Post by Veronica Eyenga, contributing Women On Business writer
Before work can begin on a contract, contracting officers can request a DCAA Pre-award Survey of Prospective Contractor Accounting System. The goal is simple: the contracting officer needs to understand your account system and determine whether or not that system is adequate to fulfill the contract.
Companies that have been awarded their first federal government contract may be surprised: even a company that has been judged squeaky clean by the IRS on Monday can fail a DCAA audit on Tuesday. Even worse: where previously DCAA offered suggestions for improvement, now the DCAA works on a simple pass-fail system.
Any accounting system – Peachtree, Quickbooks, SAP – can be set up to pass a DCAA Preaward Survey Audit. The key is preparing for the audit, and knowing the criteria DCAA uses to complete what is termed the survey form, which is SF 1408:
- Does the company follow GAAP (Generally Accepted Accounting Principles?
- Are direct and indirect costs properly segregated, allocated and detailed?
- Are accounts reconcilable and posted to the general ledger?
- Are labor costs correctly charged, verified and reconcilable?
- Are costs posted at least monthly?
- Are costs correctly defined as allowable and unallowable?
- Are costs adequately detailed?
- Are costs internally monitored and reviewed?
- Does the contractor have internal controls to ensure costs and billing are in compliance with the contract?
- Does the company provide reporting in compliance with the contract?
Full audit requirements are listed in SF 1408.Remember, when contracting with the Government preparation is key. The pre-award survey is your opportunity to show you are able to fulfill the term of your contract, so be sure all aspects of your business meet the necessary compliance requirements.