Comprehensive Guide Offers Key Insights for Navigating Cost Accounting and Regulatory Requirements.
PROCAS today announced the release of a new white paper: “Developing a Chart of Accounts for Federal Contracting Compliance: Requirements and Recommendations” written by Jim Wesloh, Founder and President of PROCAS.
This comprehensive guide for developing a Defense Contract Audit Agency (DCAA) compliant chart of accounts is now available for download and offers valuable insights into how the requirements of the Federal Acquisition Regulation (FAR) affect the development of a government contractor’s chart of accounts. Key topics include:
Financial Statement Presentation: Government contractor accounting systems are required to be operated consistent with Generally Accepted Accounting Principles (GAAP).
Direct Costs and Indirect Costs: Direct costs that are identifiable with a specific project are segregated from indirect costs that are not identifiable with a specific project.
Indirect Cost Pools: Indirect costs need to be accumulated in logical cost groupings such as fringe benefits, facilities expenses, overhead, general and administrative (G&A), bid and proposal (B&P) internal research and development (IR&D), material handling, and subcontract administration.
Elements of Costs: Direct costs are broken down into elements of costs such as labor, consultants, subcontractors, materials, and travel for proposals and invoicing as well as for the accounting system.
Unallowable Costs: Certain costs, such as interest expense, lobbying, and entertainment are not reimbursable on government contracts and need to be segregated as unallowable costs.
The white paper works through these topics in detail to develop a complete chart of accounts that can be used by businesses engaged in federal contracting. A sample chart of accounts is also available for download
“In the complex and ever-changing landscape of federal contracting, maintaining compliance while optimizing financial performance is paramount,” said Wesloh. “This white paper aims to provide contractors with the essential knowledge and practical tools to set up the core accounting system structure to help navigate these challenges effectively.”
