What is DCAA Compliance?
When the DCAA performs an Accounting System Review, Provisional Billing Rate Audit, Progress Payment Audit, Timesheet Floor Check, or Annual Incurred Cost Audit, they are assessing the contractor’s compliance with the Federal Acquisition Regulations (FAR). The FAR is the principal set of rules in the Federal Acquisition Regulation System. This system consists of sets of regulations issued by agencies of the Federal government to administer what is called the “acquisition process,” the process through which the government purchases (“acquires”) goods and services.
The Federal Acquisition Regulations (FAR) outlines the requirements of contractors during the acquisition process:
- for selling to the government,
- the terms under which the government obtains ownership, title and control of the goods or services purchased,
- rules on specifications, payments, and conduct,
- actions regarding solicitation of bids, and
payment of invoices.
What is the DCAA?
The DCAA, or the Defense Contract Audit Agency, is the government agency responsible for performing all audits for the Department of Defense (DoD) to ensure government contractors comply with federal regulations regarding proper financial management. The DCAA also provides contract audit services for many other non-DoD government agencies.
Understanding the Types of DCAA Audits our Clients Often Face
Common with small business contractors, preaward audits examine the contractor’s accounting system, determining whether it is adequate for awarding a contract, and involves completion of the SF 1408 form (Pre-Award Survey of Prospective Contractor Accounting System).
- The audit looks at the contractor’s accounting system to confirm they are GAAP (Generally Accepted Accounting Principles) compliant and have accurate timekeeping, labor distribution, cost allocation, and billings.
Conducted after the contract award, to determine the accuracy of a contractor’s cost representations.
Conducted before the contract award, these evaluate a contractor’s estimate of how much it will cost the contractor to provide the products or services.
Confirms the existence of employee, the adequacy of timekeeping practices and tests the validity of employee time entry.
DCAA Compliance for Government Contractors
If a contractor is not in compliance with the FAR, they may be precluded from future government contracts or teaming arrangements with other contractors. It is also possible for DCAA to suggest to the Contracting Officer to stop payments on work that is in progress or disallow costs on completed contracts. Therefore, it is critical for all contractors both large and small to comply with the FAR.
Review the DCAA Publication “Information for Contractors” on DCAA’s website for a look at requirements when working with DCAA auditors.
DCAA Project Accounting System Compliance from PROCAS
PROCAS software and consulting services guide government contractors to meet the FAR compliance requirements and pass DCAA audits.
Although DCAA does not support, endorse, or approve accounting software from any vendor, PROCAS Software is specifically designed to comply with the FAR. PROCAS has worked exclusively with government contractors since 1997, and clients consistently report passing DCAA audits. The Standard Form 1408 (SF 1408) that the DCAA uses for Preaward Accounting System Surveys is available to view here.