Accounting System Requirements

Transcription

1 Basic Financial Requirements for Government Contracting The views expressed in this presentation are DCAA's views and not necessarily the views of other DoD organizations Accounting System Requirements Page 2 1

2 Prior to Contract Award Contracting Office or DCMA conducts Preaward Survey to consider responsibility of prospective contractor Design of the Accounting System is part of the Preaward Survey (SF 1408 Criteria) DCAA requested to evaluate design of Accounting System Page 3 Preaward Accounting System Audit Evaluates design of Accounting System to determine if it is acceptable for prospective contract DCAA or Buying Command will request contractor complete Preaward Accounting System Checklist Contractor should be prepared to demonstrate how accounting system satisfies SF 1408 criteria at initial meeting Page 4 2

3 Preaward Accounting System Checklist Based on SF 1408 criteria Generally used by contractors new to government contracting that the Government plans to award a cost type contract (cost reimbursement contracts, or for contractors that will receive progress payments based on cost) Assesses whether the requirements for an adequate accounting system have been met Page 5 Preaward Accounting System Compliance Requirements Generally Accepted Accounting Practices (GAAP) Proper Segregation of Costs Direct Costs by Contract Allocation of Indirect Costs Accumulation of Costs Under General Ledger Control Timekeeping System Labor Distribution Interim Determination of Costs Exclusion of Unallowables Costs by Contract Line Item Preproduction Costs Limitation of Costs Billings Adequate, Reliable Data Page 6 3

4 After the Audit is Completed Issue report to Contracting Officer with an opinion that the accounting system is or is not suitably designed, in all material respects, for award of a prospective contract. Includes a completed SF 1408 An opinion that the system is not suitably designed means that the contractor cannot be awarded a cost type contract of the award will be delayed until corrective action is taken and a follow-up audit can be performed Page 7 Common Deficiencies Contractors not making interim (at least monthly) determination of costs charged through routine posting to books of account Failure to properly segregate direct and indirect costs Improper timekeeping Failure to exclude unallowable costs Page 8 4

5 Incurred Cost Submission Page 9 Due Dates of Submissions Incurred cost claims are due six months after completion of the contractor s fiscal year end Per the Allowable Cost and Payment Clause (FAR (d)(2)) Allowable cost and payment clause applies to cost-reimbursement type contracts (FAR ) Page 10 5

6 Incurred Cost Electronically Model (ICE) ICE is an excel spreadsheet It includes all schedules required for an adequate submission per FAR ICE is not a requirement but a tool to assist in preparation of an adequate incurred cost submission The submission of an adequate proposal may expedite contract closings Page 11 Delinquent Submissions If submissions are six months delinquent, DCAA will recommend a decrement factor and for the CO to make a unilateral determination. (FAR (c)(2)) Page 12 6

7 Provisional Billing Rates (PBRs) Page 13 Purpose of PBRs Established to approximate the contractor s final yearend rates, as adjusted for any unallowable costs Used for interim purposes until settlement is reached on the final indirect rates for the contractor s fiscal year FAR Billing Rates - provides procedures and guidance for establishing PBRs The contracting officer or auditor shall establish PBRs on the basis of information resulting from recent review, previous rate audits or experience, or similar reliable data or experience of other contracting activities. Page 14 7

8 When Should We Submit? Prior to the beginning of the fiscal year (once budgets are complete) or when the established billing rates are no longer representative of final year end rates due to unforeseen circumstances. PBRs should be submitted at least annually. Vouchers and progress payments can be returned if submitted without properly established billing rates. Page 15 Monitoring PBRs should be monitored: Throughout the year Immediately after year-end Upon submission of the final indirect rate proposal PBRs may be adjusted by either party at any time to prevent substantial under or over payment FAR (c). If PBRs are adjusted, the contractor should submit adjustment vouchers accordingly. Page 16 8

9 Common Deficiencies Failure to remove unallowable costs from the billing rate projections. Failure to adjust provisional billing rates based on actual experience: Before year end, if there are known or reasonably anticipated significant variances. After year end once actual rates, net of unallowable expenses, are calculated. Page 17 Public Vouchers Page 18 9

10 Public Vouchers Cost type contracts provide for interim payments for costs on a Standard Form (SF) 1034 public voucher. DCAA will perform voucher reviews based on risk. Fixed price contracts are subject to FAR Part 32 financing methods. Page 19 Contractor Responsibilities Contact the cognizant DCAA office after contract award Ensure DCAA has the necessary information to process contract billings, such as current provisional billing rates, copy of the contract, any special contract provisions, etc. Maintain adequate billing system internal controls Ensure adequate support is maintained for amounts billed Submit timely incurred cost proposals and final vouchers in accordance with FAR Page 20 10

11 Preparation of Vouchers The contractor is responsible for preparing and submitting claims for reimbursement according to the terms of the contract. Vouchers should not be submitted more than once every two weeks. All vouchers should be submitted through WAWF unless contract terms require hard copy vouchers to be submitted. Public voucher claims for reimbursement must be prepared on the prescribed Government forms: First voucher on a contract is an interim voucher, as are all subsequent vouchers prior to the final voucher. Final voucher will not be submitted until all contract work is completed Page 21 Common Deficiencies Math errors Billed costs not allowed per the contract terms (e.g. overtime) Incorrect provisional billing rates (indirect costs) Billing over contract ceiling amounts Page 22 11

12 DCAA Internet Resources Audit Process Overview Information for Contractors Manual DCAA Pre-award Accounting System Checklist DoD Contract Proposal Adequacy Checklist DCAA Incurred Cost Adequacy Checklist Incurred Cost Electronically (ICE) Model Links to Acquisition Regulations Small Business Seminar Slides Page 23 Contact Information DoD Office of Small Business Programs DCAA Page 24 12