FAR and CAS Compliance for AE Firms Part 2

Posted by Deltek on December 1, 2015

Capital Building

This is part 2 in a three part series on “FAR and CAS Compliance for Architecture & Engineering Firms”.  Click to see part 1 or part 3.

Filing Your Disclosure Statements

disclosure statement describes a contractor’s accounting practices and procedures. Fully CAS-covered contractors usually must complete a disclosure statement prior to landing a CAS covered contract of $50 million or more – as well as, corporate offices or other intermediate home offices that allocate costs of the disclosure statement. File it with your contract auditor and your government administrative contracting officer (ACO). The ACO administers day-to-day activities after you’re awarded a contract.

Once a disclosure is submitted, the ACO will ask auditors to make sure that the disclosure actually discloses everything it’s supposed to under the CAS Board’s rules, regulations, and standards. Simply put, the process is intended to collect a full description of a government contractor’s accounting system, uncover any deficiencies, and give contractors such as you a chance to address those deficiencies, clarify wording, or expand upon a description or accounting practice.

There are eight sections to a CAS disclosure statement:

  1. General information
  2. Direct costs
  3. Direct versus indirect costs
  4. Indirect costs
  5. Depreciation and use allowances
  6. Other costs and credits
  7. Deferred compensation and insurance
  8. Home office expenses


Watching the Clock Carefully

Every government contractor must track labor every day because auditors want to be sure the government is paying for their projects and nothing else. You can keep track manually or electronically, but if you’re doing it manually, do it in blue or black ink (that’s what the government wants). Track by project number or a contract name/number, and be sure that both employees and their supervisors sign off. If there’s an error, draw a line through it and initial the change.

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If you have an electronic timekeeping system, there are numerous considerations to keep in mind:

  • Employees should be able to enter their own time into the system, and supervisors should use the same system to review and approve staff time.
  • Payroll and timekeeping need to be segregated.
  • Procedures must be evident and clear-cut.
  • Controls must be verified, and any violations must be documented and remedied.
  • Policies and procedures must be periodically reviewed with employees and managers.
  • The system should allow direct entry of charging information, such as the project or contract number.

Time should be entered on a daily basis. Enter all hours, whether they’re paid or not. Every employee needs to know that accurate and up-to-date time entry is a critical part of her job and that entering the wrong hours or improperly preparing timekeeping reports will be penalized.

The government may do a floor-check audit at any time — that’s when auditors ensure that employees are spending their time where their timesheets say they’re supposed to be. So be proactive and perform your own floor-check audits from time to time. Record them and make them available to auditors to show that you’re serious about following the rules and regulations. Better for you to uncover any issues, rather than your DCAA auditor!

The employees themselves should enter the time; supervisors may only complete an employee timesheet if the employee is absent for an extended period of time.

This is part 2 in a three part series on “FAR and CAS Compliance for A&E Firms”.  Click to see part 1 or part 3.

The above article is an excerpt from the Deltek’s Special Edition “Project-Based ERP for Dummies”. To download your complimentary copy of the entire book click here.