A Few Important Aspects to Know About DCAA Trends & Compliance

After procuring a government contract, there are several aspects of the Defense Contract Audit Agency (DCAA) you need to be aware of. Most importantly, you need to focus your efforts on ensuring you stay compliant with DCAA rules. The following is a quick overview of DCAA trends and how you can stay in line with them to increase compliance and boost successful project completion.

How Does a DCAA Audit Take Place?

First and foremost, you need to know that a DCAA auditor can show up at any time to perform a timekeeping audit. Since the audits can be performed without notice, you need to remain diligent in your timekeeping practices and make sure every process has been completed in compliance with DCAA rules. Further, you need to implement a DCAA compliant timekeeping system, especially if you are carrying out a cost-reimbursement type contract, such as an SBIR Phase II contract. Other audits will begin with an entrance conference.

Specific to timekeeping audits, you will want to follow set procedures that outline:

• Daily time entries for every employee
• Submission and approval procedures
• Documentation of unpaid time as well as paid time
• Correct number hours devoted to each project
• Documented audit trails
• Internal Standard Operating Procedures (SOPs) demonstrating that your employees are aware of and abide by DCAA timekeeping rules

Use DCAA Audits to Pinpoint Effective Contractor Business Systems

Another trend being seen in DCAA audits is their use to pinpoint effective contractor business systems. It is important, however, that you also take into consideration the opinion of a licensed certified public accountant along with others working for certified public accounting firms to determine which contractor business systems are not reaching their full potential. In doing so, you can alter your resources to team up with contractor business systems that can expedite project completion at a lower cost and with more effectiveness.

Incurred Cost Audit Trend

Lastly, because there is a significant backlog of Incurred Cost audits, you will find that the DCAA is putting into effect a tiered risk approach when carrying out audits relating to Incurred Cost Proposals. This means if your company has annual auditable costs of less than $1 million (on each of your contracts), then you will not be selected for an audit. There are, however, exceptions to this trend. One example is if you had difficulty passing an accounting system survey initiated by the DCAA.

The Takeaway

By being aware of DCAA trends, you can minimize your company’s risk and exposure while maintaining compliance and increasing the likelihood of the next contract.