“A necessary evil.” If we’re being honest, that’s probably most defense contractors’ answer to the question, “What is the DCAA?” As the organization responsible for vetting defense contractor qualifications, the Defense Contract Audit Agency is also the recipient of its fair share of ire. While it’s understandable that contractors need to be qualified and taxpayers dollars spent on fair and reasonable contract prices, it can also be confusing and cumbersome for contractors to establish DCAA compliance.
For defense contractors, the challenge of establishing DCAA compliance is particularly vexing because few business outcomes are as potentially disruptive as failing to meet DCAA audit standards. In order to reliably ensure compliance with standards–and to ease the process of demonstrating this compliance–adequate accounting and financial reporting software is a critical tool. Understanding which software is best-suited to the task can represent its own challenge, though. This article is designed to answers this question and get you on the way toward more effectively and easily demonstrating DCAA compliance via software.
Before answering the question of how software can assist with establishing DCAA compliance, it’s worth taking a step back to consider what “DCAA compliance” fundamentally entails. There are many elements to achieving DCAA compliance. In fact, the DCAA has provided four different checklists to help contractors with self-assessment. But to simplify things, the regulations can be observed to cover a few key areas. Contractors looking to prove compliance with DCAA standards will need to produce documentation detailing:
The natural question many individuals will formulate is something along the lines of, “So what’s the best DCAA compliant software?” The idea of “DCAA software” is a bit trickier than it might appear on the surface. Software developers do not have to submit their solution to the DCAA for approval before they can sell it to the public. Software is not reviewed by the DCAA. In her article, “Pass, fail, or adapt: How to respond to changing DCAA audit rules,” Marcelle Green, the Marketing and PR Director for VBP OutSourcing properly observed, “There is no such thing as ‘DCAA approved’ software.”
No solutions will ever appear on a list of approved systems because such a list simply does not exist. When people talk about DCAA compliant software, it’s really a misnomer–or at least a semantic shortcut. While the software may be optimized to provide the required reporting, technically the software isn’t “DCAA compliant,” itself.
In reality, the DCAA will occasionally review your accounting processes and documentation before contracts are awarded, and throughout the entire duration of your project. During this audit, the DCAA will determine the accuracy and suitability of your process for accumulating costs to ensure reliable cost documentations have been implemented.
While software isn’t “DCAA compliant” itself, software can provide the core features you need to demonstrate DCAA compliance. It’s worth considering some of the core features that will be needed to substantiate your companies compliance:
Example: Watch how Deltek Vision handles time and expense tracking.
Example: Here’s a screen grab of a “Project Cost Summary” report from Unanet Project Tracking detailing direct and indirect costs.
Example: Watch a demonstration in creating trial balance reports in Dynamics GP