Change in Government Fiscal Year author avatar

Government Fiscal Year

For clients that operate on a government fiscal year basis, please remember to address the following items in accordance with the year change on October 1st!

Required

  • Establish new task numbers to increment the option year on cost type contracts that continue beyond the end of the current fiscal year
  • Complete the billing setup for the new task numbers
  • Establish new work authorizations
  • Establish new expense authorizations

May Be Required*

  • Enter the new accounting year
  • Enter the accounting periods for the new accounting year
  • Establish timesheet periods for October 2019 – September 2020
  • Establish new task numbers for tracking PTO by fiscal year

*If you operate on a calendar basis but have contracts that operate on a government fiscal year basis, not all of the above items will apply to your company. If that is the case, we recommend focusing on the first 4 items.

 

Additional Help

If you need help with any of the listed items, please contact your consultant. Depending on which version of the software you are on, some of the items may not be relevant to your company.

Our consulting team can be reached at consulting@procas.com.

Types of DCAA Audits for Government Contractors author avatar

Audit Procedures

Being the largest purchaser of goods and services in the world, it is no wonder that businesses large and small want to work with the United States Federal Government. With an average of $500 billion spent annually, many view federal contract procurement as a potential revenue stream to grow their business. However, many of these companies do not consider all of the rules, requirements, and oversight that come with that potential revenue. Before jumping headfirst into government contracting, let’s take a look at the types of oversight a company can expect when doing business with the government.

 

Defense Contract Audit Agency (DCAA)

The Defense Contract Audit Agency is the auditing branch of the federal government. Under control of the Secretary of Defense, the branch’s main purpose is to make sure federally procured funds are being spent accurately and appropriately.

According to DCAA’s Information for Contractors publication, “DCAA performs all necessary contract audits for the Department of Defense and provides accounting and financial advisory services regarding contracts and subcontracts to all DoD Components responsible for procurement and contract administration.”

Essentially, what this means is that their primary goal is to ensure taxpayer dollars are spent on fair and reasonable contract prices. It is DCAA’s responsibility to serve public interest first and foremost.

In order to accomplish this, DCAA has a multitude of audit procedures to ensure that government contractors are kept in line. DCAA is especially concerned with contractors working on cost reimbursable contracts as opposed to those who provide fixed price work. This is because there is more room for error (and even fraud) when billing at cost. 

Some of the most common types of DCAA audits for companies providing cost-type work are as follows:

  1. Accounting System Requirements (Pre & Post Award)
  2. Real-time Labor Evaluations
  3. Provisional Billing Rates
  4. Public Vouchers (Progress Payments)
  5. Incurred Cost Submissions

We will break down the first 4 of these common audit procedures below.

Notes:

  • Incurred Cost Submissions are too involved to cover in an overview post. This audit type will be covered in a detailed post to follow.
  • There are many more types of audits that do take place, such as financial capacity, proposal adequacy, contract briefs, monitoring subcontracts, contract close outs, etc. The above 5 were selected for the accounting heavy folks in your organization!

 

1. Accounting System Review

Government agencies want to make sure your company is operating using proper accounting policies and procedures before providing funding for any cost type work. To do this, a contracting officer from said agency for said contract will request DCAA perform an accounting system audit on your company, which is broken down into two phases – the pre-award & post-award audits.

         Pre-Award Audit

The pre-award audit takes place before any cost type contracts are awarded to your company. This is the preliminary check that DCAA will perform to see if you have a proper accounting system in place to be able to handle the proposed contracts.

To start the process, a contacting officer or DCMA (Defense Contract Management Agency) will have you complete standard form 1408, which lists what’s required for your accounting system. Some requirements include segregation of direct costs from indirect costs, identification and accumulation of direct costs by contract, ability to allocate indirect costs consistently across cost objectives, etc. For a full list of what is required, please see our prior blog post How PROCAS Addresses the SF1408.

Once the SF1408 is completed and returned to the contracting officer/DCMA, DCAA will meet with your company to see if you have the capacity to perform on what was completed in the form. This is an upper level review that does not get into the nitty gritty of the system, but ensures you have the proper policies and procedures included with your accounting system. For more on what DCAA will be requiring of your system, please see their related documents here.

         Post-Award Audit

The post-award audit takes place after your company has been performing on the awarded contract for some time. Typically, this is not too long after being awarded and is around 3-6 months (but can be earlier or later). The purpose of this phase of the audit is to make sure you are complying with the accounting policies and procedures specified in the pre-award.

During the post-award audit, you can expect the auditors to dig around your system more than the pre-award. This is a total accounting system review, which will include testing of your policies and procedures as well as data entry. Some examples of areas they could test include: segregation of duties, proper levels of access to data, correct revenue and expense recognition, trailing transactions from general ledger to invoicing, accurate labor distribution from timesheets to general ledger, etc. 

At the end of the day, DCAA wants a vote of confidence that you are operating as you said you would in the pre-award. Therefore, the auditor will take their time and conscientiously look through your system to make sure it does not have any holes.

 

2. Real-time Labor Evaluations

Also known as the “Help! DCAA auditors showed up at my door unannounced, and I don’t know what to do!” audit, real-time labor evaluations are checks to see if your people are working when they say they are working. For service-based contractors, labor is the largest piece of what is billed to the government, so it is of major concern to be monitored by the DCAA.

In these time check or “floor check” audits, the auditors are going to randomly select employees of your company and ask them simple questions to see how timesheet procedures are performed. Some of these procedures include completing time entries, determining how charge codes are created/selected, submitting timesheets, correcting/adjusting time entries, the approval process, access to employees’ timesheets, etc. Once these are confirmed, the auditors will meet with the accounting staff to see how timesheets are collected and labor is distributed with cost. They will want to see that specific cost journals in the general ledger match historic timesheets!

Some common deficiencies in timekeeping compliance that can lead to the failure of a real-time labor evaluation include:

  • The ability of more than 1 person to access an employee’s timesheet to record time
  • Improper selection of charge codes for work being performed (inaccurate use of labor categories, projects, etc.)
  • Inconsistent charging of time across contracts
  • Failure to track changes to employees’ time by audit trail (without reason)
  • Approvers overriding subordinate time without employee consent
  • Inconsistent method of applying labor cost to employee timesheets

In this audit, there is no warning for when the auditors are going to stop by. Therefore, it is important that your employees know your company’s policies and procedures at all times. We recommend having supervisors and management review these policies with your staff as frequently as possible. For more information to prepare for this surprise audit, please see click here.

 

3. Provisional Billing Rates

If specified in the provisions of a cost-type contract, contractors are allowed to be reimbursed for indirect costs via interim payments as opposed to waiting until the end of the contract. FAR 42.704 governs the procedures and guidance for establishing provisional billing rates, which is the effective way to approximate a contractor’s final year-end rates (adjusted for any unallowables). Provisional billing rates pose as an estimation of these final year end rates, which are trued up to actual indirect rates at the end of the contract’s fiscal year. More information on FAR 42.704(b) can be found here.

One major criterion for an adequate accounting system is that it provides for billings that can be reconciled to cost accounts for current and cumulative amounts claimed. The auditor is going to check to make sure your system can handle this process within the Accounting System Review audit. However, once approved, the contractor is still going to have to submit provisional billing rates to its DCAA Office or administrating contracting officer every fiscal year included in the contract.

According to DCAA, provisional billing rates should be:

  • Submitted at the beginning of each fiscal year or when established billing rates are no longer accurate in representing final year rates (unforeseen circumstances)
  • Representing a 12-month period (contractor’s fiscal year)
  • Submitted at least annually and electronically (if possible)
  • Provided in an Excel format

According to DCAA, provisional billing rates should contain:

  • Proposed billing rate calculations (including rationale)
  • Prior fiscal year pool and base
  • Current fiscal year to date pool and base
  • Current fiscal year budget pool and base (if available)
  • Comparative analysis with explanation of significant differences (if applicable)

Penalty: If the above measures are not taken, vouchers and progress payments can be held/returned until appropriate measures are taken to adjust billing rates. This not only hurts your cash flow but can affect all future invoices!

 

4. Public Vouchers (Progress Payments)

Following the same thought process described above, conrtactors can claim interim payments on work performed throughout their fiscal year. According to DCAA, cost type contracts allow for payments for costs on a Standard Form 1034 public voucher or equivalent. Typically, contracting officers have slight variations on how they would like their invoice to look, however the audit process will look similar for checking how the records of each invoice are maintained. For a look into all of the contractor’s and DCAA’s responsibilities in establishing progress payments, please click here.

Voucher audits are conducted by DCAA to determine the accuracy of costs billed to the government. DCAA auditors will use sample testing to track individual invoices from submitted government invoice in WAWF to the general ledger and job cost report and eventually to the source documents supporting the billed voucher.

Looking at your accounting records, an auditor will check for:

  • Compliance between the invoice and contract terms
  • Accuracy of billed costs to recorded costs (current and cumulative)
  • Consistent application of labor distribution
  • Consistent allocation of indirect rates using established provisional billing rates
  • Segregation of unallowable costs from allowable costs (unallowables cannot be invoiced)
  • Timely payments to vendors and subcontractors
  • Appropriate source documentation for billed costs

Penalty: If the above measures are not taken, vouchers and progress payments can be held/returned until appropriate measures are taken to adjust your invoices. This not only hurts your cash flow but can affect all future invoices!

 

At the end of the day, DCAA wants to make sure the public’s money is being spent appropriately. The above measures can seem very intimidating, so it is important that your company is aware of all the rules and regulations that need to be followed. Remember, you always have the right as a contractor to ask why an auditor needs what they are requesting from you. If anything appears to be unrelated to the measures described in each audit above, you have the right to know why it is required. If any PROCAS clients need help through any of the above audits, feel free to reach out to our consulting team at consulting@procas.com.

How PROCAS Addresses the SF1408 for Government Contractors author avatar

One of the biggest challenges government contractors face is putting together a compliant system that passes DCAA requirements. As most know, developing a DCAA compliant accounting system is a little more complicated than just purchasing accounting software. It is the total incorporation of a company’s best practices, policies, and procedures into a system that allows contractors to be consistent and appropriate in their tracking of costs.

This can be very daunting for the new contractor, who not only is worried about landing their first government contract, but also has to establish those company policies and procedures. The below post will identify the preaward audit process and how PROCAS meets the requirements of the SF1408.

 

Preaward Audit Process

Before being awarded a cost type contract, the DCAA is going to want to verify that the appropriate measures were taken in order to prove the contractor’s ability to adequately track the costs for that proposed contract. This process is known as the preaward audit or preaward survey.

Typically, an auditor will meet with the contractor first to review the established system and procedures, and then again in the future to make sure that system is being followed consistently (post award audit). However, before that takes place, the contracting officer on the proposed contract will require that Standard Form 1408 be completed. This form will be submitted to the DCAA when they request the initial audit of your system. This piece is very important because it gets the entire process started.

Standard Form 1408 is the Preaward Survey of Prospector Accounting System used by the DCAA as an evaluation checklist to determine if your system is sufficient in supporting the proposed contract(s).  According to the DCAA, the audit scope will consist of understanding the design of the contractor’s prospective accounting system as well as the procedures essential to reach an informed opinion if that system is acceptable in accumulating and generating required cost information. Having an accurately completed SF1408 is the first step in conquering this audit scope.

For DCAA’s official explanation of the preaward process, please click here.

 

PROCAS Addresses Standard Form 1408

Below are our answers for how PROCAS addresses the standards that the auditor will be concerned about when evaluating your prospective accounting system.

A downloadable version of the below answers can be found here.

 

1. Except as stated in Section I Narrative, is the accounting system in accord with Generally Accepted Accounting Principles applicable in the circumstances?

 

The PROCAS project accounting software (PROCAS Accounting) is designed to be operated in accordance with Generally Accepted Accounting Principles (GAAP), including maintaining the books of record on the accrual basis of accounting.

 

2. Accounting system provides for:

 

a. Proper segregation of direct costs from indirect costs.

In PROCAS Accounting, expense accounts in the chart of accounts are identified as either direct or indirect, which provides for the proper segregation of direct costs from indirect costs. Additionally, PROCAS assigns specific account types to further segregate these costs.

b. Identification and accumulation of direct costs by contract.

In PROCAS Accounting, the identification and accumulation of direct costs requires the assignment of direct costs to a corresponding project code. The project code corresponds to a contract.

c. A logical and consistent method for the allocation of indirect costs to intermediate and final cost objectives. (A contract is a final cost objective.)

PROCAS Accounting provides logical and consistent methods for the allocation of indirect costs to intermediate and final cost objectives. Indirect rates can be calculated automatically for Fringe Benefits, Facilities, Material Handling, Subcontract Administration, Overhead and G&A. Bid and proposal and internal research and development costs are also treated appropriately. The indirect rates can be further segregated by division, location and work-site. Indirect rates are automatically applied to contracts in direct correlation/proportion to the respective allocation base.

d. Accumulation of costs under general ledger control.

PROCAS Accounting accumulates costs directly to the general ledger, which is the basis for financial and job cost reports.

e. A timekeeping system that identifies employees’ labor by intermediate or final cost objectives.

PROCAS provides online timesheet software (PROCAS Time) in which employees record their time to intermediate or final cost objectives. Employees are assigned appropriate intermediate and/or final cost objectives for recording their time and can only record their time to their authorized work assignments.

f. A labor distribution system that charges direct and indirect labor to the appropriate cost objectives.

In PROCAS Accounting, the distribution of direct and indirect labor costs are recorded automatically from the employee timesheets created in PROCAS Time to the appropriate cost objectives. PROCAS Accounting supports the calculation of effective hourly rates associated with total time accounting.

g. Interim (at least monthly) determination of costs charged to a contract through routine posting of books of account.

In PROCAS Accounting, direct costs are posted in the general ledger and job cost ledger in real time and do not require the use of batch processing or summary entries. Indirect rates can be automatically calculated and applied at any time.

h. Exclusion from costs charged to government contracts of amounts which are not allowable in terms of FAR 31, Contract Cost Principles and Procedures, or other contract provisions.

In PROCAS Accounting, expense accounts are identified as being either allowable or unallowable. Unallowable expenses are excluded from indirect cost pools when automatically calculating and applying indirect rates.

i. Identification of costs by contract line item and by units (as if each unit or line item were a separate contract) if required by the proposed contract.

PROCAS Accounting has the capability to incorporate logical project assignments that will track costs by unit and/or line item.

j. Segregation of preproduction costs from production costs.

In PROCAS Accounting, pre-production costs are segregated from production costs through the use of project assignments and/or separate expense accounts.

 

3.Accounting system provides financial information:

 

a. Required by contract clauses concerning limitation of cost (FAR 52.232-20 and 21) or limitation on payments (FAR 52.216-16).

In PROCAS Accounting, reports are available to assist with managing the limitation of costs and/or limitation of payments.

b. Required to support requests for progress payments.

PROCAS Accounting supports cost type, time and materials and fixed price invoices which are generated automatically from the accounting records. Requests for progress payments can be generated for interim time periods, by percentage of completion or by deliverables as specified by the contract.

 

 4. Is the accounting system designed, and are the records maintained in such a manner that adequate, reliable data are developed for use in pricing follow-on acquisitions?

 

Yes. In PROCAS Accounting, records are designed to be maintained so that adequate, reliable data can be developed for use in pricing follow-on acquisitions.

Indirect Rate Calculation Setup – Mysteries Unveiled author avatar

Have you ever wondered how to set up your indirect rate structure in PROCAS? The good news is, if you’re a new contractor, and you don’t have a rate structure yet, the system already has a default setup that works for most of our clients. It’s a standard 3-tiered structure with (1) fringe, (2) overhead applied to direct labor plus fringe, and (3) G&A.

If you are more experienced, you may want to make changes to your rate structure from one year to the next but don’t know what options to pick in the system. One nice thing about how it works in PROCAS is that it is easy to use our ‘point and click’ setup to make changes and then test the calculation.

There are 2 basic setup elements the system needs to calculate the rates—(1) selections on the Rate Calculation Setup form and (2) the Cost Pool assigned to each expense account in the Chart of Accounts. Generally, your selections determine how many rates you have, what intermediate rate allocations are made, and what makes up the bases for each rate. Every expense account you use is assigned to a cost pool on the Chart of Accounts form. The Cost Pool assigned determines what type of expenses is being accumulated in that account.

Since the default chart of accounts already has appropriate cost pools established for each expense account, I will focus on the options on the Rate Calculation Setup form.

Rate Calculation Setup form – Tab 1:

Establishes defaults used when calculating rates.

Date Range – we recommend selecting Accounting Year since you must calculate your indirect rates for the accounting year-to-date for DCAA compliance. Management may want to see rates by Accounting Period but that should be for internal purposes only.

Costs to include in Pools – we suggest using Allowable Only as your default. This selection will exclude unallowable costs from the pools for calculating your claimed rates. When Allowable & Unallowable is selected, you are calculating your full rates which include all your costs. While you need to know your full rate to make informed business decisions, you cannot claim your full rate for reimbursement from the government.

Transactions to include – using Posted & Unposted transactions as your default will ensure everything recorded in the general ledger is included when you calculate your rates. Choosing Posted Only will ignore any transactions that are not posted within the period and could be misleading.

Rate Calculation Setup form – Tab 2:

Determines how many rates you have for each cost pool.

We always recommend keeping your rate structure as simple as you possibly can, for as long as you can. Using all consolidated rates means you have only one rate per cost pool. However, at some point, you may need to make some changes. This tab gives you the flexibility of establishing rates by division, location, and/or work site, in any combination.

Most often, we see clients moving from a consolidated Overhead rate (pictured above) to Overhead calculated by Site. This allows for more than one overhead rate—typically one for company site and one for client site. Keep in mind, that you will have to track your costs at whatever level you select. Since switching to a 2 Overhead rate structure is common, we start our clients off on day one by tracking direct and overhead expenses by company site (e.g., 100 cost center) and client site (e.g., 105 cost center). This makes the transition to the 2 Overhead rate structure seamless. All you have to do is select the Site checkbox in the Overhead row and you are ready to go.

Rate Calculation Setup form – Tab 3:

Determines whether you have a dollar or hour/unit base for each cost pool.

Most commonly, we see clients using a $ Base for each cost pool. Using a dollar base is simplest. It does not require any additional work on your part. The system will just need the amounts you’ve already recorded in the general ledger.

However, quite frequently we see Facilities with an Hour/Unit Base. In many cases, it makes sense to use square footage or head count as the base for Facilities rather than dollars. Note that if this is your selection, you will also need a Triggers Journal entry dated the first day of your accounting year, so the system knows how many units to use and how to allocate the office-related costs to Overhead and G&A. We have special accounts already established in the default Chart of Accounts to use for this purpose.

Rate Calculation Setup form – Tab 4:

Determines what pool to put your Material Handling and Subcontract Administration costs in.

In PROCAS, you can track your Material Handling (MH) and Subcontract Administration (SA) costs in your general ledger separately by account while keeping the costs in either the Overhead Pool or G&A Pool for rate calculation purposes. Tracking the costs will provide management with valuable cost information and have you set up to easily transition to a Value-Added G&A rate.

The selections in the screenshot above are a great place to start. Keep the material handling and subcontract administration costs in your G&A pool for now. If you ever need it, you can easily change it.

Rate Calculation Setup form – Tab 5:

Determines what makes up your Facilities base and what to include in your Overhead Pool and Base.

There’s a lot more to the options on this screen so let’s tackle them one at a time.

Facilities

Include Employee Labor in Facilities Base – if selected, productive employee company site labor is your base. If you selected a $ Base on Tab 3, the system will use the total employee labor dollars. If you selected Units/Hours Base, the system will use the total employee labor hours.

Include Contract Labor in Facilities Base – I don’t see this often, but if you have contractors that use your facilities, you can include those labor costs in the base to bear some of the facilities burden. Again, the $ or Units/Hours base selected on Tab 3 is a factor in the calculation.

Include Non Labor Facilities Base in Facilities Base – if selected, you must also have the Units/Hours base selected on Tab 3. This means you are using something like square footage, head count, or some other percentage to allocate the facilities costs to Overhead and G&A. You also must create a Triggers Journal transaction dated the first day of the year to record the unit allocations.

Overhead

Include Fringe Benefits on Direct Labor in Overhead Pool – if selected, you have a 2-tier rate structure—overhead and G&A. Fringe is an intermediate rate and is not stated separately on invoices to your clients.

Include Facilities Costs Related to Direct Costs in Overhead Pool – if selected, the facilities costs allocated to direct company site labor are allocated in the Overhead Pool. This is the most common selection.

Include Direct Labor in Overhead Base – this option should always be selected. Direct labor is the standard overhead base.

Include Contract Labor in Overhead Base – this option is rare, but if you have contractors that use your company’s contract support resources, you can include those labor costs in the base to bear some of the overhead burden.

Include Fringe Benefits on Direct Labor in Overhead Base – this option should be selected if you have a 3-tier rate as described in the beginning of this article. Fringe is stated separately on invoices to your clients and overhead is applied to direct labor plus the allocated fringe. If this option is not selected, you also have a 3-tier rate. Fringe is stated separately on invoices to your clients, but overhead is only applied to the direct labor costs.

Rate Calculation Setup form – Tab 6:

G&A Base options

As you can see in the screenshot above, there are several selections to choose from for your G&A base.

Total Cost Input Base – this is the most common selection. Select this when all your costs (excluding G&A) are the G&A base. What you get with this option is all your direct costs plus the allocated facilities, fringe and overhead costs as your G&A base.

Value Added – No Materials – if your rate structure includes a separate Material Handling rate (Material Handling Pool option is selected on Tab 4), you must select this option. This will exclude the direct materials from the G&A base. Instead, the direct materials are the base for the MH rate.

Value Added – No Subcontracts – if your rate structure includes a separate Subcontract Administration rate (Subcontract Admin. Pool option is selected on Tab 4), you must select this option. This will exclude direct subcontract costs from the G&A base. Instead, the direct subcontract costs are the base for the SA rate.

Total Direct Cost – I can honestly say that I have never seen a client select this option. That doesn’t mean it’s not right. It’s there if you need it. Only direct costs will be your G&A base. This means that you don’t have a separately stated fringe or overhead rate. Basically, everything ends up in the G&A pool with this option.

Direct Labor Base – I have seen this option selected one time in my career. Again, it could make sense in certain circumstances.

The default chart of accounts is already set up with the appropriate Cost Pools for each expense account. This is how the system knows what type of cost each account contains (direct, fringe, facilities, overhead, G&A, material handling, subcontract administration, etc.). That, along with the selections on the Rate Calculation Setup form, informs the system of where each amount goes in the various pools and bases when the rates are calculated.

I cannot stress enough how important it is for DCAA compliance to be consistent with how you accumulate and allocate your costs. The way you bill the government for reimbursement of your direct and indirect costs must match how your rates are calculated. If you are ever unsure of what selections to make, please reach out to one of our PROCAS consultants for help.

Setting up PROCAS for SCA Employees author avatar

Do you have contracts that require you to pay service employees according to the area wage determinations (AWD) as outlined in the Service Contract Act (SCA)?

OR

Do you have personnel that are paid different hourly rates depending on the work they are doing?

If so, you can use the AWD capabilities in PROCAS to automatically record the proper hourly wage rate as well as fringe benefits per hour.

Here’s how:

1. Add AWD fringe accounts to your Chart of Accounts. (Go to >System, >Accounting, >Chart of Accounts)

You will only need to do this if the SCA employees receive a dollar amount per hour worked for fringe. When the labor journal transaction is recorded, it will add a line with an AWD fringe expense account along with its associated direct task. The cost center for the fringe account must match the cost center of the direct task. So, you will need to add a fringe account for each appropriate cost center.  The chart of accounts in PROCAS includes AWD Fringe Expense accounts 6600000, 6600100, and 6600105 by default. These accounts are used by the system to record the earned fringe expense in the labor journal.

When SCA employees also earn fringe per hour on paid leave hours (i.e., holiday, vacation), you will need to add paid leave accounts for each cost center, as shown in the screenshot below. The reason for this will become evident later on in the setup.

 

2. Add the new fringe accounts to the AWD Fringe Accounts (Go to >System, >Accounting, >AWD Fringe Accounts)

If you added AWD Fringe Expense accounts in step 1, you will need to set up those accounts by department. The system uses the account setup from the AWD Fringe Accounts form to know where to record the fringe expense in the labor journals.

 

3. Add the AWD information to Billing Setup on the appropriate tasks. (Go to >Projects, >Billing Setup)

  • First, locate the task that your SCA employees use to record their time, and then click on Bill Rate by LC/FP Item
  • Next, for each SCA labor category, type in the minimum AWD hourly wage to be paid to the employee in the AWD Base $/Hr. When the system creates the labor journal transaction, it will compare the minimum rate for the labor category in the Billing Setup, to the employee’s hourly pay rate in their Personnel record. The system will use whichever rate is higher to record the amount due to the employee.
  • If you are also paying employees an amount for fringe per hour worked, type in the appropriate fringe dollar amount in the AWD Fringe $/Hr. box for the labor category (see the screenshot below.) When the system creates the labor journal transaction, it will add a line of detail to record the fringe expense to the accounts you set up in Step 2.

 

4. Update employee work authorizations. (Go to >Projects, >Work Authorization by Task)

Setting up the direct work authorization for a SCA charge code is no different than setting one up for a non-SCA charge code. However, if the SCA employees also earn a fringe amount on their paid leave hours, there is a specific setup required for the system to include the fringe earned on those hours in the labor journal transaction.

Notice in the screenshot below, Sarah Porter has a standard direct charge code for task 10003.001.00.105 using the 5000105 account and AA labor category. In addition, Sarah has a paid leave charge code for the same task and labor category. This is where the fringe account you set up in Step 1 is needed. Since the task uses cost center 105, the fringe account also needs cost center 105. So, instead of using the 6100000 account that non-SCA employees use, Sarah will be using the 6100105 account.

 

Here's what Sarah’s timesheet looks like after recording her time to the SCA direct charge code we set up for her. She only needs to record the hours worked.

 

And the screenshot below shows what Sarah’s labor journal transaction looks like. Lines 1 and 2 are for the 88 hours of direct work that Sarah recorded on her timesheet. Note that while her regular pay rate is $10/hour (as highlighted in the header), the system recorded the $12 hourly rate from the AWD information in the billing setup. The system also added the last 2 lines of detail to record the $3.80/hour fringe expense earned for the 88 hours worked and the associated liability. Since the system will record the fringe automatically, there’s no need for Sarah to record her AWD fringe “hours” on her timesheet.

 

Although there are several steps, the AWD setup is not difficult. Once that part is done, then the system will do the rest whether you are creating the labor journal transactions automatically, or manually creating them.