PROCAS Sponsored Event – 2019 MACPA Government Contractors Conference 2019 author avatar

We will be a sponsor of the 2019 MACPA Government Contractors Conference on September 24th in Hyattsville, MD.

For any clients or third parties interested in growing their GovCon knowledge, this 1-day event is perfect for you!

According to the Maryland Association of Certified Public Accountants, “The Government Contractors Conference is designed to help CPAs understand issues related to their government contractor clients and manage their engagements. This unique event addresses current issues affecting government contracts, enabling CPAs in industry to add strategic value to their organizations.”

For those interested, click here to check out the full agenda of the event.

We will have a vendor table set up close to the sign in table of the College Park Marriott Hotel & Conference Center. Feel free to stop by when you have some spare time!

Five Potential Changes for HUBZone Certified Contractors – SBA Recap author avatar

As announced two weeks ago, we had the opportunity to sponsor the National HUBZone 2019 Conference in Chantilly, VA. There were many great presentations and industry updates, all of which could have a direct impact on HUBZone certified companies in the near future.

Of these presentations, the U.S. Small Business Administration’s agency and regulatory update had potentially the greatest impact on HUBZone designated companies. Led by Associate General Counsel, John Klein, the SBA’s team commented on many major changes to legislation that they feel will be made into law by 12/31/21.

Below are our 5 main takeaways from this update. It’s important to note that this information is all speculative at this point in time, but these were heavily emphasized throughout the 90-minute presentation:

 

1) HUBZone status is no longer required at all phases of attaining contract.

Prior requirement – Contractor must be HUBZone certified from the time of offer through time of award.

Proposed change – Contractor only has to be HUBZone certified at either the time of offer or time of award. No longer required for both steps.

Interpretation – Contractors in danger of losing HUBZone certification can still bid on work before losing status, which helps continue cash flow while management readdresses company status. New companies can also bid on work while attempting to become HUBZone certified rather than having to wait for the process to complete. This change should smooth out the work opportunities of companies on both ends of the spectrum. 

 

2) HUBZone status to drop the minimum requirement from 35% to 20% HUBZone designated employees.

Prior requirement – Contractor must have at least 35% of its employees live in a HUBZone designated area.

Proposed change – Contractor only has to have at least 20% of its employees live in a HUBZone designated area.

Interpretation – The 35% rule is being loosened for HUBZone certified companies. This could allow for more companies to attempt to become HUBZone certified, as well as HUBZone work to become more competitive. The drop in percentage allows for current certified contractors to have some leeway in employee status.

 

3) Employees must live in HUBZone designated area for at least 180 days to be considered towards the new 20% requirement. Registering for a voter ID can no longer expedite process.

Prior requirement – Employees could either live in HUBZone designated area for 180 days or register for voter identification to be considered towards the 35% requirement.  

Proposed change – Employees must live in HUBZone designated area for 180 days to meet the new 20% requirement.

Interpretation – While the 35% rule is being loosened, employee status is being tightened. This is mostly done to cut down on any loopholes being exploited in filing for voter registration. Contractors that depend on employee hirings to impact their percentage immediately will have to build in a 180-day buffer. 

 

4) Employees do not lose HUBZone status after 180 days, even if they move. However, designation lost once they leave the company.

Prior requirement – In order to count towards the 35% requirement, employees must live in a HUBZone area.

Proposed change – Employees can now move out of HUBZone area as long as they achieved HUBZone status after 180 days. This status is continuous only for that specific employer, and once employment ends, the status is lost.   

Interpretation – SBA mentioned that one of the goals of HUBZone work is economic advancement for employees. They do not want to penalize companies for having employees advance in their careers and afford to move out of economically challenged areas. As long as the company still resides in the economically challenged area, and the employee stays with that company, they feel it is a beneficial to all parties to allow advancement and career growth.

 

5) The areas determined to be HUBZone designated will be unfrozen after the 2020 Census.

Current Status – The maps that define the lines for which areas are economically challenged are currently frozen. SBA is waiting for 2020 Census information before unfreezing the maps.

Once Unfrozen – The estimated timeframe to be unfrozen is 12/31/21. A HUBZone’s certification will continue as it was before the maps were frozen on 12/07/17. For example, if your company was in an area set for redesignation 3 months after being frozen on 12/07/17, you can expect the redesignation to occur 3 months after 12/31/21 on 03/31/21.

 

Follow Up Information

If any of the above points interest you or your company, we highly recommend attending this event next year. These are just 5 of the many important updates covered by the Council that effect HUBZone certified companies in the near future. For more information, be sure to check in with the HUBZone Council here.

For frequently asked questions about current HUBZone rules and regulations, SBA’s HUBZone information can be found here.

For more information related to these potential changes, SBA has a blog they update regularly with more interpretations and concepts related to updates.

 

PROCAS Sponsored Event – 2019 National HUBZone Conference author avatar

We will be a sponsor of the 2019 National HUBZone Conference on September 4-5th in Chantilly, VA.

For any clients that are HUBZone certified, this is a great opportunity to network with industry leaders including large prime contractors and federal agencies related to HUBZone designated contracts and subcontracts. The primary focus of the event includes updates to government contracting, specifically related to small business and HUBZone work, as well as matchmaking opportunities with these industry leading organizations.

For those interested, click here to check out the full agenda of the event.

We will have a vendor table set up in the Washingtonian section of the Westfield Marriott towards the center of the room. Feel free to stop by when you have some spare time!

Types of DCAA Audits for Government Contractors author avatar

Being the largest purchaser of goods and services in the world, it is no wonder that businesses large and small want to work with the United States Federal Government. With an average of $500 billion spent annually, many view federal contract procurement as a potential revenue stream to grow their business. However, many of these companies do not consider all of the rules, requirements, and oversight that come with that potential revenue. Before jumping headfirst into government contracting, let’s take a look at the types of oversight a company can expect when doing business with the government.

 

Defense Contract Audit Agency (DCAA)

The Defense Contract Audit Agency is the auditing branch of the federal government. Under control of the Secretary of Defense, the branch’s main purpose is to make sure federally procured funds are being spent accurately and appropriately.

According to DCAA’s Information for Contractors publication, “DCAA performs all necessary contract audits for the Department of Defense and provides accounting and financial advisory services regarding contracts and subcontracts to all DoD Components responsible for procurement and contract administration.”

Essentially, what this means is that their primary goal is to ensure taxpayer dollars are spent on fair and reasonable contract prices. It is DCAA’s responsibility to serve public interest first and foremost.

In order to accomplish this, DCAA has a multitude of audit procedures to ensure that government contractors are kept in line. DCAA is especially concerned with contractors working on cost reimbursable contracts as opposed to those who provide fixed price work. This is because there is more room for error (and even fraud) when billing at cost. 

Some of the most common types of DCAA audits for companies providing cost-type work are as follows:

  1. Accounting System Requirements (Pre & Post Award)
  2. Real-time Labor Evaluations
  3. Provisional Billing Rates
  4. Public Vouchers (Progress Payments)
  5. Incurred Cost Submissions

We will break down the first 4 of these common audit procedures below.

Notes:

  • Incurred Cost Submissions are too involved to cover in an overview post. This audit type will be covered in a detailed post to follow.
  • There are many more types of audits that do take place, such as financial capacity, proposal adequacy, contract briefs, monitoring subcontracts, contract close outs, etc. The above 5 were selected for the accounting heavy folks in your organization!

 

1. Accounting System Review

Government agencies want to make sure your company is operating using proper accounting policies and procedures before providing funding for any cost type work. To do this, a contracting officer from said agency for said contract will request DCAA perform an accounting system audit on your company, which is broken down into two phases – the pre-award & post-award audits.

         Pre-Award Audit

The pre-award audit takes place before any cost type contracts are awarded to your company. This is the preliminary check that DCAA will perform to see if you have a proper accounting system in place to be able to handle the proposed contracts.

To start the process, a contacting officer or DCMA (Defense Contract Management Agency) will have you complete standard form 1408, which lists what’s required for your accounting system. Some requirements include segregation of direct costs from indirect costs, identification and accumulation of direct costs by contract, ability to allocate indirect costs consistently across cost objectives, etc. For a full list of what is required, please see our prior blog post How PROCAS Addresses the SF1408.

Once the SF1408 is completed and returned to the contracting officer/DCMA, DCAA will meet with your company to see if you have the capacity to perform on what was completed in the form. This is an upper level review that does not get into the nitty gritty of the system, but ensures you have the proper policies and procedures included with your accounting system. For more on what DCAA will be requiring of your system, please see their related documents here.

 

         Post-Award Audit

The post-award audit takes place after your company has been performing on the awarded contract for some time. Typically, this is not too long after being awarded and is around 3-6 months (but can be earlier or later). The purpose of this phase of the audit is to make sure you are complying with the accounting policies and procedures specified in the pre-award.

During the post-award audit, you can expect the auditors to dig around your system more than the pre-award. This is a total accounting system review, which will include testing of your policies and procedures as well as data entry. Some examples of areas they could test include: segregation of duties, proper levels of access to data, correct revenue and expense recognition, trailing transactions from general ledger to invoicing, accurate labor distribution from timesheets to general ledger, etc. 

At the end of the day, DCAA wants a vote of confidence that you are operating as you said you would in the pre-award. Therefore, the auditor will take their time and conscientiously look through your system to make sure it does not have any holes.

 

2. Real-time Labor Evaluations

Also known as the “Help! DCAA auditors showed up at my door unannounced, and I don’t know what to do!” audit, real-time labor evaluations are checks to see if your people are working when they say they are working. For service-based contractors, labor is the largest piece of what is billed to the government, so it is of major concern to be monitored by the DCAA.

In these time check or “floor check” audits, the auditors are going to randomly select employees of your company and ask them simple questions to see how timesheet procedures are performed. Some of these procedures include completing time entries, determining how charge codes are created/selected, submitting timesheets, correcting/adjusting time entries, the approval process, access to employees’ timesheets, etc. Once these are confirmed, the auditors will meet with the accounting staff to see how timesheets are collected and labor is distributed with cost. They will want to see that specific cost journals in the general ledger match historic timesheets!

Some common deficiencies in timekeeping compliance that can lead to the failure of a real-time labor evaluation include:

  • The ability of more than 1 person to access an employee’s timesheet to record time
  • Improper selection of charge codes for work being performed (inaccurate use of labor categories, projects, etc.)
  • Inconsistent charging of time across contracts
  • Failure to track changes to employees’ time by audit trail (without reason)
  • Approvers overriding subordinate time without employee consent
  • Inconsistent method of applying labor cost to employee timesheets

In this audit, there is no warning for when the auditors are going to stop by. Therefore, it is important that your employees know your company’s policies and procedures at all times. We recommend having supervisors and management review these policies with your staff as frequently as possible. For more information to prepare for this surprise audit, please see click here.

 

3. Provisional Billing Rates

If specified in the provisions of a cost-type contract, contractors are allowed to be reimbursed for indirect costs via interim payments as opposed to waiting until the end of the contract. FAR 42.704 governs the procedures and guidance for establishing provisional billing rates, which is the effective way to approximate a contractor’s final year-end rates (adjusted for any unallowables). Provisional billing rates pose as an estimation of these final year end rates, which are trued up to actual indirect rates at the end of the contract’s fiscal year. More information on FAR 42.704(b) can be found here.

One major criterion for an adequate accounting system is that it provides for billings that can be reconciled to cost accounts for current and cumulative amounts claimed. The auditor is going to check to make sure your system can handle this process within the Accounting System Review audit. However, once approved, the contractor is still going to have to submit provisional billing rates to its DCAA Office or administrating contracting officer every fiscal year included in the contract.

According to DCAA, provisional billing rates should be:

  • Submitted at the beginning of each fiscal year or when established billing rates are no longer accurate in representing final year rates (unforeseen circumstances)
  • Representing a 12-month period (contractor’s fiscal year)
  • Submitted at least annually and electronically (if possible)
  • Provided in an Excel format

According to DCAA, provisional billing rates should contain:

  • Proposed billing rate calculations (including rationale)
  • Prior fiscal year pool and base
  • Current fiscal year to date pool and base
  • Current fiscal year budget pool and base (if available)
  • Comparative analysis with explanation of significant differences (if applicable)

Penalty: If the above measures are not taken, vouchers and progress payments can be held/returned until appropriate measures are taken to adjust billing rates. This not only hurts your cash flow but can affect all future invoices!

 

4. Public Vouchers (Progress Payments)

Following the same thought process described above, conrtactors can claim interim payments on work performed throughout their fiscal year. According to DCAA, cost type contracts allow for payments for costs on a Standard Form 1034 public voucher or equivalent. Typically, contracting officers have slight variations on how they would like their invoice to look, however the audit process will look similar for checking how the records of each invoice are maintained. For a look into all of the contractor’s and DCAA’s responsibilities in establishing progress payments, please click here.

Voucher audits are conducted by DCAA to determine the accuracy of costs billed to the government. DCAA auditors will use sample testing to track individual invoices from submitted government invoice in WAWF to the general ledger and job cost report and eventually to the source documents supporting the billed voucher.

Looking at your accounting records, an auditor will check for:

  • Compliance between the invoice and contract terms
  • Accuracy of billed costs to recorded costs (current and cumulative)
  • Consistent application of labor distribution
  • Consistent allocation of indirect rates using established provisional billing rates
  • Segregation of unallowable costs from allowable costs (unallowables cannot be invoiced)
  • Timely payments to vendors and subcontractors
  • Appropriate source documentation for billed costs

Penalty: If the above measures are not taken, vouchers and progress payments can be held/returned until appropriate measures are taken to adjust your invoices. This not only hurts your cash flow but can affect all future invoices!

 

At the end of the day, DCAA wants to make sure the public’s money is being spent appropriately. The above measures can seem very intimidating, so it is important that your company is aware of all the rules and regulations that need to be followed. Remember, you always have the right as a contractor to ask why an auditor needs what they are requesting from you. If anything appears to be unrelated to the measures described in each audit above, you have the right to know why it is required. If any PROCAS clients need help through any of the above audits, feel free to reach out to our consulting team at consulting@procas.com.

Logging into PROCAS Timekeeping author avatar

Time collection is one of the most important processes for service-based government contractors. In order to effectively collect employees’ time, apply labor distribution, and bill the government accurately, you first need to make sure employees know how to access their timesheets.

In PROCAS, employees can access their timesheets from any web browser on any device with internet access. This includes laptops, mobile devices, tablets, home computers, and even TV’s.

Let’s take a look at how you can access your timesheet in PROCAS. The following post will be broken down into 4 sections:

  • Upgraded Version, Returning User
  • Upgraded Version, New User
  • Legacy Version, Returning User
  • Legacy Version, New User

To determine which category you belong to, please look at the integrated screenshots below to see which login screens look familiar.

 

PROCAS Timesheet – Upgraded Version, Returning User

If your company has upgraded to the most recent version of PROCAS, you have the easiest journey to accessing your timesheet. Everyone logs into the same web address, so all you have to do is click here and enter your username and password.

 

 PROCAS Timekeeping and Expense Reporting Login

 

If you forget your username and/or password, please select the “Reset Password” link and enter the email assigned by your administrator to begin the reset process.

Note: If you cannot remember this email either, the accounting admin of your company can look it up under Accounting --> Setup --> Time and Expense Users.

 

PROCAS Timesheet – Upgraded Version, New User

If your company has upgraded to the most recent version of PROCAS, and this is your first time logging in to record your time, you will need to establish a username and password via an email invitation. Your company’s administrator will determine your level of access in PROCAS and send an email from invites@procas.com to get the login process started.

 

 

 

Click on the first link at the bottom of the email as displayed in the screenshot above. From here, you will be able to establish your login credentials as displayed in the screenshot below.

 

PROCAS New Timekeeping User Setup

 

Follow the instructions defined in the email sent from invites@procas.com to complete the fields required for login.

Note: Your email address will be your official username, which is set by your administrator and cannot be changed by you once this process is completed.

 

PROCAS Timesheet – Legacy Version, Returning User

If your company is on a Legacy version of PROCAS, the path you will take to access your timesheet follows the sequence --> www.procastime.com/ + Company Code. In this sequence, the first portion of the web URL stays consistent, however the “Company Code” portion is a code assigned specifically to your company. The following example illustrates this:

Ex. LJ’s Maintenance Shop has been a PROCAS client for 5 years. When implemented, LJ’s Maintenance Shop was assigned the company code of LJMAIN. Therefore, all employees (new and existing) will login to www.procastime.com/ljmain until upgraded to the newest version of PROCAS.

 

PROCAS Timekeeping and Expense Reporting Login - Legacy

 

If you forget your username and/or password, please click the “I Forgot My Password” button and enter the email assigned by your administrator to begin the reset process.

Notes:

  • If you cannot remember this email either, the accounting admin of your company can look it up under System --> Time and Expense --> Web Users.
  • If you are using the correct email, and the system replies with User could not be found, please try logging into this link, or contact your administrator.

 

PROCAS Timesheet – Legacy Version, New User

If your company is on a Legacy version of PROCAS, you will first need to set your password before you can log in to the timekeeping system. Following the example in the above section, please navigate to your company’s timekeeping link using the sequence --> www.procastime.com/ + Company Code.

Once you’ve made it to timekeeping, select the “I Forgot My Password” link and enter the email assigned by your administrator upon onboarding. This will generate a system email, which will provide a link to set and confirm the password required to log in. 

Note: If you are using the correct email, and the system replies with “User could not be found”, please try logging into this link, or contact your administrator.

 

If you run into any issues attempting any of the above login processes, feel free to contact our Support team at support@procas.com.

How PROCAS Addresses the SF1408 for Government Contractors author avatar

One of the biggest challenges government contractors face is putting together a compliant system that passes DCAA requirements. As most know, developing a DCAA compliant accounting system is a little more complicated than just purchasing accounting software. It is the total incorporation of a company’s best practices, policies, and procedures into a system that allows contractors to be consistent and appropriate in their tracking of costs.

This can be very daunting for the new contractor, who not only is worried about landing their first government contract, but also has to establish those company policies and procedures. The below post will identify the preaward audit process and how PROCAS meets the requirements of the SF1408.

 

Preaward Audit Process

Before being awarded a cost type contract, the DCAA is going to want to verify that the appropriate measures were taken in order to prove the contractor’s ability to adequately track the costs for that proposed contract. This process is known as the preaward audit or preaward survey.

Typically, an auditor will meet with the contractor first to review the established system and procedures, and then again in the future to make sure that system is being followed consistently (post award audit). However, before that takes place, the contracting officer on the proposed contract will require that Standard Form 1408 be completed. This form will be submitted to the DCAA when they request the initial audit of your system. This piece is very important because it gets the entire process started.

Standard Form 1408 is the Preaward Survey of Prospector Accounting System used by the DCAA as an evaluation checklist to determine if your system is sufficient in supporting the proposed contract(s).  According to the DCAA, the audit scope will consist of understanding the design of the contractor’s prospective accounting system as well as the procedures essential to reach an informed opinion if that system is acceptable in accumulating and generating required cost information. Having an accurately completed SF1408 is the first step in conquering this audit scope.

For DCAA’s official explanation of the preaward process, please click here.

 

PROCAS Addresses Standard Form 1408

Below are our answers for how PROCAS addresses the standards that the auditor will be concerned about when evaluating your prospective accounting system.

A downloadable version of the below answers can be found here.

 

1. Except as stated in Section I Narrative, is the accounting system in accord with Generally Accepted Accounting Principles applicable in the circumstances?

 

The PROCAS project accounting software (PROCAS Accounting) is designed to be operated in accordance with Generally Accepted Accounting Principles (GAAP), including maintaining the books of record on the accrual basis of accounting.

 

2. Accounting system provides for:

 

a. Proper segregation of direct costs from indirect costs.

In PROCAS Accounting, expense accounts in the chart of accounts are identified as either direct or indirect, which provides for the proper segregation of direct costs from indirect costs. Additionally, PROCAS assigns specific account types to further segregate these costs.

b. Identification and accumulation of direct costs by contract.

In PROCAS Accounting, the identification and accumulation of direct costs requires the assignment of direct costs to a corresponding project code. The project code corresponds to a contract.

c. A logical and consistent method for the allocation of indirect costs to intermediate and final cost objectives. (A contract is a final cost objective.)

PROCAS Accounting provides logical and consistent methods for the allocation of indirect costs to intermediate and final cost objectives. Indirect rates can be calculated automatically for Fringe Benefits, Facilities, Material Handling, Subcontract Administration, Overhead and G&A. Bid and proposal and internal research and development costs are also treated appropriately. The indirect rates can be further segregated by division, location and work-site. Indirect rates are automatically applied to contracts in direct correlation/proportion to the respective allocation base.

d. Accumulation of costs under general ledger control.

PROCAS Accounting accumulates costs directly to the general ledger, which is the basis for financial and job cost reports.

e. A timekeeping system that identifies employees’ labor by intermediate or final cost objectives.

PROCAS provides online timesheet software (PROCAS Time) in which employees record their time to intermediate or final cost objectives. Employees are assigned appropriate intermediate and/or final cost objectives for recording their time and can only record their time to their authorized work assignments.

f. A labor distribution system that charges direct and indirect labor to the appropriate cost objectives.

In PROCAS Accounting, the distribution of direct and indirect labor costs are recorded automatically from the employee timesheets created in PROCAS Time to the appropriate cost objectives. PROCAS Accounting supports the calculation of effective hourly rates associated with total time accounting.

g. Interim (at least monthly) determination of costs charged to a contract through routine posting of books of account.

In PROCAS Accounting, direct costs are posted in the general ledger and job cost ledger in real time and do not require the use of batch processing or summary entries. Indirect rates can be automatically calculated and applied at any time.

h. Exclusion from costs charged to government contracts of amounts which are not allowable in terms of FAR 31, Contract Cost Principles and Procedures, or other contract provisions.

In PROCAS Accounting, expense accounts are identified as being either allowable or unallowable. Unallowable expenses are excluded from indirect cost pools when automatically calculating and applying indirect rates.

i. Identification of costs by contract line item and by units (as if each unit or line item were a separate contract) if required by the proposed contract.

PROCAS Accounting has the capability to incorporate logical project assignments that will track costs by unit and/or line item.

j. Segregation of preproduction costs from production costs.

In PROCAS Accounting, pre-production costs are segregated from production costs through the use of project assignments and/or separate expense accounts.

 

3.Accounting system provides financial information:

 

a. Required by contract clauses concerning limitation of cost (FAR 52.232-20 and 21) or limitation on payments (FAR 52.216-16).

In PROCAS Accounting, reports are available to assist with managing the limitation of costs and/or limitation of payments.

b. Required to support requests for progress payments.

PROCAS Accounting supports cost type, time and materials and fixed price invoices which are generated automatically from the accounting records. Requests for progress payments can be generated for interim time periods, by percentage of completion or by deliverables as specified by the contract.

 

 4. Is the accounting system designed, and are the records maintained in such a manner that adequate, reliable data are developed for use in pricing follow-on acquisitions?

 

Yes. In PROCAS Accounting, records are designed to be maintained so that adequate, reliable data can be developed for use in pricing follow-on acquisitions.

PROCAS Content Update author avatar

You’ve probably been wondering what we’ve been up to the past year. It’s been a really busy time as we’ve been migrating clients to our new software, listening to your ideas for system improvements, and implementing those changes to better our service!

To the clients that have migrated already, we would like to thank you for taking the plunge and providing excellent feedback. To those still operating on our legacy system, we appreciate your patience and will be keeping you updated with more information at a later time.

 

Restructured Blog

As we’ve been navigating these rapid waters, we felt it was appropriate to revamp this platform as well. Before, we used this blog environment solely to post monthly entries to help our clients use our product. While we still hope to accomplish that, we are also looking to promote value to our clients in other ways.

Our New Approach

Former Support Staff member and current Blogger-In-Chief, LJ, will be posting regular content related to issues all GovCon accountants face; such as FAR interpretations, Accounting system tutorials, DCAA audit recommendations, and much more. These posts are intended to be written by common accountant for common accountant and will hopefully make some of the more complicated topics seem just a little less scary.

Content Layout

All content will be categorized in sections that can be easily navigated to at a future point in time and will be broken down as follows:

  1. Government Contract Accounting
  2. PROCAS System Training
  3. PROCAS System Improvements
  4. Industry Topics
  5. Accounting Education
  6. PROCAS Sponsored Events

As this platform grows and more entries are published, the above list will expand/contract as needed. If there any topics that you would like to see covered, please email feedback@procas.com, and we will take it into consideration!

 

Meet the Author

Because we will be spending a lot of time together, it is only fair that you get to know me a little. As mentioned above, my name is LJ, and I have worked at PROCAS for about 5 years now. When I’m not at work assisting clients, I enjoy being with friends/family, taking a swing at social softball, finding the best crab cake Maryland can offer, and most importantly, taking life one step at a time.  It is a pleasure to virtually meet you, and I look forward to sharing our thoughts on anything and everything Government Contracting.

For more information about me, feel free to check out my LinkedIn profile here.

Last Call! 1099s Must Be Sent by 01/31/18! author avatar

For those unaware, vendor payment information can be printed from our software onto 1099-MISC forms for the year 2017. To do so, please proceed with the following steps:

 

  • Obtain legal 1099-MISC forms
    • Can be purchased from most office supply retailors such as Amazon, Staples, etc.
    • Do NOT print the forms directly from the .pdf online

 

  • Determine which vendors/subcontractors should receive a 1099-MISC
    • Run a GL for the year 2017 on account 1000 grouped by vendor for transactions D - G
      • Any vendor that is not taxed as a corporation should be considered
      • Follow all applicable IRS regulations to determine which of these vendors should receive a 1099-MISC

 

 

  • Mark each applicable vendor as Y on Tab 2 of their Vendor Record
    • By default, the amounts for each vendor will print onto Box 7 – Non-employee compensation of the form
    • If the amounts for a vendor should print onto a different box of the form, place that box number into the “Business Code” field of the vendor record for that vendor (i.e. Rents – 1, Royalties – 2, Other income – 3, etc.).

 

 

  • Select the proper vendors to print from the 1099/1096 Menu
    • In the bottom left hand corner, please select the “Select” button, enter the proper Reporting Period dates (01/01/17 – 12/31/17), and hit “OK.”
    • Once the menu has updated, select the “Report” button to see if all the vendors listed match your list of vendors from Step 2 to receive 1099s.
      • Unmark any vendors that have received less than $600!
    • If they all match, select “1099s” to print your 1099s!
    • Repeat these steps for all forms (1099-MISC A,B,1,2,C).

 

  • After 1099s have been sent and reconciled, print the associated 1096 form
    • Can be printed following the same process as Step 3, replacing the “1099s” button with the “1096” button

Notes:

  • If the values from the 1099s and 1096 reports do not completely align with your forms, please email support@procas.com with a copy of a printed 1099/1096, and we can adjust where the values print.
  • We only support 1099-MISC and 1096 forms.
  • Follow the instructions on the IRS website to determine where and when each 1099 form needs to be sent (1099-MISC forms A,B,1,2,C).
  • For additional information related to printing 1099s and 1096s from our software, please read pages 299-301 of our Accounting User’s Manual.

Alert! ICE Submissions Due Next Week! author avatar

I’d like to imagine that this blog would fall on deaf ears. I’d like to think that in a perfect world, everyone is already in the process of reviewing their completed incurred cost submissions with the thought of freedom in the back of their minds. I’d like to visualize everyone packing away those spreadsheets for the summer, kicking back on a nice hammock somewhere overlooking the ocean.

However, as much as it pains me, this is not a perfect world. Not everyone has had the chance of getting a jump start on their ICE submissions. Not everyone has had the opportunity to compile all their costs to complete that monster of a spreadsheet. If you’re like me, then the thought may not have even crossed your mind! If you fall into one of these 3 categories, or you would like to double check your work, then I have the post for you!

For those that aren’t aware, incurred cost submissions are required if you have cost reimbursable contracts and some time and materials contracts if included in solicitation. They are essentially a compilation of various schedules of your costs, presented in a specific way, and submitted to the DCAA for their review and audit, which allows the government to verify that they are paying a fair price for the services that they receive. Most contractors are required to complete these submissions by June 30th of each year, hence my alert.

The above stated schedules can be found here:

http://www.dcaa.mil/ice_model.html

 

If you select the above link and download the ICE model as per the DCAA’s instructions, you will notice that completing the model is no easy feat. (You know you’re in for a long day when an Excel file comes with its own User’s Manual!) The ICE_Model spreadsheet contains a little more than 25 tabs, all of which require major brain power. To help with this, we’ve built some reports for specific schedules that are separated on each tab (although a couple cups of coffee wouldn’t hurt).

These reports can be found by going to Projects à Incurred Cost Submission Support within the accounting system. Once each report is printed, they can be exported to Excel using the white envelope at the top of the report, so that the data can be easily transferred to the ICE model.

Note: These reports will only give accurate numbers if…

  • Invoices are being billed out of the system
  • Costs are recorded correctly
  • Indirect rates have been calculated and applied for your fiscal year

For those interested, below is a description of each report as found in the PROCAS Users Manual. The screenshots taken are from a sample company as an example of what the reports look like.

 

 

Indirect Rate Support

Perhaps the most important, the indirect rate support reports contain the details of costs within each pool and base for the rate calculation most recently performed, regardless of the date range used when printing the reports. The reports should be used in the ICE Model Schedules A, B, C, D, and E and in PDF format as supporting documentation.

The indirect rate support reports are used to support the rate calculations performed for the year. The period date range used to run the reports are for information in the report header only and should coincide with the date range used for the most recent indirect rate calculation performed.

You should begin your ICE Model by inserting a new tab in the workbook, which will be used to copy your trial balance information. You should link information within the various schedules in the ICE Model to the trial balance tab where appropriate. This will leave less room for discrepancies between information in the ICE Model compared to information in your general ledger. If general ledger adjustments are needed after you have begun the ICE Model, you will only need to update the trial balance information on the trial balance tab.

  • Indirect rates must be calculated and applied before printing
  • There are 6 Reports – 1 for each of the following indirect rate types
    • Fringe – ICE_SUPPORT_6_FRINGE.RPT
    • Facilities – ICE_SUPPORT_7_FACILITIES.RPT
    • Overhead – ICE_SUPPORT_8_OH.RPT
    • General & Administrative (G&A) – ICE_SUPPORT_9_G&A.RPT
    • Material Handling – ICE_SUPPORT_M_MAT_HANDLING.RPT
    • Subcontract Admin. – ICE_SUPPORT_S_SUB_ADMIN.RPT

 

 

Schedule H

The ICE Model Schedule H is the “Schedule of Direct Costs by Contract/Subcontract and Indirect Expense Applied at Claimed Rates.” The standard Schedule H reports accommodate a consolidated overhead rate structure (SCHED_H_ONE_SITE) and a two worksite overhead rate structure (SCHED_H_TWO_SITE).

  • Indirect rates must be calculated and applied before printing
  • For the report to group the contracts by cost class, an Incurred Cost Class code must be established on the project records, receivable task records, and/or the revenue task records.
  • The report is available in four roll up levels: Project, Task, Subtask, and Cost Center
  • The report can be filtered by Department, Division, Location, Site

 

 

Schedule I

The ICE Model Schedule I is a “Schedule of Cumulative Direct and Indirect Costs Claimed and Billed by Contract and Subcontract.” The automated billing process records billed detail information in Invoice History which maintains the inception-to-date billed hours and amounts on contracts. By default, this report will display prior years settled total costs, prior year costs, and cumulative billed amounts, by contract, grouped by incurred cost class for the date range selected. The report displays the contract billed information in cost class order.

  • The Schedule I support report requires that the automated billing process is used to create invoices within the accounting system.
  • The Schedule I support report in the system requires invoice history.
  • The report is available in four roll up levels: Project, Task, Subtask, and Cost Center

 

 

Schedule K

The ICE Model Schedule K is a “Summary of Hours and Amounts on Time and Material/Labor Hour Contracts.” The automated billing process records billed detail information in Invoice History which maintains the inception-to-date billed hours and amounts on contracts. By default, this report will display the cumulative hours and amounts billed for the date range selected, regardless of the cost class. The report displays the contract billed information in cost class order. You can filter on a cost class code or a range of cost class codes to isolate the information needed.

  • The Schedule K support report requires that the automated billing process is used to create invoices within the accounting system.
  • The Schedule K support report in the system requires invoice history.
  • The report is available in four roll up levels: Project, Task, Subtask, and Cost Center

 

 

Schedule L

The ICE Model Schedule L is a “Reconciliation of Total Payroll per IRS form 941 to Total Labor Costs Distributions.” It is a reconciliation of the accrual basis labor cost per your general ledger to a cash basis labor cost per the IRS Form 941s. The Schedule L report will display the labor costs recorded in the general ledger, grouped by cost pool.

  • Performing a labor reconciliation separately before beginning the ICE Model will help to ensure the information in your general ledger is accurate.
  • The account field in the report parameters will automatically default to one greater than the account code for salaries payable box of the Default Accounts form.
  • The report does not include subtotals by pool. Those must be done in Excel.

 

If you’ve made it this far, I applaud your stamina! These reports can seem intense, however they lend a helping hand in completing the associated tabs of the ICE model. For additional help completing ICE submissions, please check out our Webinar on the subject by emailing webinars@procas.com. As mentioned above, additional explanations on the reports can also be found in the PROCAS Users Manual or by emailing consulting@procas.com.

 

Update to the PROCAS Budget Template author avatar

We recently made a change to our Budget Template that should make fringe projections more straightforward.

Originally, some of the fringe accounts were projected using productive labor hours and estimated days off instead of amounts. However, upon the request of multiple clients, we decided to make all of the fringe accounts accept a projected amount.

 

 

This new version of the fringe tab works similarly for us on the backend, however there are some noticeable changes for the end user:

  1. The fringe accounts are broken out into two different sections; Fringe Benefits – Time Off and Fringe Benefits Other. On the original budget template, the accounts listed in the Time Off section were automatically calculated based on a percentage of total labor and the time off days. While this ensured that the accounts were budgeted for, it didn’t allow the freedom for users to edit the amounts. Now, the amounts can be adjusted if you do not want them to be a factor of total employee labor (i.e. part-time employees do not receive the benefits), rather than having to back into percentages to force it to work.
  2. The manual amounts from Tab 3. Fringe should match the total listed at the bottom of the Time Off column in Tab 1. Labor. After entering your company’s totals for each fringe account, the excel file will compare your company’s numbers to the projected percentages from the labor tab to see if everything matches. If they do not, the following error message will appear:

 

Please be sure to have the Total Time Off amounts from Tab 1 and Tab 3 match so that your labor distribution projections match your fringe dollar projections for your fringe rate.

 

This most recent version of our budget template (and other documents) can be accessed from:

          PROCAS Time & Expense --> Help --> Downloads --> PROCAS Budget Template

Or if you’d like us to send you a copy, feel free to give our support line a call at (410) 730-4011 Ext.2 or shoot us an email at support@procas.com.