All businesses must have some form of accounting. For some small companies, business owners are comfortable maintaining their own books. For others, an in-house accounting department handles the finances. But for government contractors, a professional accountant that specializes in government regulations is a must. Keep reading to learn why you need professional accounting services if you are a contractor for the government.
Familiarity with Accounting Regulations
As a government contractor, your business is subject to a number of different regulations from several organizations—namely, the Defense Contract Audit Agency (DCAA), Cost Accounting Standards (CAS), and Federal Acquisition Regulation (FAR). Your bookkeeping and accounting must meet these standards down to the last detail, or your business will suffer. Failure to meet standards will, at the very least, cost you your current contracts with the government, and may even bar you from applying for future ones.
Most accountants are familiar with basic standards for bookkeeping and records keeping. But if you’re a government contractor, you need an accountant who specializes in government compliance and is familiar with the standards set forth by DCAA, CAS, and FAR. With government accounting specialists handling your finances, you can feel confident that your books are being kept up to standard, and you’re prepared to face any regulatory audits that may come your way.
Use of the Right Software
Accounting software is all created equal, isn’t it? That couldn’t be further from the truth. Government accounting specialists can help you find a flexible account solution that can adapt to your business’s unique needs and scale effectively as your business and contracts grow. Working with a professional accountant from the very beginning ensures that you’re using the right tools from the start, and that your accounting system is set up properly to maintain compliance with the institutions described above.
Optimize Internal Controls
With government contracting, your accounting software isn’t the only thing that needs to be up to DCAA, CAS, and FAR standards. Your policies and procedures that impact the accuracy of your accounting system must also follow strict regulations. These policies are often referred to as internal controls, and a government accounting specialist can help you ensure those controls are up to standard as well as optimized.
For example, your time-tracking procedures must follow certain standards to ensure that all employee hours are properly logged and secured within your accounting system. This keeps work hours (and, therefore, job costs) accurate. Your team must also be educated on the proper procedures to ensure this accuracy. If your internal controls don’t meet these requirements, you can fail an audit and lose a contract.
Plan for the Future
A professional accountant doesn’t just help you maintain the status quo by keeping your books up to date. We also take a proactive approach to your company’s finances, become a partner that can advise you on how to grow your business and better manage your cash flow. If you’re managing your books on your own, you’re likely just focused on data entry and the accuracy of your accounting.
With a professional, we can ensure accuracy while also analyzing the data we handle. We help you find ways to use your company’s financial information to grow and thrive, rather than simply putting the numbers into a spreadsheet.
Ensure Accurate Bids
When bidding on government contracts, it’s incredibly important that the bids you submit are detailed and accurate. If your bid is being seriously considered, you’ll work with a DCAA auditor to go over each of the numbers you included in your bid—and each of those numbers will need to be backed up by clear documentation and reasoning. Essentially, you must be able to prove that every line of your calculations is accurate, in addition to your final bid being as accurate as possible.
This level of accuracy can’t be achieve by chance or through a “best guess” approach. It requires precision and careful documentation of expenses. A professional accountant, especially one who specializes in government contract accounting, can help you to ensure that all of the proper documentation is in order before you even submit a bid. Then, when a DCAA auditor needs to review your data, that information will be organized and readily available to help the audit move along quickly and smoothly.
If you’re a government contractor, you can’t afford subpar accounting. Contact Witts CPA today to speak to one of our government accounting specialists and learn how we can help your government contracting business grow and thrive.