The Defense Contract Audit Agency (DCAA) has specific requirements for accounting and accounting software for government contractors. These requirements are designed to ensure that government contracts are administered in a transparent, accurate, and accountable manner. To pass audits and follow DCAA regulations, it is critical that government contractors use accounting software that can be set up with DCAA compliance in mind. While QuickBooks Online may not be inherently DCAA compliant, with the right setup and training, it is a powerful tool that can help government contractors meet all of the DCAA’s accounting requirements.
DCAA Requirements for Accounting
DCAA-compliant contracts require daily time-tracking, precise records with audit trails for all changes, extensive reporting, specific supervisor approvals, and more. Therefore, an important part of preparing to pass DCAA accounting audits is selecting the right DCAA-compliant accounting software to ensure that your business’s accounting and timekeeping practices are in line with DCAA regulations. QuickBooks Online is a popular option. Scroll down to learn how GovCon Connect can help you achieve DCAA compliance using QuickBooks Online.
Using QuickBooks Online to Achieve DCAA Compliance
Cost Allocation and Job Costing
QuickBooks Online allows contractors to monitor expenses closely and bill clients accurately. It can be customized to provide labor cost tracking that captures separate labor categories, including direct labor, indirect labor, and overtime. By utilizing classes or locations in QuickBooks Online, contractors can accurately track expenses and revenue by project, contract, or job. GovCon can also help contractors set up separate indirect cost pools within the software for different types of costs (such as fringe benefits, overhead, general, and administrative costs).
Timekeeping Integration
GovCon can help contractors integrate a timekeeping system with QuickBooks that meets the stringent requirements for daily timekeeping, precise records, audit trails, extensive reporting, specific supervisor approvals, and more — all of which are necessary for DCAA compliance. With our assistance, government contractors can learn how to use QuickBooks Time to perform all of the following tasks:
- Automate daily email alerts to all employees to remind them to submit hours for managers’ approval (required by the DCAA)
- Reduce labor costs by setting up automatic overtime alerts to notify administrators and employees when they are approaching their daily or weekly overtime maximums
- Generate detailed reports
Internal Controls and Segregation of Duties
The DCAA has stringent requirements for security and access controls within accounting software. QuickBooks Online allows users to meet these requirements by (1) establishing internal controls within the system to prevent unauthorized changes or entries, (2) implementing role-based access, and (3) providing the segregation of duties necessary to ensure data integrity and compliance.
Generating Reports, Invoices, and Documentation
GovCon Connect can help you set up QuickBooks to generate detailed reports and documentation required by the DCAA, such as Incurred Cost Submissions, Contract Briefs, and more. Users can generate DCAA-compliant invoices by setting up templates within QuickBooks that include necessary details like contract number, performance period, invoice amount, type of work performed, labor categories and rates, direct and indirect costs, and total amount due.
Audit Trail and Reconciliation
An important feature of QuickBooks Online is its ability to create a detailed audit trail and locked audit logs, streamlining the process of tracking changes to financial data and regularly reconciling accounts to ensure the accuracy of financial records.
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Remember that the DCAA’s requirements are comprehensive and can be complex, especially for larger contracts. Achieving DCAA compliance using QuickBooks Online may require support to ensure proper setup, customization, training, and ongoing maintenance. The specific changes and additions needed will vary based on your unique business processes and contract requirements.
If you need a back-end accounting solution to support your government contracts, GovCon can help. As a QuickBooks Solutions Provider, we offer unbeatable accounting software solution packages specifically designed for government contract bookkeeping to help you remain DCAA compliant. And with GovCon Connect, we provide all-in-one software packages, training opportunities, and a range of both full and partial accounting services. We can be as hands-on (or as hands-off) as you need us to be.
Working with GovCon, you can trust that you’re in the hands of DCAA compliance experts. With our 20+ years of experience, rest easy knowing that your financial records will be ready for audit at any time. Contact us for a free consultation to see which GovCon Connect package is the best fit for you.