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DCAA Contract Audit Manual: An Essential Guide for Government Contractors.All-in-one time management solution for your team
Its work benefits our men and women in uniform and the American taxpayer. Contract audits are independent, professional reviews of financial representations made by defense contractors, and DCAA helps determine whether contract costs are allowable, allocable, and reasonable.
An official website of the United States government Here's how you know. Official websites use. Contributions and Donations. Cooperative Research Consortium Costs. Correction of Internal Control Deficiencies. Cost of Money. Depreciation Costs. Domestic and Foreign Taxes — Differential Allowances. Dues, Membership Fees, and Subscription Costs. Economic Planning Costs.
Employee Welfare and Moral Expense. Entertainment Costs. Environmental Costs. Fines, Penalties, and Mischarging Costs. General Service Administration Schedule Contracts. Help-Wanted Advertising Costs. Idle Facilities and Idle Capacity.
Insurance Costs. Interest and Other Financial Costs. Item Unique Identification and Valuation. Joint Ventures and Teaming Arrangements. Labor Relations Cost. Be sure to select a time tracking tool that provides detailed reports showing who has submitted time, whose time has been approved, and who recorded these steps.
A system that keeps track of the time spent on all of your existing projects separately and thoroughly ensures transparency, and the ability to add new projects as they begin keeps it simple. Each employee should also have access to this information in case they need to refer to it.
This means that regardless of whether your employee is tracking hourly pay, or is paid by salary — tracking the actual time worked is essential. Using a program that records and calculates overtime correctly is so crucial if you want to pass your audit. We may sound like a broken record here, but it bears repeating.
People in charge of payroll should not approve time-keeping! The responsibility for approving accurately recorded timesheets is heavy. Selecting the right person for the job can mean keeping you, your employees, and your company in business and away from fines, or even jail time for labor mischarging. Hopefully, this will result in zero changes to timesheets when they reach management approval, making after-record changes unnecessary.
To avoid spending a lot of extra time and paperwork, a time tracking system should provide on-demand access to stored information that is secure, online, and available in real-time. Your employees need to understand that ultimately, the responsibility to maintain DCAA compliance for their time tracking lies with them individually. This is why business tools with specific features that make it easy to stay within DCAA guidelines — like Everhour — are so valuable. Even more importantly, your time tracking software should make day-to-day tracking, management, and reporting quick and painless.
All the guidelines and requirements are outlined in the DCAA audit manual. The FAR standards apply a standard set of guidelines governing how federal agencies procure products and services. This step creates a uniform system that the federal government uses to:. Government contractors need to implement systems that help facilitate these fundamental principles.
Having an accounting system that differentiates between direct and indirect costs is required to work with federal agencies. This step involves employing either a two-tier or three-tier rate structure to effectively allocate costs across multiple projects. This is the most common audit performed by the DCAA and aims to ensure that claimed actual costs match the billed costs.
But the identification of direct costs to contracts, the rate structure, as well as the indirect costs and unallowable costs, can be challenging to navigate, particularly for those without much prior experience. It is important to note that contractors must provide sufficient documentation for all costs.
Allowable costs must meet the five criteria outlined in the FAR:. Costs that are considered allowable must follow generally accepted sound practices that adhere to all federal and state regulations, enable the contractors to effectively represent their stakeholders and be consistent with their established practices.
Simply put, DCAA contract audit manual unallowable costs include any cost that fails to meet each of the five criteria listed above or those listed as expressly unallowable in FAR
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