Benefits
Take command of your control system
Go beyond basic setup with internal controls that span functions and subsystems, built to support scalable performance.
- Gap analysis of subsystem controls
- Chart of accounts setup & refinement
- Indirect rate strategy & development
- Control environment setup & refinement
Connect systems, prove compliance
Make your processes — from pre-contract through performance and closeout — reconcile cleanly with your policies, procedures, and controls to prove ongoing compliance.
- Policy & procedure development
- Billing & invoicing support
- Billing & invoicing artifacts
Set the benchmark
Deliver auditor walk-throughs described as “the model example” — helping remove audit scope and build credibility.
- Entrance briefing preparation
- System demonstration
Succeed at every stage
Get system remediation and DCAA response support, leveraging a team that’s been in both your and the auditor’s shoes.
- Corrective action plan development
- Corrective action plan implementation
- DCAA questionnaire responses
Related
success stories
Take a deeper dive and discover how we’ve helped clients with Accounting System Compliance.
Fortune 100 Telecom Company
Received an approved accounting system in less than two months from third party auditor
Read moreFAQs
Can’t find what you’re looking for?
Why does our accounting system need to meet a specific standard to win government contracts?
In order to award certain types of government contracts, particularly cost-reimbursable, time-and-materials, or other flexibly priced contracts, the government must determine that the contractor’s accounting system can properly identify, segregate, accumulate, and allocate costs in accordance with FAR requirements. FAR Part 16 specifically requires an adequate accounting system before awarding a cost-reimbursement contract because the Government reimburses the contractor for actual incurred costs.
An adequate accounting system provides assurance that:
- Direct costs are charged to the correct contract or project
- Indirect costs are accumulated and allocated consistently
- Unallowable costs are excluded in accordance with FAR Part 31
- Labor charges and other billings are supported by reliable records
- The contractor can produce accurate, auditable data for invoices, incurred cost submissions, and contract reporting
If a contractor’s accounting system is inadequate, the government may be unable to award certain contract types, may impose additional oversight, or may question the contractor’s ability to manage federal funds appropriately. As a result, accounting system adequacy is both a compliance requirement and an important factor in establishing credibility and eligibility for government contracting opportunities.
What does an accounting system audit actually evaluate, and how do we prepare for one?
A DCAA accounting system audit evaluates whether your system meets the criteria established under DFARS 252.242-7006, covering 18 discrete criteria across areas including, but not limited to cost accumulation, labor distribution, billing controls, and indirect rate development. Auditors assess not just whether policies exist, but whether your people can demonstrate that those policies are followed consistently. Thorough preparation, consisting of a structured entrance briefing, a documented system demonstration, and a completed internal gap analysis prior to the auditor’s arrival, can help your organization narrow the audit scope and establish credibility with the review team from the outset.
Our accounting system was approved previously. What causes it to fall out of compliance?
Approval is a point-in-time determination, not a permanent status. The conditions most likely to introduce compliance risk after approval are organizational growth, system migrations, changes to indirect rate structures, and the addition of new contract types that impose requirements the existing system was not designed to support. The DCAA can revisit system adequacy at any point, and a finding of material weakness can result in withheld payments, corrective action requirements, and the inability to be awarded cost-reimbursable contracts. Organizations that treat accounting system compliance as an ongoing discipline rather than a one-time setup consistently avoid the remediation costs that come with reactive responses.
How do policies and procedures factor into accounting system compliance?
Policies and procedures establish the system design and framework for internal controls, ensuring they are intentional, standardized, and consistently applied across the organization.
Auditors use them as the baseline against which they test actual practice. A system where the written policy and the observed process do not align is one of the most reliable predictors of an adverse finding. Capital Edge maintains pre-developed, audit-ready and DCAA-approved off-the-shelf policy and procedure frameworks that can help growing contractors accelerate compliance. These documents can be tailored to reflect your organization’s actual processes, roles, and responsibilities. The objective is not documentation for its own sake. It is a control environment where documented practices and day-to-day operations are fully aligned.
How quickly can an accounting system be brought into compliance, and what drives the timeline?
A well-scoped engagement can achieve accounting system adequacy in under two months when the foundational elements, chart of accounts, indirect rate structure, timekeeping, and labor distribution controls, are addressed in sequence with clear ownership and active participation from functional and organizational leadership. The variables that extend timelines are system complexity, gaps in existing documentation, and delayed access to key personnel. Organizations that front-load the gap analysis and move quickly on corrective action plan implementation consistently compress the timeline. The process is not inherently slow; it moves at the pace of organizational readiness.
What is the business case for investing in accounting system compliance beyond just passing an audit?
An approved accounting system expands the universe of contracts your organization can pursue. Without it, cost-reimbursable and time-and-materials contract types are effectively off the table, limiting your competitive position to firm-fixed-price work where margin pressure is highest. Beyond contract type eligibility, a well-designed system produces the cost visibility that finance and operations leadership need to manage contract profitability in real time. Organizations that build compliant systems with that dual purpose in mind, audit readiness and business intelligence, extract more value from the investment than those treating it as a pure compliance exercise.
Build a system that wins
Design, integrate, and validate compliance in your accounting system to unlock larger contract opportunities.
*Excluding audit timeline. Audit timelines will vary by auditor and audit type.