Government contractors have always faced accounting and financial management challenges. Federal contractors face critical challenges in aligning accounting methodologies with the demands of their target market. They face issues which include maintaining constant audit readiness, the need for diligence, and the demand to stay on the cutting edge of applicable technologies. If you are a part of the world of government contractors, here are 5 common accounting problems that you may face.
1. Obtaining DCAA Approval of a Government Contractor’s Accounting System
Prospective government contractors are often faced with an array of special difficulties in qualifying their accounting systems with the Defense Contract Audit Agency (DCAA).
It is critically important for all government contractors to thoroughly understand the approval requirements as well as how those will be assessed.
- Keeping Pace With Changes in Government Rules for Finance Management and Accounting. Managing in a perpetual stream of changes in requirements is the way of business in government contracting. Currently, the increased transparency of government finance motivated by the economic stimulus plan provides a good example. But, with merely the usual turnover of new regulations, continuous changes in government financial management and accounting requirements are an ongoing fact of operating as a US government contractor.
2. Preparation for Surprise Audits
Your business must operate under the assumption that it will be subjected to a thorough government audit that will occur without advance notice. Contracts may be terminated and in some cases, payments may even be withheld on existing contracts, pending satisfactory improvements. Always be prepared to ensure that your company will receive a positive evaluation.
3. Maintaining Sufficient Staff and Training
Inaccurate data and incorrect data entry, or errors in performance, put the system at risk. If data is wrong or entered into the system improperly, or internal accounting processes such as contract cost allocations are performed incorrectly, the system is jeopardized. Contractors must ensure that the entire accounting staff is fully skilled to prevent mistakes, and for the correction of undue mistakes.
4. Failing to Use Available Information
An accounting system and design procedures have little value if the contractor does not leverage it to manage and grow the company. With innovative technology, government contractors are far better able to comply with government contracting requirements and can use the system to manage and grow their companies while gaining necessary compliance.
5. Organizing a System Around an Individual
As government contractors grow, they organize the accounting function to improve compliance and may hire a mid- or senior-level accountant to institute a system. This results in a system that cannot be maintained if the key individual leaves the business or is incapacitated.
Georgen Scarborough Associates, PC for Your Accounting Needs!
A full-service accounting firm located in Vienna, Virginia, Georgen Scarborough Associates, PC is licensed to practice in Virginia, Maryland, and the District of Columbia (DC). We are professionals who listen carefully to our clients and can customize a suite of accounting, tax, and financial management services tailored to each unique situation.
At Georgen Scarborough, we provide a broad range of products and services to give our clients a secure financial future. We offer customized services to each of our clients.
We will carefully listen to your needs, and we produce results that work. Our services include:
- Individual Income Tax Preparation
- Estate and Trust Tax Preparation
- Small Business Accounting Services
- Financial Statement and Tax Preparation for Small Businesses
- Payroll Services
- Audits and Tax Reporting of Non-profits
- Accounting Services for government contractors
- QuickBooks Advisor