You already have an accounting system for your business. You have monthly financial statements and can run payroll and invoice your customers.
What else do you need to have in place if you’re selling to the federal government?
If all you’re doing is selling products to the federal government on a fixed-price basis – like a “commercial off the shelf” product, you would treat your government customer just like any other customer, with no special accounting.
However, if you plan to provide services to the federal government that require you to go through a bidding process, under a Request for Proposal that has a Cost Proposal, you need to learn about the accounting rules specific to federal contracting to prepare a properly structured bid.
For example, the Cost Proposal will have you list hours estimated by labor categories, show that your proposed personnel meet the labor category requirements, demonstrate how much you are paying the employees, and show your cost build-up, using an indirect rate calculations method to cover Fringe Benefits, Overhead, and General & Administrative costs.
Where do these rules come from? They are defined in the Federal Acquisition Regulation, under FAR 31 Cost Principles Guide. The Defense Contract Audit Agency (DCAA) makes sure that contractors are following the Cost Principle requirements through audits of contractors.
For accountants, small business owners, and executives, this session on Accounting System requirements will give a working understanding of the terminology and explain the additional requirements placed on businesses who are federal contractors. You will understand why federal contractors invest in specialized accounting software that is designed to support federal contracting requirements for billing, costing and pricing, and reporting.
Here is what you will learn:
- What is on the checklist for DCAA Compliance and what the checklist terms mean.
- Common government contract accounting terminology with examples of how to classify costs as direct, indirect, unallowable.
- That it is not the accounting software itself that’s “DCAA Compliant or DCAA Approved,” but how you show that you operate the system and understand the rules.
- That you must complete timesheets daily if you are a federal contractor providing services that are billed by hours and costs.
- What to look for in accounting software, plus examples of systems commonly used by federal contractors.
Target Audience: Small business contractors providing services to the federal government that require a bidding process