RKI routinely performs pre-award and post award accounting system evaluations. Our reports identify significant deficiencies, material weaknesses, and areas for process improvement. Clients most frequently ask for these to satisfy management and/or internal audit interests or have us perform them so that they may use our report as part of a proposal package to demonstrate to the U.S. Government or prime contractor that they have an adequate accounting system suitable to for the award of a contract or subcontract.
For additional information regarding RKI’s Accounting System evaluation services.
Requirements of your accounting system for U.S. Government contracts differ between contract-types. Not all contracts, and hence contractors, require the same level of accounting system capabilities. Per FAR 16.103, “Before agreeing on a contract type other than firm-fixed-price, the contracting officer shall ensure that the contractor’s accounting system will permit timely development of all necessary cost data in the form required by the proposed contract type.” Translated, this means that Contracting Officers must satisfy themselves that a contractor’s accounting system can meet the contract vehicle’s needs to protect the U.S. Government financial interests. In its simplest sense, any contractor performing work under cost-type contracts including Cost Plus Fixed Fee (CPFF) and Time and Materials (T&M) will be required to have an adequate accounting system, as determined by DCAA.
Prior to award of applicable contracts and after award of that contract. The Defense Contract Audit Agency (DCAA) audits your accounting for adequacy prior to award during a pre-award accounting system audit focused on the design of your accounting system and post award accounting system audit focused on the operating effectiveness of your accounting system including reviews of labor charging, project cost accumulation, indirect cost rate methodology, invoicing, and similar. Not having an adequate accounting system is a barrier to entry for a contractor looking to be awarded a cost-type contract.
While a Contracting Officer must satisfy itself that an accounting system meets the requirements of its contract-type, generally there are 2 sets of Accounting System requirements contractors are held to:
1. Pre-Award Accounting System criteria (SF-1408) (Link:
2. Post-Award Accounting System criteria (DFARS 252.244-7001 https://www.acquisition.gov/dfars/252.242-7006-accounting-system-administration)