Government Contracts And Dcaa Audits

The United States government is the world's largest buyer of goods and services. The American Reinvestment and Recovery Act (ARRA) means that there are more government dollars than before being spent and more contracts available to those companies that qualify to bid on them. In the current economy, those contracts can be quite lucrative and mean life or death for a company. They are well worth pursuing.

Doing business with the federal government requires compliance with many complex laws and regulations, with many of those involving accounting practices. The largest purchasing agent in the U.S. government is the Department of Defense (DoD) with its contracts overseen and audited by the Defense Contract Audit Agency (DCAA). Recently the DCAA evaluation was changed to a pass or fail basis allowing for no exceptions. Auditors offer no assistance or suggestions for improvements to a system to bring it up to compliance. A failed DCAA audit can result in payments being delayed or suspended pending correction of system problems which can be devastating to a small business that depends on prompt payment. Audit failure can prevent the award of future contracts. In some cases, a DCAA audit is done before a contract is awarded with failure resulting in the loss of an otherwise winning bid.

To avoid failing a review or recovering from a failed review, the best solution is to employ an experienced government contract consultant who has DCAA audit experience. These are accountants who are very knowledgeable and up to date on DCAA requirements and regulations, understanding the regulatory climate in which government contractors operate. With this experience, the consultant may perform a mock DCAA audit to reveal any problems in the accounting system to address them before an official audit is potentially failed.

The DCAA is often involved with the review of bid proposals and the auditing of indirect cost proposals. It performs compliance reviews of accounting systems and audits any modification costs in changed contracts. With DCAA rules and regulations constantly evolving, it's essential that government contractors remain vigilant and proactive to avoid failing an audit that can result in lost revenue, the termination of an existing contract, or the loss of future contracts. An experienced government contract consultant can provide the expert advice and services needed in a cost-effective manner to firms who are interested in selling their products and services to the U.S. government. For companies new to government contracting, there is no better market and no better way to begin than with professional services to ensure success.