EisnerAmper's Federal Government Contracting Group serves contractors who are awarded federal contracts/grants.

• Offers a variety of services – most common:
  • Accounting System Compliance
  • DCAA Audit Assistance
   
• Provides specialized expertise to help preserve your funding and livelihood

Traditional vs. Government Accounting 

Traditional Accounting

• Serves commercial businesses
• Serves a part of your business as a government contractor

Government Accounting

• Government contractors subject to the Federal Acquisition Regulation (FAR)
  • FAR dictates all the regulations/requirements of the accounting system
  • IRS has the tax code; government contracting has the FAR
   
• Specific expertise needed to ensure compliance with these special rules/regulations

Dual Market Business

• How to function when serving both commercial and government clients
• One accounting system to serve both
• Government trumps commercial and will dictate the accounting system

Accounting System Compliance 

• Often the first thing contractors need help with upon securing an award
• Basis for maintaining your contract and avoiding possible suspension, cancellation or pay back of your award dollars

Chart of Accounts 

• Core of the company’s accounting system
• Creates a formatted structure for the company
• First step in segregating costs into proper cost pools

Types of Cost Pools 

• Direct Costs
  • Any cost that can be identified with a final cost objective (i.e. a contract/grant/job/task)
  • Examples: Labor, Subcontractors/Consultants, Materials
   
• Indirect Costs
  • Any cost that cannot be identified with one final cost objective but benefits multiple cost objectives
  • Allows for recovery of operation costs not associated with a specific job
  • Further segregated into these general categories:
    • Fringe (health insurance)
    • Overhead (rent)
    • General & Administrative (G & A) (professional fees)
     
   
• Unallowable Costs
  • Any cost that cannot be included in prices, cost reimbursements or settlements under a government contract to which it is allocable
  • Any cost specifically stated to be unallowable
  • Contractors must properly segregate unallowable from allowable costs in the accounting system
  • Contractors may be subject to penalties
   

Timekeeping 

Timekeeping system that identifies labor by cost objective and allocates this time properly

• Many contractors’ systems falter here
• All employees’ time, whether direct or indirect, must be accounted for daily, by the work activity performed
• Proper procedures for time sheets or entering time
• Employee responsibility for preparing/correcting time sheet
• Adequate management overview
• Written policy for employees and management to follow
• Traceability of changes
• System that detects errors and required changes

Properly filling out the time sheets:

• Filled out daily and submitted weekly
• Signed and dated by employee and reviewing supervisor
• Done in ink or government approved timekeeping system
• Every employee must comply
• Work week is 40 hours
• Work 2,080 hours for the year

Summary 

• FAR dictates everything
• Government Compliant Accounting System:
  • Critical
  • Key to maximizing cost recovery
  • Help you bid competitively
   
• Your investment in the proper expertise and accounting system will benefit your company for years to come

Contact: Anthony J. Faugno