The Defense Contract Audit Agency (DCAA) sets a high standard for the accounting processes and tools used by any business that contracts with the federal government. All federal contractors must adhere to strict government regulations, particularly accounting and timekeeping procedures. QuickBooks Online has emerged as a popular choice for many government contractors who need an accounting software system that can be set up to meet the DCAA’s requirements and pass audits. But is QuickBooks Online DCAA compliant? With the right approach and support, it can be here. Here’s where to start.
Using QuickBooks Online to Achieve DCAA Compliance
Every business contracting with the federal government must adhere to rigorous government regulations overseen by the DCAA. The DCAA ensures that federal contractors comply with these regulations through a variety of audits, which can include (but are not limited to):
- Pre-award audits
- Post-award accounting system audits
- Forward pricing proposal audits
- Timekeeping system audits
- Cost accounting standards audits
- Incurred cost submission audits
- Indirect rate proposal audits
DCAA-Compliant Accounting Software
Using DCAA-compliant accounting software is important for any comprehensive DCAA compliance plan. The government does not officially endorse or recommend any accounting or timekeeping software, but that doesn’t mean all accounting software meets DCAA requirements. Businesses seeking a new accounting system should ensure it’s capable of the following:
- Creating detailed, daily timekeeping and labor distribution reports
- Utilizing job costing
- Producing precise, extensive records and reports with thorough audit trails
- Demonstrating a straightforward method and a documented paper trail related to specific supervisor approvals (overtime, etc.)
- Tracking, segregating, and thoroughly recording all direct and indirect costs
- Generating detailed invoices
To meet these accounting requirements, many federal contractors consider using QuickBooks Online. But is QuickBooks Online DCAA compliant?
Is QuickBooks Online DCAA Compliant?
QuickBooks Online is not inherently DCAA-compliant. However, with the right setup and training, QuickBooks Online can be set up to help ensure that your accounting and timekeeping practices align with DCAA requirements and regulations.
Let’s explore some QuickBooks Online features that can help your business meet the core demands that define DCAA-compliant accounting and timekeeping practices . . .
Timekeeping Tools
QuickBooks Online boasts a variety of time-tracking features, from manual entry to automatic time estimation based on user activities. It can categorize hours by customer, service, and more, streamlining reporting and ensuring no billable minutes go unlogged. Importantly, it enables the segregation of direct labor costs from indirect labor costs, as DCAA-compliant practices require.
Cost Allocation Capabilities
QuickBooks Online offers job costing tools that support the allocation of expenses across projects and tasks and can provide properly documented visibility related to labor, materials, and overhead costs.
Project Management Integration
With QuickBooks Online’s project management feature, users can segregate and manage contract-specific direct and indirect contract costs.
Audit Trail
A key tenet of DCAA compliance is the ability to produce a clear, auditable trail of all financial transactions. QuickBooks Online’s transaction history, audit log, and bank reconciliation features provide the transparency and documentation the DCAA requires.
Vigorous Security
The DCAA requires robust accounting security practices. Thanks to features like role-based access and multi-factor authentication processes, QuickBooks Online helps ensure that sensitive financial information is only accessible to authorized personnel.
DCAA Compliance with GovCon Connect
Today, QuickBooks Online is the most popular cloud-based software for small to mid-size government contractors. And QuickBooks Online is DCAA compliant with GovCon Connect. GovCon Connect provides all-in-one software packages, training opportunities, and four levels of full or partial accounting services, depending on your needs. Whether your business needs to transition from QuickBooks Desktop to QuickBooks Online, or if you need to get started with QuickBooks Online for the first time, GovCon can help ensure your accounting setup meets DCAA requirements. Working with GovCon means that you’re working with DCAA compliance experts. With our 20+ years of experience, you can rest easy knowing that your financials will be ready for audit anytime. Contact us today.