When an organization is awarded a government contract, it can mark the beginning of a very lucrative relationship with an excellent source of repeat business. According to Bloomberg Government, contract spending rose by more than 6 percent year over year during the five years leading to 2018, when federal contract spending reached $560 billion.
However, navigating the complex regulations that apply to this type of work can be overwhelming, even for companies that have experience in government contracting. Certified public accountants (CPAs) can help contractors ensure that they are compliant with all the relevant regulations so their experience contracting for the government is a positive one.
What Is A Certified Public Accountant?
A certified public accountant, or CPA, is an individual who has passed a specialized CPA examination and has met the educational and experience requirements for this designation. It is a title that helps to enforce professional standards within the accounting industry. At a minimum, CPAs have a bachelor’s degree in finance, accounting, or business administration; 150 hours of education; and two or more years of public accounting experience.
Are Government Contractors Required To Use CPAs?
There are a few aspects of government contracting that require the use of CPAs. For example, CPAs can be used to certify incurred cost submissions for contractors. They can also supply management letters concerning any internal control weaknesses in an incurred cost proposal.
CPAs can also help with accounting systems compliance. Before a government contractor can be awarded a cost reimbursable contract, they must have an accounting system in place that has been reviewed and approved for accumulating, exporting, and estimating cost in a way the government deems acceptable.
The Defense Contract Audit Agency (DCAA) has traditionally carried out a Pre-Award Accounting System Review, but some agencies are now giving contractors the option to provide evidence that their accounting system was reviewed and approved by an independent CPA. This can be a good option for contractors who do not wish to wait for the DCAA to perform the audit, enabling them to start bidding on opportunities sooner.
How Can CPAs Help Government Contractors?
Although there are few points throughout the contract term where CPAs are required, there are a myriad of accounting standards and requirements that contractors must follow. Determining these requirements are being met can be difficult without the help of experienced CPAs. Outlined below are some of the ways that CPAs can support government contractors toward a successful contracting experience.
Government Contract Management And Accounting
CPAs can assist with every step in the government contract cycle, providing experienced insight and expertise into the procurement and acquisition process. They can help with bidding on government contracts as well as modifying, negotiating, renewing, and terminating contracts. They can also help contractors make requests for equitable adjustment.
CPAs can help businesses achieve compliance with the guidelines set forth by the DCAA as well as the Defense Federal Acquisition Regulation Supplement (DFARS), Federal Acquisition Regulation (FAR), Cost Accounting Standards (CAS), Department of Defense (DOD), and General Services Administration (GSA), among others. Many CPAs offer consulting services that allow contractors to refine their business processes and accounting systems to ensure compliance and raise their chances of being awarded future contracts.
DCAA Cost And Pricing Proposals
CPAs can help organizations formulate accurate cost proposals and prepare forward pricing rates.
DCAA Incurred Cost Submissions
Incurred Cost Submissions must be submitted to the government by contractors who performed Cost Reimbursable or Time and Materials Contracts during a fiscal year. CPAs can help prepare these submissions and calculate the relevant indirect cost rates. This is a very complex document, and successful completion depends on an effective accounting system.
Government contract accounting often comes under scrutiny, and contractors may experience surprise audits. CPAs can help government contractors operate with the possibility of surprise audits in mind, and this constant state of preparedness can raise contractors’ chances of a positive evaluation. In addition, they can help contractors make improvements to regain acceptance from the government if they have been tagged for noncompliance.