What’s in This Article
Why Choosing the Right Accounting Firm Matters
A Firm That Understands Government Contracts
A Firm That Understands the Value of Timekeeping
A Firm That Understands the Importance of Compliance
A Firm That Understands Incurred Costs and Rate Proposals
Why Choosing the Right Accounting Firm Matters
For government contractors, working closely with an experienced accounting firm can help ensure financial reports, policies, procedures, and timekeeping practices meet applicable contract requirements. Finding the right government contract accounting firm can help your organization stay prepared for audits and avoid unnecessary delays.
The right partner should understand more than business taxes. They should also be familiar with government contract accounting requirements and know how to help you prepare for a preaward accounting system survey or a Defense Contract Audit Agency (DCAA) review, when applicable.
Here are four things to look for in a government contract accounting firm before choosing one to serve your organization.
A Firm That Understands Government Contracts
Your first concern should be finding a firm that understands the Federal Acquisition Regulation (FAR) and how it applies to your contracts. A firm familiar with government contracting requirements can help you navigate the accounting process, potentially saving time and reducing costly errors.
Government contractors often have accounting and reporting requirements that differ from those of commercial businesses. Depending on the contract, these may include tracking costs by contract, separating direct and indirect costs, and identifying unallowable expenses.
Look for an accounting firm that works regularly with government contractors and understands the challenges that come with federal contracts.
A Firm That Understands the Value of Timekeeping
Tracking time is important for professional service organizations, especially government contractors. Accurate timesheets support labor charging, contract billing, and compliance with applicable government requirements.
A government contract accounting firm should be able to evaluate whether your company has appropriate timekeeping policies and procedures. Employees should record their time accurately, charge it to the correct project or cost objective, and follow established procedures for corrections and approvals.
An experienced firm can also help identify weaknesses in your timekeeping process before they become problems during an audit.
For more information, see our article on DCAA Compliant Timekeeping.
A Firm That Understands the Importance of Compliance
Compliance is critical for government contractors. It involves more than keeping accurate books. It can include accounting system design, employee training, internal controls, and the proper treatment of contract costs.
A qualified government contract accounting firm should understand FAR Part 31, which addresses contract cost principles and procedures, as well as Cost Accounting Standards (CAS) when those standards apply.
The firm should also be familiar with DCAA accounting system expectations, including the requirements outlined in the Preaward Accounting System Adequacy Checklist.
Not every government contract is subject to the same requirements, so an accounting firm should help you understand which rules apply to your business.
A Firm That Understands Incurred Costs and Rate Proposals
Provisional billing rates and forward pricing rate proposals help contractors estimate indirect costs and rates for billing or pricing purposes. These rates may need to be reviewed and adjusted as actual costs become known.
An Incurred Cost Submission (ICS), when required by the contract, reports actual costs and proposes final indirect cost rates for the contractor’s fiscal year. Certain contracts containing FAR 52.216-7 generally require an adequate final indirect cost rate proposal within six months after the end of the fiscal year, unless an extension is granted.
Preparing these submissions can be time-consuming, especially when accounting records, indirect cost allocations, and supporting documentation are not properly maintained throughout the year.
An experienced government contract accounting firm can help prepare these submissions and review the underlying records for accuracy and compliance.
A firm that understands government contract accounting, timekeeping, compliance, and rate proposals can be a valuable resource for your business. Before making your choice, consider the firm’s experience, services, and how well they align with your organization’s needs.
At Cheryl Jefferson & Associates, government contract accounting is a core area of our practice. Learn more about our Government Contract Consulting services or contact CJA to discuss your accounting and compliance needs.
Frequently Asked Questions
Why should government contractors hire an accounting firm with GovCon experience?
Government contracts can involve specialized accounting, labor charging, cost allocation, and reporting requirements that differ from ordinary commercial accounting.
Does every government contractor need a DCAA-approved accounting system?
No. Accounting system requirements depend on the type of contract and applicable government requirements. DCAA may evaluate a contractor’s accounting system when requested by the government.
What should I ask before hiring a government contract accounting firm?
Ask about the firm’s experience with FAR, DCAA reviews, timekeeping, indirect cost rates, incurred cost submissions, and the accounting systems used by government contractors.
