Adequate Accounting Systems Requirements for Government Contractors

Podcast

September 18, 2019

Defense Federal Acquisition Regulation Supplement (“DFARS”) 252.242-7006(a)(1) defines an acceptable accounting system as: “a system that complies with the system criteria in paragraph (c) of this clause to provide reasonable assurance that—

  • Applicable laws and regulations are complied with;
  • The accounting system and cost data are reliable;
  • Risk of misallocations and mischarges are minimized; and
  • Contract allocations and charges are consistent with billing procedures.”

John Carpenter and Curt Smith discuss some of the most common reasons contractors are not successful in getting their accounting system deemed adequate when going through a Defense Contract Audit Agency (“DCAA”) audit, often referred to as a 1408 Pre-Award Survey of Prospective Contractor – Accounting System Review.

Common deficiencies discussed in this segment include:

  • Accounting properly for the costs of jobs – properly allocating direct and indirect costs
  • Failure to apply the Cost Principles in FAR 31.2 – inability to identify and remove unallowable costs
  • Improper timekeeping
  • Poor or inadequate book keeping

Cherry Bekaert has a great deal of experience assisting contractors with accounting system reviews using the criteria in DFARS 252.242-7006 and SF1408. Please contact Cherry Bekaert with any questions about the criteria and preparation for accounting system reviews.


Related Podcasts

View All Government Contracting Podcasts

 

John T. H. Carpenter

Deal Advisory Services

Managing Director, Cherry Bekaert Advisory LLC

Past Episodes

Podcast

September 10, 2024

12:15

Speakers: Eric Poppe, Jonathan Reid

Learn the do's, don'ts, and pitfalls of outsourced accounting for government contractors. Discover how to make a smooth transition to outsourced accounting.

Podcast

August 28, 2024

15:04

Speakers: Eric Poppe

Learn the crucial steps in selecting an ERP system that aligns with your business needs, including stakeholder discussions and integration requirements.

Podcast

August 13, 2024

11:04

Speakers: Michael G. Cippel, Irwin Kaplan, Jonathan Reid

Explore the benefits of accounting outsourcing for government contractors and learn how to choose the right firm and optimize your partnership.