How to get ready for DCAA Compliance
Federal government contracts can be a profitable and stable source of income for your business. Due to competitive bidding rules, most domestic businesses have a chance at winning a contract as long as they make the best bid and prove they can follow through on it. The following are tips to get your company ready for DCAA compliance.
Do you know what DCAA Compliance is?
Defense Contract Audit Agency reviews the accounting practices of government contractors, including prime contractors and subcontractors. When the DCAA performs an audit on a government contractor, they assess the contractor’s compliance with the Federal Acquisition Regulations (FAR).
The FAR is the principal rules set in the Federal Acquisition Regulation System. This system consists of sets of regulations issued by agencies of the Federal government to administer the acquisition process through which the government purchases goods and services. Why is DCAA compliance so important to government contractors? When a contractor is not compliant with the FAR, they may be excluded from future government contracts or teaming up with other contractors. It is also possible for DCAA to propose to the Contracting Officer to cease payments on work that is in progress or reject costs on completed contracts. Therefore, it is critical for all contractors, large and small to comply with the FAR.
Are your timesheets accurate?
When businesses win government contracts, it’s always essential for their timekeeping to be compliant with the DCAA. DCAA-compliant contracts require daily time tracking, accurate records with an audit trail for all changes, extensive reporting, specific supervisor approvals and more, in case of a DCAA audit. Accurate timesheets help protect your business with the timekeeping, management and reporting
capabilities needed to comply with the regulations.
Do you record time off?
Your business timesheets need to include a complete record of any unworked compensation your employees receive, such as paid time off. You should track unworked compensation such as holidays, vacation, bereavement, and sick time. It’s easy to track overtime and paid time off, but then DCAA compliance can still make for some tricky accounting. It’s, therefore, a good idea to get professional advice to make sure your payroll is DCAA compliant. Businesses that are running payroll should hire someone to help them in timesheet keeping making sure the company complies with all the local, state, and federal regulations.
Does your business have a clear approval process?
DCAA places most of the time tracking responsibility on whoever works the hours that end up on the daily time card. However, managers also have an essential role to play. It is their responsibility to approve timesheets at the end of every work period. To have a transparent approval process, everyone in your company should be aware of your company’s time tracking procedures. It should be easy for workers to keep accurate, real-time record of their hours. The managers should quickly view and approve time without digging through a pile of paperwork.
Do you have an audit trail?
An audit trail is a system that traces the complete transactions relating to any item in accounting records. Your business should have a perfect record of the hours your employees have worked on each project. You should know whether their time has been approved or not, and who has approved it. Track any changes that may have been made to your employees’s timesheets, why they were made, and by who? This tends to be the most complicated area of DCAA compliance when it comes to time tracking.
Is your business ready for a DCAA Audit?
Whether you have just won a government contractor you were recently audited, or you won the contract a long time ago it does not matter. You should always be prepared for a DCAA audit. This is when the inspectors come to your business location or office with a long checklist and lots of questions. Always keep a clear record that is up to date.
To comply with the regulations regarding proper financial management, government contractors must satisfy the DCAA, and it’s straightforward. If you follow the simple rules mentioned above, you will be DCAA compliant.