Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Common Pitfalls Which Might Prevent You from Passing a DCAA Pre-Award Audit

1,574 views

Published on

One of the most daunting tasks for small government contractors in being able have their accounting systems determined to be adequate by Defense Contract Audit Agency (DCAA). Per DCAA, "the pre-award accounting system survey is an audit to determine the acceptability of a contractor's accounting system for accumulating costs under a prospective Government contract". Without a good bill of health from DCAA, contractors are limited in the types of contracts that they can be awarded.

This presentation covers some of the common pitfalls which might prevent you from passing a DCAA Pre- Award Audit and provides guidance on how to become a successful government contractor

  • Be the first to comment

  • Be the first to like this

Common Pitfalls Which Might Prevent You from Passing a DCAA Pre-Award Audit

  1. 1. Common Pitfalls Which Might Prevent You from Passing a DCAA Pre-Award Audit Presented by: Steve Dasher, CPA Jason Mills, CPA Kelly Ryan, CPA December 11, 2012
  2. 2. About LRMDYear end financial statements with consultation meetingTax Planning and PreparationThirty year foundation and growingHelp contractors develop, grow and build transferablevalue Rate development Develop pricing models Compliance with FAR and CAS regulations Due diligence related to M&A Incurred cost submissions
  3. 3. LRMD Growth AnalysisTransferable value Vision Values Competencies Capacity Controls & Procedures
  4. 4. DCAA Pre-award Audit of Accounting System Proper tracking and segregation of costs Billings and timekeeping systems Internal controls Accordance with GAAP
  5. 5. ELEMENTS REQUIRED BY DCAA RECORDS IN COMPLIANCE WITH VERIFY LABOR ACCORDANCE WITH CONTRACT TERMS DISTRIBUTION GAAPABILITY TO MONITOR PREVENTING ADEQUATE TIME RATES CONTRACT OVERRUNS KEEPING SYSTEM JOB COST REPORTS FOLLOWING WRITTEN RECONCILE TO PROPER ALLOCATION POLICIES AND OF EXPENSESACCOUNTING RECORDS PROCEDURES
  6. 6. SuggestionsObtain a Planning Letter!Communicate during Fieldwork!Have a CPA present for your Audit!
  7. 7. Building A Cost Structure Direct costs by contract and CLIN if• Directs applicable • Unallowable costs• Fringe and• Overhead • CLIN: Contract Line indirect costs• G&A Item Number• Unallowables Define the cost pools Segregate costs
  8. 8. Indirect Rate DevelopmentWhat fits your company the best? 2 or 3 Tiers (multiple Fringe or OH Rates)Indirect Rate structure needs to be consistentChanges must be reported to DCAAIt is designed for compliance and competitiveness Rate ceilings Contractual requirements (M&H vs. G&A)
  9. 9. Wrap Rate AnalysisMake sure you understand your Company’s RateKnow your industry and competitorsCompany size & business status can impact rateKnow your competitive range 1.5 1.8 2.1(Average for Small to Mid-Size Service Contractors)
  10. 10. How to Apply the Wrap RateSample WRAP rate calculation:3 Tier Structure – Fringe 41%, OH 5%, G&A 8%WRAP RATE 1.60 FEE @ 5% 1.68 Annual Salary $100,000 Hourly Pay $48.08 Fully Burdened $76.88 BILLING RATE $80.77Wrap rate = (1.41*1.05*1.08) = $1.60
  11. 11. Financial Metrics Use AnalyticsUse indirect rates to • Current year vs Priormonitor company’s Yearfinancial metrics • Current Year vs Budget • Current Year vs Industry
  12. 12. Financial Metrics Ratios • LiquidityGrowth Pattern • Efficiency • Profitability • Leverage Capacity Cash Flow
  13. 13. Questions? REMEMBER …..we are ALWAYS here to help!

×