Accounting Compliance for Government Contractors

Learning Objectives

At the completion of this comprehensive course, participants will be able to:

• Demonstrate knowledge of general cost accounting concepts.
• Apply CAS and FAR regulations to accounting practices.
• Explain the differences between GAAP and government contract accounting principles.
• Develop acceptable accounting practices used by government contractors.
• Adopt acceptable accounting system controls.
• Create and maintain compliant cost accounting practices.
• Explain what makes up an overhead pool and a G&A pool.
• Determine appropriate allocation bases and calculate the rates that apply overhead and G&A costs to final cost objectives.
• Explain the effect of unallowable costs on profitability.
• Explain how changes from provisional to final incurred rates affect cost.
• Explain the effect of cost overruns and under-runs on Fixed Price, Cost Type, Fixed Fee, Award Fee, and T&M contracts.

Program Content

Introduction to the Regulatory Environment

• Overview of the Federal Marketplace
  • Acquisition Cycle
  • The Regulatory Environment
  • Bid Proposals and Contract Award
  • Contract Performance and Closeout
  • Foundation Expectations of Government in Accounting Systems
• Main Players in Acquisition Process
  • Procuring Contracting Officer (PCO)
  • Administrative Contracting Officer (ACO)
  • Defense Contract Audit Agency (DCAA)
  • Inspector General (IG)
• Key Regulations Affecting Cost Accounting Systems
  • FAR Part 9 Contractor Qualifications
  • FAR Part 15 Contracting by Negotiations
  • FAR Part 16 Contract Types
  • FAR Part 31 Cost Principles
  • FAR Part 32 Contract Financing
  • Cost Accounting Standards (CAS)
  • Truthful Cost or Pricing Data Act (TINA)

Overview of Government Contract Audits Linked to Cost Accounting Systems

• Bid Proposals
• Accounting System Audits
• Provisional Indirect Billing Rates
• Incurred Cost Proposals
• CAS Compliance
• Estimating Systems
• Timekeeping & Labor Charging
• Billing Systems
• Financial Capability
• Purchasing System
• Defective Pricing

Establishing an Adequate Cost Accounting System

• Foundation Requirements
  • General Ledger Controls & Requirements
  • Financial Tracking and Profitability Evaluation
  • Subsidiary Systems Expectations
  • Chart of Accounts
  • Reconciliation Processes
• Basic Job Cost Accounting Expectations
  • Cost Segregation by Contract
  • Project Cost Ledger System
  • Tracking Unallowable Costs
  • Transaction Traceability to Subsidiary Ledgers
  • Requirements of SF 1408

Specific Cost Accounting Provisions

• Direct vs. Indirect Costs
  • Understanding Direct Costs & Allocation Techniques
  • Indirect Costs
    • Pooling Logical Cost Groupings
    • Selecting Appropriate Allocation Bases
    • Overhead vs. G&A
    • Intermediate Cost or Service Centers
  • Consistency in Allocating Costs (CAS 402)
• Accounting for Unallowable Costs
• Documentation Expectations
• Timekeeping and Labor Charging
• Billing System
• Relationship to Accounting System
  • Billing Indirect Costs
  • Monitoring Invoiced Amounts to Contract Ceilings
  • Allowable Cost and Payment Contract Clause
• Relationship of EVMS to Accounting System

Expanded Discussion of Selected FAR Part 31 Provisions

• Contracts Covered by FAR Part 31
• Selected Costs

Case Study

• Designing Compliant Chart of Accounts
• Segregation & Tracking of Unallowable Costs
• Direct vs. Indirect Cost Identification
  • Identifying Direct Costs
  • Charging Indirect Costs to Appropriate Cost Center
• Indirect Cost Centers
  • Overhead
  • General & Administrative
  • Intermediate/Service Centers
  • Assigning Appropriate Allocation Bases
• Calculating and Tracking Actual Indirect Rates
• Job Cost Reports
  • Grouping Direct Costs by Job/Contract
  • Using Provisional Indirect Rates
• Billing System Considerations
  • Billing from Job Cost Summaries
  • Adjusting Provisional to Actual Indirect Rates
• Charging & Tracking Costs for Four Typical Types of Contracts