DCAA / Audit Readiness & Audit Support
As a government contractor, your business may undergo several different types of audits of your accounting and financial systems, calling on the need for DCAA audit readiness and DCAA audit support. While some audits may not be as involved as others, all audits can be stressful and potentially harmful without the proper preparation. JS Morlu can assist you clean up the books so you can put your best foot forward in the event of an audit. Proper cleanup of the books prior to an audit can not only save you money, but it can also save you time.
What is DCAA Audit Readiness?
When the government brings you on as a contractor, you are subject to their accounting policies and procedures, some of which need to be meticulously followed. Your accounting system needs to be an approved DCAA compliant accounting system if you want to obtain a cost reimbursable or cost plus contracts, calling on the need for an expert, like JS Morlu, working with you. Moreover, the DCAA conducts audits on a regular basis and you are required to submit a incurred cost report. During these audits, they will be checking you accounting system to ensure complete compliance. Audit readiness is concerned with reviewing your current accounting system to be sure compliance will be met. Failing to maintain proper compliance can result in lost contracts and additional fines and penalties.
What Services Does JS Morlu Offer?
JS Morlu offers complete services, from initial recording of DCAA contracts all the way to audit support and readiness. Since we stand behind our work and are there to assist with your every need, we will also engage the auditors for you if you desire. On the contrary, if you are looking for an independent auditor, we can fill those shoes as well. Our team has experience with DCAA procedures and audits. We provide multiple audit support services including:
- DCAA Pre-Award Accounting System Audit
We can help your firm set up systems that ensure you meet the required criteria. DCAA will determine if your company’s accounting system for accumulating costs meets the government’s requirement when awarding a contract. It is up to you to make the necessary adjustments to your accounting system to make it acceptable. If there is a failure, once you have followed through on the auditor’s recommendations you will need to contact the DCAA so they can perform a follow-up audit. The time between correcting the failures and DCAA follow-up could cost you a contract and prevent your firm from growing.
- DCMA Pre-Award Financial Capability Audit
Before you are awarded a cost reimbursable or any cost type contract, DCMA will look at certain documents to include cash flow forecasts, sales pipeline, financial history, financial reports given to stockholders and banks, SEC filings, any loan/financing agreements with statements showing your good standing, and employee federal payroll tax returns. This is done to determine if your company is financially viable to complete the contract.
After fully reviewing this information, the auditor will make their recommendation of whether they feel that your company is financially stable enough to fulfill the contract. If your company is considered not to be financially viable, you will be notified immediately and informed of any deficiencies. This can be a time-consuming process and you need an experienced accountant like JS Morlu to help you go through the process.
- DCAA Post-Award Audits
A Post-Award audit is usually performed after the contractor has been performing under a cost-type contract for a period of time, approximately six months. This follow-up audit is also requested by the Contracting Officer. This audit involves more detailed testing of transactions. We can help you prepare for any post-award audits, and we also provide Noncompliance Corrective Action Assistance.
- DCAA Incurred Cost Audits
Incurred Cost Reports are required to be submitted to the government 6 months after the end of the contractor’s fiscal year for cost reimbursable type contracts. The government will audit these reports as well. JS Morlu can help you prepare your Incurred Cost Report, and also help you through an audit of this report.
- Proposal Audits
Occasionally, the government contracting officer requests that DCAA reviews proposal costs to verify that they are reasonable and allocable. This review, or audit, is often conducted as an onsite visit by a DCAA auditor who asks for information (such as indirect rates backup). The audit typically causes great concern for our clients. Unless we can intercede on their behalf, this may result in the decrease in the price of our client’s proposal. We have experience working with the DCAA.
- Public Voucher Audit
DCAA often conducts voucher audits to determine the accuracy of the invoices submitted to the government. They will review the invoices to make certain they are in accordance with the contract specifications. The audit process will track the accounting transactions from the source documents to the invoices and payments to ensure the process is complete and accurate. We can guide you in preparing your invoices and working with DCAA on your behalf.
- Timesheet Check
Contractors who charge labor hours to Cost Reimbursable Contracts will have an annual timesheet check performed by DCAA. This unscheduled visit by a DCAA auditor is to verify that proper timesheet procedures are being followed. The auditor will first review the timesheet procedures with the company’s financial personnel. Randomly selected employees will then be asked how they complete their timesheet, how errors are corrected, who tells them what charge codes to use and other questions. We can assist you and your employees understand the process and pass this type of audit.
- Contractors Purchasing System Review
The government wants to know how your company is spending taxpayers’ money. Contractors Purchasing Systems Reviews (CPSR) is the means the government uses to measure how efficiently and effectively a contractor spends government funds and evaluates compliance with government subcontracting policies, regulations, and laws. The Administrative Contracting Officer (ACO) will withhold or withdraw approval of a company’s purchasing system when there are major weaknesses or when your company is unable to provide sufficient information upon which to make an affirmative determination. JS Morlu can assist you to become and remain compliant.
- Inspector General Audits
Inspector General’s usually conduct audits of contracts and programs paid for by the U.S. Government. IG audits can be just as daunting and intimidating as audits by DCAA. We are particularly experienced with audits conducted by the USAID Inspector General. We have provided audit readiness support and helped clients successfully complete USAID Inspector General’s audit and financial reviews. Don’t go into an IG audit without an experienced hand assisting you.
What if I Need DCAA Services That Aren’t on the List?
JS Morlu’s main goal is to understand where we can provide value to you as a DCAA contractor. If you need a specific area looked at in your business or simply just need advice, we can help. We offer agreed upon procedures based on your specific situation to ensure your accounting and tax needs are being met. Moreover, many business owners find they need help in a few different areas. In these cases, JS Morlu works with you to put together a service plan that hits on all the areas you are struggling with. Our pricing isn’t a one-size-fits-all. Instead, we work with you to pick out the areas you need more assurance on and build from there. JS Morlu can help with anything and everything DCAA, making us your go-to experts when issues or audits arise. Other common services include:
- Estimating System
- Material Management and Accounting System (“MMAS”)
- Property Management System
- Earned Value Management System (“EVMS”)
What are the Risks of Foregoing Audit Readiness?
When you neglect proper due care within your business, risks arise. Government agencies are very particular in the accounting methods they accept, meaning if errors are found, you could risk losing the contract altogether. If your business primarily profits off government contracts, this can lead to business continuity issues. Financial improvement and audit readiness provided by JS Morlu gives you peace of mind that your upcoming DCAA audit will go smoothly. We catch errors and misstatements before government officials comb through your books with a fine comb, leading to reduced fines and penalties. Regardless of business size, DCAA audit readiness and preparation completed by JS Morlu is a factor you can’t afford to forego.
What Makes JS Morlu Qualified?
JS Morlu has been helping government contractors for over a decade. Our team understands what the government will be assessing, giving us leverage to help you properly prepare your accounting system and financials. In addition, regulations are constantly changing each year, requiring you to stay on top of changes to avoid costly errors. Instead of reading up on DCAA regulations, JS Morlu does that for you. We consistently review the DCAA manual for changes that directly impact your business, saving you time and ensuring you remain in compliance with all regulations. We’ve worked with dozens of clients who can testify that our DCAA audit preparation and readiness services are top of the line and beneficial to your business.
What if I’m Not Located in Virginia?
The goods news is that technology has made remote accounting a possibility. Although JS Morlu is an audit readiness and audit support service provider in the DC, Maryland and Virginia Metro Area, that doesn’t mean we can’t help you if you are located out of state. Remote capabilities give us leverage to work with clients across the nation, even globally. JS Morlu will go to great lengths to guarantee that your needs are met, regardless of location. First, we will set up a consultation to discuss the DCAA needs prevalent in your business. Then, we will get to work providing you with our valuable knowledge and expertise. Time zone differences don’t matter as we will cater to your needs and busy schedule.
All businesses completing government contracts can benefit from DCAA audit readiness and DCAA audit support with JS Morlu. We go above and beyond to ensure that your accounting system is DCAA compliant. We offer a wide variety of services, from DCAA pre and post awards to timesheet checks and contractor purchasing system reviews, to fit all your business needs. Foregoing our professional help leads to unfavorable audit results, which can have a monetary impact on your business. Skip the hassle and contact JS Morlu to give your business the best chance of success before government officials analyze your books.