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Example DCAA audit

When a DCAA auditor says “Show me…,” ERPGov Cloud users remain calm, cool, and collected because they know the software organizes all the information required and makes it readily available.

The DCAA Audit

All audits involve an evaluation of your records. The DCAA will be concerned with contributions that impact the proposed or incurred costs of a contract, with particular emphasis on:

  1. Business systems
  2. Management policies and procedures
  3. Accuracy and reasonableness of forward pricing and incurred cost representations
  4. Adequacy and reliability of records and accounting systems
  5. Compliance with contractual provisions having accounting or financial significance
 

We designed ERPGov Cloud with the auditor’s requirements in mind. The result? A system that provides credible information and the necessary business transparency to lead you to DCAA compliance. Below are some questions you might expect to hear during an audit. Don’t worry if you are not an expert in accounting or government contracts - ERPGov Cloud has you covered.

 

 

 

 


Prior to an audit, the DCAA may assess whether your accounting system can manage costs under a government contract and generate the required information. While the DCAA does not endorse any specific accounting software; auditors have regularly assessed and approved contractors using the ERPGov Cloud accounting system.


The DCAA requires that contractors have “proper segregation of direct costs from indirect costs”. Auditors may ask for details of indirect expenses such as the breakdown between client-site overhead, contractor-site overhead, general & administrative or material handling, all of which can be easily displayed in ERPGov Cloud.
You may also be required to justify your indirect rates, a metric for allocating your indirect costs. These rates determine how much you ultimately get paid. Without proper justification, indirect costs may be disallowed by the auditor. With ERPGov Cloud’s detailed Indirect Rate reports, you can be sure that your expenses will be clearly documented so you can get paid what you are entitled to.


Job cost accounting is all about segregation – direct/indirect, allowed/unallowed direct costs by program and possibly by task. ERPGov Cloud automatically creates these various books of account and the associated general ledger when you initiate a new contract into the system. Your ongoing entries to the job cost ledger and other books of account are immediately and automatically registered in the general ledger (G/L) - there is no separate reconciliation event. This is the convenience of having a single database for both your contract management and accounting system.

The cost ledger and general ledger reports:


These reports provide the evidence needed by the DCAA auditor..


The DCAA requires a timekeeping system that identifies employees' labor by intermediate or final cost objectives (e.g., an individual task or contract). The auditor will determine whether your timekeeping system has the ability to track employees' time spent on each work activity. To demonstrate compliance, the auditor may want to see that specific timesheet entries can be directly correlated to a specific cost objective (cost ledger account) and are properly reflected in the general ledger.

The timesheet and general ledger reports:


The timesheet and general ledger reports show a specific timesheet entry, its account (Holiday Costs), and its entry in the general ledger. Using ERPGov Cloud, you can always demonstrate the chain of evidence from timesheet entry to general ledger, invoicing and payment. Further, the software helps enforce your time entry policies, ensuring the smoothest possible results for DCAA’s audit of your time management system. 


Incurred cost proposals are intended to reconcile actual direct and indirect costs incurred on government contracts to the amounts billed. The reports include the direct and various indirect fringe, overhead and G&A rates incurred during your fiscal year. They also include the indirect cost pool and base costs used to calculate these rates, a summary of costs incurred by contract by contract type, supporting schedules, supplemental information and the Certificate of Final Indirect Costs..

Below is a sample incurred cost submission:
ERPGov Cloud automatically generates all 16 required schedules of your Incurred Cost Submission Electronic (ICE) using the existing data from your system – no further input needed. For more information, see the Incurred Cost Submission Electronic (ICE) page. 



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