Government contractors must navigate a changing regulatory landscape, shifting client demands, and evolving technology trends in today's complex environment. To succeed, organizations must leverage the expertise of experienced financial teams and accountants to maintain agility and flexibility to adapt to rapidly changing conditions.
How GovCon Accountants Support Government Contractors
The federal government spends billions of dollars every year on goods and services. To ensure that taxpayer money is spent wisely, contractors must comply with specific rules and regulations. These include the Federal Acquisition Regulation (FAR), the Code of Federal Regulations (CFR), and the Federal Procurement Regulations (FPR). In addition, many states require contractors to abide by state laws and regulations. And while most contracts contain clauses requiring compliance with these rules and regulations, it's essential to understand what those requirements entail.
Although there are a few points throughout a contract term where Certified Public Accountants (CPA) must be involved, there are many accounting standards and requirements contractors must meet where a GovCon accountant can help. For example, ensuring that contractors meet the FAR requirements or that a subcontractor maintains accurate books and records. This requirement includes ensuring subcontractors follow proper bookkeeping procedures such as maintaining adequate backup systems, having sufficient personnel, and keeping appropriate documentation.
CPAs can assist contractors in meeting these requirements by reviewing financial statements and supporting documents, evaluating internal controls, and performing audits. They can also guide how to manage risk, identify potential fraud, and perform due diligence.
To help clients achieve success, government contractor accountants can provide customized solutions that address the challenges they face in three key areas:
- Regulatory compliance and risk management
- Financial and digital transformation
- Global expansion
GovCon accountants provide comprehensive support to ensure their government contractors and agencies can successfully manage their businesses and thrive in the future.
GovCon Accounting Responsibilities
An accountant contractor directly manages a business’ finances. The contractor works exclusively on the company and organizes all its financial reports. The accountant contractor controls, inspects, and encodes all the company's financial transactions, ensuring that everything is well-accounted for and adequately documented. The contractor must be licensed, have expert skills in accountancy, be well-organized, have a high level of communication skills, and work under pressure.
GovCon accounting services should help businesses comply with federal regulations such as FAR, DFARS, and OMB Circular A-110, including preparing cost management reports and indirect rate computations. Additionally, GovCon bookkeepers should have experience working with the Defense Contract Audit Agency (DCAA) to ensure compliance with the DCAA audit process.
Any contractor needs to meet their financial obligations to the government. These include, but are not limited to, the preparation of annual financial statements, quarterly consolidated financial statements, internal control reviews, budget development, and tax planning.
General Accounting Responsibilities
You should perform various accounting functions as an accountant, from preparing sub-ledgers to reconciling general ledgers to doing taxes and audits. Here are examples of responsibilities from contractor accountants representing typical tasks they are likely to perform in their roles.
- Manage and oversee accounting processes for compliance with Sarbanes-Oxley (SOX).
- Coordinate and facilitate external audits.
- Assist in preparing tax returns and financial statements and recording transactions in ERP, finance, and accountancy systems, for example, Deltek Costpoint.
- Help prepare for quarterly audits by the SEC (Securities Exchange Commission), assist with reviewing and preparing monthly Sarbanes-Oxley (SOX) reports
- Assist with all required taxes, reports, and audits.
- Perform checks, wires, direct deposits, ACH payments, applications for credit cards, and reconciliations between accounts.
- Enter reconciliation information into an accountancy tool by using journal entries.
- Evaluate and implement accounting processes, procedures, and systems to increase operational efficiency and adhere to GAAP.
GovCon Accountants Support The Complete Transaction Lifecycle
Government contracting accountants can support clients throughout the entire contract lifecycle, from market access and pursuit of federal funds to award and post-award compliance. There are many GovCon accountants who offer a comprehensive range of consulting services designed to meet the needs of diverse range of government contractors.
A GovCon accountant can assist with financial statement audits, risk assessments, information systems assurance, employee benefits plan audits and more. They can also help companies prepare for and complete transactions, such as mergers and acquisitions, divestitures, spinoffs, and dispositions.
Accounting consultants work closely with clients to ensure that every aspect of the process is executed efficiently and effectively. These processes include assisting with developing policies and procedures, conducting due diligence reviews, and providing guidance on best practices.
In addition to supporting clients during the pre-contract phase, a specialized GovCon accountant can continue to advise throughout the entire contract lifecycle. From acquisition planning and execution to post-award audit readiness.
GovCon CPA Benefits
Keeping organized financial records helps government contracting businesses run efficiently. GovCon CPAs can maintain your accounting records so that your financial information is available when you need it.
GovCon CPAs provide the following accounting services:
GovCon CPAs are experts in the government contracting world. They know how to navigate the complex rules and regulations surrounding federal contracts. They understand the intricacies of the contract itself, including clauses, terms, conditions, and requirements. They can help with bid preparation, proposal writing, pre-qualification, negotiation, award, performance monitoring, and post-award management.
They can help companies prepare for audits, manage risk, and ensure compliance. They can even help you file claims against the government.
The Defense Contract Audit Agency (DCAA) is part of the U.S. Department of Defense's Office of Inspector General (DoD OIG). The mission of DCAA is to provide objective and independent auditing and evaluation of defense contracts. DCAA provides audit assistance to DoD agencies and other government contractors through its contracting offices worldwide.
A DCAA bookkeeper performs essential bookkeeping duties, including maintaining journals, posting receipts and disbursements, processing payroll, and filing various documents to support DCAA compliance and auditing.
Furthermore, DCAA bookkeeping aims to ensure that the financial statements are accurate and complete. They must ensure that there are no material misstatements in the financial statements and there are no errors in the entries into the general ledger. Finally, bookkeepers can ensure that the financial statement information is presented in accordance with GAAP.
The DCAA requires companies to perform specific tests on their books and records to achieve these goals. These tests include testing transactions against the cash receipts journal, testing accounts payable against the vendor master file, and testing inventory against the purchase requisition files.
Cost and Pricing Proposal Preparation
The Internal Revenue Service (IRS) requires certain federal contractors to submit cost and pricing proposals to determine whether the contractor is eligible for contract awards. These proposals are submitted in accordance with the Federal Acquisition Regulation (FAR). A cost proposal includes information about how much it costs to perform the work required under the solicitation. A price proposal provides a reasonable estimate of what the contractor believes the government will pay for the goods or services.
A cost proposal must include a description of the product or service being offered; the quantity, quality, and characteristics of the product or service; and the total amount requested for the product or service. In addition, the cost proposal must contain supporting documentation such as invoices, purchase orders, receipts, bills, statements, contracts, or similar documents.
A price proposal must provide a reasonable estimate of the prices that the contractor expects to charge the government. The price proposal must state the basis upon which the contractor arrived at the proposed price. This basis could be based on historical fees charged by the contractor, current market conditions, anticipated future market conditions, or any combination thereof.
CPAs can assist businesses in preparing cost and pricing proposals that comply with FAR requirements. They can review the bids and advise clients on how to improve them. If necessary, CPAs can draft cost and pricing proposals for their clients.
Accountants and Accounting Systems
Accounting systems, policies, and procedures are a critical component of government contracting. With effective accounting practices, companies can effectively manage their government contracts. In fact, with proper accounting, a contractor can know where money is coming from and how it is being spent.
Effective government contract accounting requires adherence to generally accepted accounting principles (GAAP), which govern how financial information is reported. GAAP provides a common language for reporting financial data across industries, allowing businesses to compare their performance against others.
Government contracting agencies require contractors to comply with FAR and CAS, which cover the types of accounting rules applicable to federal contractors. FAR covers everything from basic record-keeping requirements to complex cost-analysis methods. CAS includes detailed guidelines for preparing financial statements and auditing those statements.
The combination of GAAP and FAR/CAS creates a powerful toolset for government contractors. It allows them to report accurate financial information and maintain complete records of their transactions. These records help ensure compliance with government regulations and enable contractors to understand their costs and revenues better.