Is QuickBooks a DCAA Approved Accounting System?

When you are in the business of federal government contracts, DCAA compliance is non-negotiable. DCAA stands for the Defense Contract Audit Agency. QuickBooks provides an accounting package that is well suited for small to mid-sized businesses, but often, the question arises; Is QuickBooks a DCAA Approved Accounting System?. QuickBooks offers two options and several different versions depending on your unique business requirements. QuickBooks offers both a desktop solution and an online tool, and either can be set up to be DCAA/Federal Acquisition Regulation (FAR) Compliant, especially with our DCAA compliance checklist. The keys are Job Costing and Labor Distribution.

DCAA Contracts

Potential government contractors who wish to bid on certain types of contracts should know that although the contracts vary, there is a difference between direct costs and indirect costs.

A direct cost is a cost that can be tied directly to the production of goods or services. A direct cost may be variable. An example of a direct cost is labor cost or manufacturing supplies.
Indirect cost allocations include overhead expenses such as rent and insurances and general expenses like accounting department costs. Indirect costs are harder to pin down and harder to allocate to a specific project or item. Using a timesheet tracking application in conjunction with an accounting package like Quickbooks, you can better control the indirect cost allocations, particularly for general and administrative expenses, to the correct cost objective.
One type of DCAA contract is called a cost reimbursable contract, where the direct cost and a percentage of the indirect costs are paid. This type of contract requires the accounting system approval under FAR subpart 16.3.

What is QuickBooks? And Is QuickBooks a DCAA Approved Accounting System?

QuickBooks is an accounting software solution that allows for integration across multiple platforms to make payroll quick and easy. They have two main products that make their service worthwhile.

QuickBooks Desktop

This interface of web-based time tracking software and payroll makes QuickBooks Desktop an ideal tool for DCAA Compliance. We base this on our experience with hundreds of clients over several decades. Furthermore, the QuickBooks Desktop integrated payroll module permits the charging of time directly to the General Ledger. This includes Customer, Job, and Service Items, which are immensely beneficial.

QuickBooks Online

QuickBooks Online is a cloud-based solution that is not, at the outset, designed to meet the FAR and DCAA requirements and has some limitations. The good news is that there are ways to make the QuickBooks Online system meet all the government’s requirements without too much effort.

What is DCAA Compliant Accounting Software?

DCAA-compliant accounting software is software that meets DCAA requirements. Your chosen accounting package – in this case, QuickBooks is set up to meet the requirements. Timekeeping and the allocation of costs are of particular importance. Consequently, QuickBooks Time Tracking software integration is an essential aspect of DCAA compliance.

Refer to DCAA compliance explained for more information.

Any accounting package set up to meet compliance requirements will be subject to strict internal controls to ensure financial integrity. One of these internal controls should be an internal accounting system audit regularly. There should also be regular checks on a monthly basis to see that all the income and expenditures balance.

The Benefits of Being DCAA Compliant for Small Businesses

If you are DCAA compliant, you may be one step closer to securing funding from the federal government programs SBIR and STTR. These programs gear towards supporting innovation and technology in small businesses. Integrating Hour Timesheet’s DCAA-compliant timesheet with QuickBooks will be invaluable in pursuing this kind of opportunity.

Is QuickBooks DCAA Compliant?

Yes, QuickBooks can be set up to be DCAA compliant, but it doesn’t automatically meet DCAA standards and requires additional configuration to be compliant. Certain elements of the software do meet the standards, including the ability to properly segregate direct costs from indirect costs. This can be accomplished by using the software’s reporting features to separate costs by project as well as items versus expenses. When searching for DCAA-compliant accounting software, QuickBooks also operates under general ledger control, which is required under the standards. Another example of how the platform conforms with DCAA standards is its support of separating preproduction costs in a number of ways.

On the other hand, as a DCAA-compliant accounting system, QuickBooks as it is distributed falls short in a number of ways. For instance, it does not automatically calculate indirect rates per your company’s rate structure. It also fails to offer time tracking capabilities required to identify employees’ work according to intermediate or final cost objectives. Satisfying these and other requirements calls for expert configuration of the platform as well as integration with time tracking software that provides additional functionality. These are areas in which Hour Timesheet’s solutions can be of exceptional benefit to your enterprise. We provide you with the expertise necessary to make the most of your QuickBooks setup and ensure you are making QuickBooks DCAA compliant.

There are three areas to consider:

Chart of Accounts establishment
Flow of transactions
Cost and Computations

It’s important to note that one should always bear Generally Accepted Accounting Principles (GAAP) in mind when analyzing your accounting system.

Even if you understand all the regulations, it is still best to refer to the DCAA compliance checklist. Where possible, seek professional assistance! Be ready to implement policies and procedures that need to be applied consistently across your business.

Keys to Compliance

Employee time tracking posted daily with required explanations for edits and record locking.
Printable timesheet reports.
Policies & Procedures oriented toward FAR Compliance Criteria found in DCAA’s SF-1408 pre-award audit checklist.
Consistently applied labor dollar distribution accommodating uncompensated OT for salary exempt personnel.
Indirect Cost Pools and the ability to compute and forecast Indirect Rates applied to Direct Costs under Cost Reimbursable Awards.
Progress billing + Cumulative dollar values reported against award ceilings tied to cost proposals.
Identification and segregation of Unallowable Costs as defined per FAR 31.205.

This isn’t a comprehensive list, but it gives a good idea of what to expect. One of the best ways to help navigate QuickBooks DCAA compliance with timekeeping and accounting systems is to partner with a company that has a demonstrated knowledge of government contracts. It can also be helpful to review multiple services and look for important features in DCAA compliant time tracking systems.

What Happens if You Fail a DCAA Audit?

You may lose your contract or face a suspension of payment. Be assiduously aware of remaining compliant. Floor checks are routine, and timekeeping records are an essential part of your compliance. A floor check is the DCAA’s way of verifying your employees.

One way to help ensure you pass your DCAA audit is to get any requested information to your auditors quickly. This can speed up your audit, and help ensure the DCAA auditor has all the information they need. In order to do this, it’s best practice to keep excellent records and track every process and transaction. Hour Timesheet allows businesses to keep these kinds of records, in a convenient, cloud-based place.

Is QuickBooks a DCAA Approved Accounting System? Let Hour Timesheet help!

Hour Timesheet isn’t just a timekeeping software provider for government contracts looking to pass a DCAA audit. We also partner with dozens of CPA firms and consultants who can assist you with the entire life cycle of getting a DCAA-approved accounting system. Call Us Today! We can introduce you to our extensive list of experienced partners and answer the million dollar question…Is QuickBooks a DCAA Approved Accounting System?

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8a Firms and DCAA Compliance

Are you 8a certified small business and looking to stay compliant with DCAA standards? The Defense Contract Audit Agency (DCAA) is responsible for auditing and monitoring government contracts. As such, all businesses that contract with the U.S. Government must comply with the DCAA’s requirements. Here’s what you need to know about 8a firms and DCAA compliance, and how it affects your business.

What is DCAA and How does it Relate to 8a Firms and DCAA Compliance?

The Defense Contract Audit Agency (DCAA) is a federal agency within the U.S. Department of Defense (DoD). Its mission is to provide audit and financial advisory services for DoD acquisitions in support of national security objectives. It’s important for small businesses that contract with the government to understand their responsibilities under the DCAA guidelines and remain compliant at all times in order to avoid any issues or penalties from non-compliance.

Understanding Your Responsibilities Under The DCAA Guidelines

The first step towards complying with the DCAA guidelines is understanding them clearly. This includes knowing your obligations related to timekeeping, accounting, payroll, labor costs and more. You must also make sure that your accounting systems are up-to-date and accurate so that they can be easily audited by the DCAA if necessary. Additionally, you should ensure that all of your employee records are kept properly as required by law, as these will also be subject to review during an audit from the DCAA. Finally, it’s important to keep accurate records of all transactions related to your contracts with the U.S. Government so that you can demonstrate your compliance when needed.

How Can You Ensure You Are Compliant?

There are several steps you can take to make sure you remain compliant with the DCAA guidelines at all times:
First, create a comprehensive audit plan for yourself and your staff that outlines what needs to be done in order to stay compliant with all regulations set forth by the DCAA; this should include regular internal audits as well as external audits performed by certified professionals whenever possible.

Second, work closely with experts who understand the complexities of federal contracting requirements so they can provide guidance and advice on keeping up-to-date on changes in regulations.

Thirdly, make sure you have adequate training in place for yourself and your staff so everyone understands their roles and responsibilities when it comes to staying compliant; finally, invest in technology solutions such as software or apps designed specifically for helping companies stay in compliance with governmental regulations like those set forth by the DCAA—this could save you time, money and headaches down the road!

8a Firms and DCAA Compliance…Conclusion:

In conclusion, 8a certified business owners who contract with the US Federal Government must understand their responsibilities under the Defense Contract Audit Agency’s guidelines so they can remain compliant at all times. While there may seem like a lot of information involved in making sure this happens correctly, taking some basic steps like creating an audit plan, working closely with experts in federal contracting law, providing training for employees on compliance procedures and investing in technology solutions like Hour Timesheet specifically designed for helping companies remain compliant can greatly reduce stress levels while ensuring successful outcomes during audits from the DCAA!

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DCAA Compliance Guidelines For Your Small Business

Small business contractors working for the Department of Defense (DoD) have a duty to achieve and maintain compliance with strict government regulations and requirements. Failing to meet DCAA compliance guidelines could endanger a contractor’s current engagement or bar them from applying for and obtaining future federal contract opportunities.

Regulations and requirements specific to contractors are governed and monitored by the Defense Contract Audit Agency (DCAA) and include providing your employees with everything they need to do their jobs with ease and success.

If you are seeking your first or next government contract, we want to help you achieve and maintain the required DCAA compliance for small business owners.

Tips and Strategies for Your Small Business to Maintain Continuous DCAA Compliance

The most important thing to remember working with the DOD is how critical it is that you don’t fall behind standard DCAA Compliance Guidelines, which primarily entails keeping track of your business finances and your employees’ time tracking to ensure timely regular payments and their ongoing productivity and success.

Our team at Hour Timesheet understands how much you have to think about. With your business’s success in mind, we have compiled our three top tips and strategies to help you keep your small business DCAA compliant to protect your project, small business and future federal prospects.

1. Follow DCAA Compliance Guidelines for your accounting processes

The best way to prepare for an unanticipated audit is to set yourself up for continuous preparedness by instituting standard policies and procedures to keep everything running smoothly. If everyone is on the same page and can access records essential for audits in an instant, you won’t need to worry about moments of panic and chaos if you get the auditing call or visit.

We recommend that you make it regular practice to organize all invoices, track expenses, account for employee timesheets and check everything twice to ensure optimal efficiency, which can empower your team to maintain DCAA compliance.

2. Back up your pricing for proposals

Each time you create a proposal, you need to bid appropriately and back up your pricing with supporting research results and data. Make this task a priority because, if you have to undergo a DCAA audit, they will want this information, and it’s essential that you can easily provide all the data that supports your requested budget and subsequent uses of the funds.

Create a proposal template that allows you to include critical information, such as contract rates, labor hours and any other costs in an easily accessible way that you can explain to the auditors without hesitation.

3. Work with industry thought leaders who can help you maintain DCAA compliance with confidence

It’s important that you don’t underestimate how vital it is that you can prove you have consistently maintained DCAA compliance guidelines. Our team at Hour Timesheet works daily to continue enhancing our timekeeping software to help you prepare for an audit as if it could happen at any moment. The best part is that you will be prepared if it does, and you can relax in the meantime.

Contact us to learn more about our simple employee time tracking system designed for DCAA compliance.

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What Is the Difference Between DCMA and DCAA?

If your organization has been awarded a government contract, you need to understand two government contract agencies that require your compliance: DCAA (Defense Audit Contract Agency) vs. DCMA (Defense Contract Management Agency).

As of December 2021, the Department of Defense (DoD) reported working with approximately 20,000 contractors within the DOD’s area of responsibility.

With so many government contract organizations spread throughout the world, it’s crucial that the U.S. government develops and regularly updates regulations that keep the DoD and contract organizations aligned in their goals and according to government regulations.

What Is the the Defense Audit Contract Agency (DCAA)?

The Defense Contract Audit Agency (DCAA) is a government agency connected to the DoD, working on behalf of various government agencies.

The DCAA functions to ensure consistent compliance with government regulations such as Defense Federal Acquisitions Supplement (DFARS), the Cost Accounting Standards (CAS) and the Federal Acquisition Regulation (FAR).

What Does the DCAA Audit Cover, Entail and Establish?

The DCAA performs regular audits on government contracted organizations to ensure that each one follows the government’s recommendations and regulations to the letter. Every contractor that applies for and is awarded a government contract understands that it could be selected to undergo a Defense Audit Contract Agency audit at any time.

DCAA compliance means that, per the outcome of the audit, the government contractor follows the federally established guidelines and may proceed with the contract.

Who Needs to Maintain DCAA Compliance?

Every contractor awarded a government contract from the DOD and other government agencies must follow all the federally established laws and guidelines. It is impossible to know if or when a contractor might receive an audit, so it is imperative that contractors commit to continuous compliance.

How to Stay DCAA Compliant

Government contractors must focus on documenting and accounting for various expenditures related to their business, including:

Hiring

Employee time management and payroll

Equipment needs

Any other financial factors related to the organization’s ongoing operations

The Risks and Penalties of Non-Compliance

If a government contractor is found to be non-compliant in one or more areas during an audit, they risk not being able to apply for future government contracts offered by the DoD.

What Is DCMA?

The Defense Contract Management Agency (DCMA) focuses on a part of the DoD that works directly with government contractors to ensure the government is getting the most value and highest quality from each mutual engagement. Operating under the direction of the Under Secretary of Defense for Acquisition, Technology and Logistics, the DCMA is a relatively new area and focal point.

The agency manages each contract issued by the DoD and oversees matters like the delivery of materials and disbursement of requested funds for government projects.

The DCMA is more proactive and cooperative, working in tandem with government contractors to ensure mutual success, rather than what is more of an accountability or watchdog function of the DCAA (Defense Contract Auditing Agency).

The Compliance Requirements for the DCMA

Government contractors must meet certain criteria and expectations to ensure DCMA compliance, including setting and adhering to a specific schedule agreed to in the proposal. They must also prove that they are compliant with agreed upon bookkeeping, time tracking and finances.

The DoD provides each government contractor with at least 32 specific guidelines to follow.

Similar to the DCAA non-compliance penalties, government contractors may lose the ability to apply for and secure future government contracts. Worse penalties involve the cancellation of the current contract.

The DCMA vs. DCAA: How Different Are They?

The DCMA and DCAA primarily differ in the way that each agency interacts with government contractors and the overarching requirements.

Our Time Tracking Software Can Keep You DCAA Compliant Without Worry

Our time tracking solutions at Hour Timesheet can help you achieve and maintain ongoing, pitch perfect DCAA compliance as a government contractor to keep your current contract and receive many more.

If you’re ready to tighten up your time tracking activities and keep the Defense Contract Auditing Agency happy, start your free trial today

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How To Keep Track Of Employee Hours

Time tracking remains the most effective way to measure your employees’ value to your business. It is also the most practical way to pay them for their commitment and service to your organization. That’s one reason why it is so important to find out how to keep track of employee hours.

Additional benefits of learning how to track employee time worked include Defense Contract Audit Agency (DCAA) compliance, accurate payroll reporting, employee performance, time management, project progress, billing clients, and identifying potential issues and problems. Now that we have some thoughts in mind about why employee time tracking is so important, let’s dive deeper into this topic.

Tracking Employee Work Hours

Considering all the benefits of tracking employee time, you are probably wondering about the best way to do it. These days, you have plenty of options, ranging from manual pen and paper techniques and desktop timeclocks to comprehensive automated time tracking software programs that do it all.

Like most businesses, you probably don’t have time to take the traditional route and would rather find a user-friendly, high-functioning and customizable software tracking tool. You might find yourself lost in a sea of time tracking technology, requiring guidance regarding what you need along with best practices and standards.

What to Look for in Time Tracking Software

You might not know how to start your search with so many software options available. Here are four things to look for in time tracking software.

Payroll Integration

Payroll integration allows your payroll system to sync with other software programs. With integrated payroll capabilities, you can quickly and easily access vital information, including historical time and attendance records, all signed documentation from all employees, information about employees’ benefits and tax details, and workers’ compensation files.

Track Employee Hours and Job Costs

Job costing is a method included in different time tracking software that allows you to track all costs and revenue attached to each project. You can track everything from human resource investments to material costs and more.

Leave Tracking

Leave tracking is a crucial feature included with time tracking software, ensuring that your HR team and employees always know the status of vacation, PTO and sick time. Anyone who has managed leave time manually knows that requests for leave slips can fall through the cracks. Leave tracking also lets employees check their available time to avoid any missteps or confusion before making vacation plans. Finally, time tracking software’s inclusion of leave tracking lets everyone in the office know when an employee is out of the office.

Location Tracking

Employees who work remotely or who are frequently away from their desks can let other workspace members know where they are with location tracking capabilities enabling them to not only track employee work hours from Hour Timesheet’s simple and free mobile app.

Frequently Asked Questions

Is your software DCAA compliant?

Yes! Hour Timesheet provides detailed audit documentation, manager approvals and daily employee reminders to enter time tracking information, including authorized charge codes.

Will my team still need to do any manual data entry?

You won’t need to do much manual data entry, if any. We have automated and streamlined nearly every facet of employee time tracking.

Our Solutions Will Streamline Your Time Tracking Processes

At Hour Timesheet, our time tracking software will be a game-changer for your payroll department and employees. We offer an integrated system that ties everything together to keep valuable employee information at your fingertips. You won’t need to wonder about how to track workforce hours again.

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