Any business that has a contract with the Department of Defense (DoD) is subject to strict government regulations and requirements, and the Defense Contract Audit Agency (DCAA) is the agency that ensures that DoD contractors comply with these regulations. To accomplish this, the DCAA performs a wide range of audits. These range from forward pricing and special audits to incurred cost, pre-contract, and performance audits. Contractors who do not pass these audits can be subject to a range of penalties, from loss of cash flow and loss of present or future business opportunities to delayed contract start dates. So, as a government contractor, it’s critical to have DCAA-compliant accounting software as part of a comprehensive plan to maintain DCAA compliance. Need some guidance? Scroll down to learn what to look for in DCAA-compliant accounting software.
What to Look for in DCAA-Compliant Accounting Software
The goal of DCAA compliance is to prevent waste, fraud, and abuse in government contracting. Using reliable accounting programs and practices tailored to DCAA compliance is, therefore, one of the most important ways to ensure that you maintain DCAA compliance.
Not all accounting software is created equal. Keep the following features in mind when comparing DCAA-compliant accounting software.
Timekeeping and Labor Distribution Features
DCAA requires companies to have a detailed timekeeping system that records employees’ hours worked and allocates them to specific projects or contracts. An accounting software with built-in timekeeping and labor distribution features simplifies this process, allowing employees to easily track their time and expenses and management to monitor project costs and labor allocation.
Cost Allocation and Job Costing Capabilities
Cost allocation is an essential requirement of DCAA-compliant accounting software, allowing for the allocation of accurate direct and indirect costs to projects or contracts. Job costing, on the other hand, enables tracking expenses and revenue at a project or job level. A software with these features enables companies to monitor expenses closely and bill clients accurately, ensuring compliance with DCAA regulations.
Auditing and Reporting Capabilities
DCAA requires companies to have a clear audit trail of their accounting records, including financial statements and project costs. The software should have auditing and reporting capabilities that allow for easy tracking and monitoring of changes made to financial records. The system you choose should be able to generate various financial reports as required per DCAA regulations.
Security and Access Controls
A DCAA-compliant accounting software should have a robust security system and access controls to protect sensitive financial data from unauthorized access. The software should have role-based access controls, which enable employees to access only the information relevant to their job functions. This feature enhances data security and ensures compliance with DCAA regulations.
Ongoing Support and Training
Choosing the right DCAA-compliant accounting software can be overwhelming, and having adequate support and training is crucial. The software provider should have the expertise and ability to offer customer support to resolve any technical issues and provide training resources to help employees use the system effectively. DCAA regulations can be complex, so proper training is essential, especially when onboarding new employees.
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Selecting the right accounting software is crucial when your business must comply with DCAA regulations. A DCAA-compliant accounting software should have timekeeping and labor distribution features, cost allocation and job costing capabilities, auditing and reporting capabilities, security and access controls, and adequate support and training. By choosing a reliable DCAA-compliant accounting software, companies can focus on winning and keeping government contracts while remaining compliant.
If you need a back-end office solution to support your government contracts, Gov-Con can help. As a QuickBooks Solutions Provider, we offer an unbeatable accounting software solution package specifically designed for government contract bookkeeping to help you remain DCAA compliant. Plus, we offer four different levels of full or partial accounting services and support to meet your accounting and DCAA compliance needs.
Along with our DCAA-compliant accounting software, we also will prepare all necessary government reporting, including Indirect Rate Computations and Cost Management Reports for Program Managers. Working with GovCon, you can trust that your financials are in the hands of DCAA compliance experts. With our 20+ years of experience, rest easy knowing that your financials will be ready for audit at any time. Contact us today for a free consultation to determine which package is the best fit for you.