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Why DCAA Compliance is Important for Your Government Contracted Business

When you are a contractor for the government, it is very important that you follow various federal rules and regulations. DCAA compliant accounting is a widely used term in the contracting industry. With DCAA-compliant accounting, you can reduce the risks of problems with an audit and be much better prepared for an audit.  Being DCAA compliant means that you are simply following the rules and regulations. For example,  you have a business system in place that will be able to track direct costs, indirect costs, labor costs, billing costs, and accounting costs.

Types of Audits

The DCAA has a number of different audits in place. This includes forward pricing audits and special audits along with others.  Contractors can also request is any evaluation of their compliance with the rules and regulations.

Forward pricing audits are typically done before a contractor is awarded a contract. During this type of audit, an evaluation is done of how much the contractor will charge for services and goods to the government. 

Usually, it is the contracting officers who will request special audits. Special audits can be done either before or after the contract is awarded. Contracting offices require an independent financial opinion on the contractor's accounting business system. Special audits are considered a top priority.

Incurred cost audits evaluate the accuracy of course representations. It is done after a contract is awarded.

Pre-award survey audits are done to gain knowledge about the contractor's accounting system.  This way, it can be determined whether or not the contractor should be awarded the job.

Other types of audits are also performed in order to reduce risk.

The Consequences of Noncompliance

Every contractor must abide by the rules and regulations of the DCAA. If there is a violation of the rules and regulations, there are consequences. Consequences may include termination of the contract or disbarment.  Disbarment is fairly serious. Future bids or proposals by the contractor will likely be barred. There may also be civil and criminal penalties that apply. It can cost the contractor thousands of dollars for a violation and even possibly lead to jail time.  It is also important to note that a contract can be terminated for bribery or for a conflict of interest.

With so many possible consequences of non-compliance, you can see why it is important to follow all of the rules and regulations as outlined by the DCAA and by the federal government. If you are submitting a bid or proposal to an agency that requires compliance, it is important to have all your ducks in a row before you do so, and there is a lot for a contractor to know.  Turn to for assistance.  The compliance professionals at will ensure you have all your ducks in a row, and you have no problems with compliance. This way, it is smooth sailing for you as a contractor. Avoid the risk of thinking you can do it on your own. Let do it for you - You will be glad you did.

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