Government contracts can be lucrative but they come with strings attached. Among the most critical? Compliance with the Federal Acquisition Regulation (FAR) and Cost Accounting Standards (CAS). Yet, too many small to midsize contractors make one dangerous mistake: treating compliance as an afterthought. In reality, even minor oversights in your accounting system can lead to disallowed costs, rejected invoices, or worse an audit that stalls payments and jeopardizes your entire contract.
The Real-World Cost of “Good Enough” Accounting
Many contractors enter the federal space with a commercial mindset. But unlike private clients, the U.S. government expects contractors to maintain an audit-ready accounting system at all times. That means:
- Segregating direct and indirect costs properly
- Following timekeeping protocols to the letter
- Generating compliant reports for incurred cost submissions
- Tracking project costs down to the task level
Failing to do any of the above even unintentionally can trigger a cascade of issues. We’ve seen it firsthand: contractors facing payment delays of 6–12 months due to a single compliance red flag. Others are forced to retroactively clean up months (or years) of records at great expense.
What “Audit-Ready” Really Means
DCAA (Defense Contract Audit Agency) doesn’t just want your financials to be accurate—they want them to be documented, consistent, and reproducible. That means having:
- A compliant chart of accounts
- Timekeeping that ties directly to labor distribution
- Clear allocation methods for indirect costs
- Policies that match actual procedures
In short, “audit-ready” isn’t just about having clean books, it’s about proving your system is built to protect taxpayer dollars.
How PWCPA Helps Government Contractors Stay Ahead
At PWCPA, we specialize in working with government contractors who want to stay proactive. Our services go beyond general bookkeeping. We help you:
- Set up and maintain a DCAA compliant accounting system
- Prepare for pre-award or incurred cost audits
- Interpret FAR and CAS requirements in plain English
- Develop cost proposals that stand up to scrutiny
- Train your internal team to prevent errors before they occur
We act as your strategic partner so you can stop guessing and start growing.
Compliance Is a Business Strategy
Think of compliance not as a burden, but as a competitive advantage. When your accounting system is audit-ready:
- You respond faster to RFPs
- You pass audits with confidence
- You avoid payment delays
- You build credibility with government agencies
- You become eligible for larger, more complex contracts
Final Thoughts:
If you’re treating compliance like a box to check after winning the contract, you’re playing a dangerous game. The smartest government contractors build compliant systems before the audit comes knocking.
Let’s make sure your accounting system is built to win and keep government contracts.
Ready to take control of your compliance?
Schedule a free consultation with PWCPA today. We’ll review your system and show you exactly what needs to be fixed before it costs you a contract.