Contracting office or DCMA conducts Pre-award survey to consider responsibility of prospective contractor.

Design of the DCAA Accounting system is part of the Pre-award survey (SF 1408 Criteria)

DCAA requested to evaluate design of Accounting system

Preaward Accounting System Audit

Evaluates design of Accounting system to determine if it is acceptable for prospective contract

DCAA or Buying Command will request contractor complete Accounting system checklist

Contractor should be prepared to demonstrate how accounting system design satisfies SF 1408 criteria at initial meeting

Acceptable Accounting System

DFARS 252.242-7006 (a) (1) defines an acceptable accounting system as:

“as system that complies with the system criteria in paragraph ( c) of this clause to provide reasonable assurance that-

  1. Applicable laws and regulations are complied with;
  2. The accounting system and cost data are reliable;
  3. Risk of misalllocations and mischarges are minimized; and 
  4. Contract allocations and charges are consisten with billing procedures.”

Accounting System

DFARS 252.242-7006 (a)(2) defines an accounting system as:

“the Contractor’s system or systems for accounting methods, procedures, and contraols established to gather, record, classify, analyze, summarize, interpret, and present accurate and timely financial data for reporting in compliance with applicable laws, regulations, and management decisions.”

May include subsystems for specific areas such as:

  • Billing 
  • Labor

Total Contract Costs

The total cost of a contract is the sum of the direct and indirect costs allocable to the contract. 

While the total cost of the contract includes all costs properly allocable to the contract, the allowable costs to the Government are limited to those allocable costs which are allowable pursuant to Part 31 and applicable agency supplements. 

DFARS 252.242-7006 ( c ) ( 2) requires proper segregation of direct costs from indirect costs. 

  • Direct cost is any cost that identified specifically with a particular final cost objective.
  • Indirect cost means any cost not directly identified with a single, final cost objective, but identified with two or more final cost objectives or an intermediate cost objective. 

Reference following website for further details:

https://www.dcaa.mil/Content/Documents/smallbusiness/Accounting_System.pdf