accounting systems for government contractors
TRANSCRIPT
Accounting Systems for Government Contractors
John Pace, CPA, CVASteven Lyons, CPA
Accounting Systems for Government Contractors
John Pace, CPA, CVA, CGMA, Senior Manager− More than 15 years of accounting and finance experience− Prepares and analyzes indirect rate calculations, prepares
incurred cost submission proposals, provides forward pricing and proposal support and analysis
− Provides guidance related to the proper treatment of government contractor specific accounting issues
− Develops government contractor compliant accounting systems
− FAR, CAS and other regulations related to government contractors
John Pace
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Accounting Systems for Government Contractors
Steven Lyons, CPA, Supervisor− Over 10 years of experience− Audit assurance and accounting responsibilities− Preparation of reviews and compilations for various small
businesses government contractors and nonprofit clients− Budget development and financial planning analysis− Served as Controller and CFO on various outsourced
accounting projects
Steven Lyons, CPA
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Accounting Systems for Government Contractors
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Combined experience of 30+ years specializing in accounting and consulting for organizations doing business with the US Government
Broad range of experience with DCAA, government and private contractors
Active in Industry Associations:− Maryland Association of CPAs Government Contracts Committee− Montgomery County Chamber of Commerce Government Contractor
Network− Reston Chamber of Commerce Government Contractor Committee
Background
Accounting Systems for Government Contractors
Capabilities
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Accounting Systems for Government Contractors
I. Examples of Common Accounting Systems
II. Key Accounting System Components
III. Chart of Accounts
IV. Importance of Written Policies and Procedures
V. Internal Control Environment
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Overview
Accounting Systems for Government Contractors
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I. Accounting Systems Examples of Common Accounting Systems
− QuickBooks
− Deltek First (Cloud-based)
− Deltek GSC Premier
− Deltek CostPoint
− PROCAS
− Many others …
Accounting Systems for Government Contractors
Chart of accounts that separates direct, indirect and unallowable costs
Has a timekeeping system
Has a labor distribution system that charges direct and indirect labor to the appropriate cost objectives
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II. Key Components of an Acceptable Accounting System
Accounting Systems for Government Contractors
Accumulates costs by contract and/or task order
Provides cost data so that indirect costs can be allocated to cost objectives based upon relative benefits received
Provides profit and loss reports by contract that can be reconciled with the general ledger
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II. Key Components of an AcceptableAccounting System (cont.)
Accounting Systems for Government Contractors
Identifies and segregates unallowable costs (FAR Part 31)
Cost accounting records are reconciled to and controlled by the general ledger on a current basis
Maintaining and following accounting policies and procedures
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II. Key Components of an AcceptableAccounting System (cont.)
Accounting Systems for Government Contractors
Backbone of your accounting system
Must have the ability to segregate costs types:
−Direct: 5000− Indirect: 6000-8000−Unallowable: 9000 (Direct and
indirect)
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III. Chart of Accounts
Accounting Systems for Government Contractors
Uniform usage for all contract types (set up for most stringent reporting)
Using this format provides for much easier calculation of indirect rates and NICRA’s.
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III. Chart of Accounts (cont)
Accounting Systems for Government Contractors
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III. Government Contractor Chart of Accounts
Accounting Systems for Government Contractors
III. Sample Job Profit & Loss Statement
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Accounting Systems for Government Contractors
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IV. Importance of Written Policies and Procedures
1. Assignment of authority and areas of responsibilityAdequate segregation of duties if possible
2. General accounting system
3. Identification and exclusion of unallowable costs
Accounting Systems for Government Contractors
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IV. Importance of Written Policies and Procedures (cont.)
4. Direct/indirect charge practices
5. Allocation of indirect costs to final cost objectives
6. Approval and documentation of journal entries
Accounting Systems for Government Contractors
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IV. Importance of Written Policies and Procedures (cont.)
7. Establishment of account numbers
8. Approvals for establishing contract charge numbers
Accounting Systems for Government Contractors
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1. Correct noted deficiencies promptly CPA’s management letter DCAA internal control audits
2. Maintain written policies and procedures
3. Reconcile cost accounting records back to general ledgers
4. Identify costs by contract
V. Internal Control Environment
Accounting Systems for Government Contractors
Initiate/maintain training program to reasonably assure that all employees (especially new employees) are aware of proper time charging
Write procedures and policies that:− Identify the work to be performed− Track labor charges to a final cost objective− Explain allowable or unallowable/direct or indirect− Corrections are documented− Authorizations and approvals needed
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V. Labor System Controls
Accounting Systems for Government Contractors
Final Thoughts
Be proactive
Review your system in detail BEFORE your system audit
Make sure policies and procedures are written and followed
Follow your timekeeping procedures
Keep your books up to date
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Accounting Systems for Government Contractors
Important References
FAR Part 31: Contract Principles and Procedures−www.acquisition.gov\far
“Information for Contractors”−www.dcaa.mil
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