Many government contracts and grants require an "adequate" or "approved" accounting system. More than a FAR requirement for certain contract types, an adequate accounting system helps you understand your costs and positions you for financial success. Come learn the essential components of an accounting system and best practices for passing the SF 1408 survey.
Are you working or bidding on any of the following contracts?
Small Business Innovation Research/ Small Business Technology Transfer (SBIR/STTR) Phase II
Time and Material (T&M) contracts
Cost-reimbursable contracts
Multiple Award Contract (MAC) or Government-Wide Acquisition Contract (GWAC)
If so, you'll need an approved accounting system.
What does it mean to have an "adequate" or "approved" accounting system? You must meet the 15 requirements outlined in SF1408 Preaward Survey of Prospective Contractor Accounting System. Key items include segregation of direct and indirect costs, a logical and consistent method for the allocation of indirect costs, timekeeping, and labor distribution.
The SF1408 review of your accounting system includes the software (e.g. QuickBooks), the apps (e.g time and expense reporting, payroll), your policies and procedures, and historical records.
We'll guide you through the basic requirements and dispel common myths regarding the use of QuickBooks. Join us to learn best practices to prepare for and successfully pass the survey (aka "audit)!
Learning Objectives
Recognize the need for an adequate or approved accounting system.
Identify the criteria for a government contract adequate accounting system.
Learn the components of an accounting system.
Identify some of the best practices for successfully passing the survey/audit.
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2. “In every day, there are 1,440
minutes. That means we have
1,440 daily opportunities to make
a positive impact.”
~ Les Brown
3. Many government contracts and grants require
an "adequate" or "approved" accounting
system.
More than a FAR requirement for certain
contract types, an adequate accounting system
will help you understand your costs and
positions you for financial success.
Why we’re here
4. Today we’ll learn:
The essential components of an accounting system and
best practices for passing the SF 1408 survey.
5. Are you working on or bidding on:
• SBIR Phase II
• T&M contracts
• Cost-reimbursable contracts
• MAC* (multiple award contract) or GWAC* (government-
contract)?
Room Poll
6. • Recognize the need for an adequate or
approved accounting system
• List the components of an accounting system
• Describe the criteria for a government contract
adequate accounting system
• Explain some of the best practices for
successfully passing the survey/audit
Learning
Objectives
7. Why You Need an Adequate System
For the following contract types the government wants to
ensure the accuracy of your cost collection and reporting.
• Cost-reimbursable
• Time and materials (T&M)
Reference:
FAR 16.104 (i) https://acquisition.gov/content/part-16-types-contracts
DFARS 242.7502 https://www.acq.osd.mil/dpap/dars/dfars/html/current/242_75.htm
8. Why You Need an Adequate System
For SBIR Phase II (cost-reimbursable).
Reference:
SBIR Course 8 Tutorial 2 https://www.sbir.gov/tutorials/accounting-finance/tutorial-2
9. Why You Need an Adequate System
For Progress Payments on Fixed Price Contracts.
Reference:
FAR 32.503-3(a)(2) and (b)
https://acquisition.gov/content/part-32-contract-financing#i1082047
10. Do you have an immediate need for an
"approved" accounting system?
Room Poll
11. Components of Accounting System
• Software
QuickBooks
Xero
Freshbooks
Unanet
SYMPAQ
PROCAS
14. Components of Accounting System
• Policies & Procedures
Written manual
• Records & Reports
Receipts
Invoices
Financial Statements
15. Which accounting software do you currently use?
• QuickBooks
• Xero
• Freshbooks
• Unanet
• SYMPAQ
• PROCAS
• Other: __________
Room Poll
16. Describe the Criteria
1. In accordance with Generally Accepted Accounting
Principles
2.a. Proper segregation of direct and indirect costs
2.b. Accumulation of direct costs by contract
2.c. Logical and consistent method for allocation of indirect
costs
17. Describe the Criteria
2.d. Accumulation of costs under general ledger control
2.e. Timekeeping system
2.f. Labor distribution system
2.g. Interim (monthly)posting of books
2.h. Exclusion of unallowable costs
2.i. Costs by contract line item (if required)
18. Describe the Criteria
2.j. Segregation of preproduction costs
3.a. Limitation of cost or limitation on payments clauses
3.b. Progress payments
4. Sufficient for follow-on acquisitions
5. In full operation
Reference: DCAA Accounting System Requirements
https://www.gsa.gov/forms-library/pre-award-survey-prospective-contractor-accounting-system
19. Do you feel ready to pass the accounting system
survey ("audit")?
Room Poll
20. • Start early - even before you need an
"approved" system.
• Complete the checklist - and gather all
of your supporting documentation.
• Hire an outsider - to help you prepare
and to perform a mock audit.
Best Practices for the
Survey/Audit