Understanding DCAA and DCMA Oversight
DoD contractors operate in an environment with significant government oversight. While DCAA evaluates accounting systems, cost submissions and other financial compliance matters, DCMA oversees contract administration and contractor business systems. Maintaining compliant systems, processes, and documentation can help support your readiness for ongoing government review and evaluation.
With guidance from Cherry Bekaert’s experienced government contracting advisors, you can address DCAA and DCMA requirements, strengthen compliance and support long-term contract success.
DoD Awardees Must Maintain a DCAA Compliant Accounting System
If you receive funds from the DoD, you must maintain an accounting system that complies with FAR Part 31 and other DCAA requirements. The type and amount of funding you receive determines the level of oversight and audits. For contractors performing under cost-reimbursable awards, accounting systems must be capable of properly identifying and accumulating direct and indirect costs, supporting billing requirements and maintaining documentation needed to demonstrate compliance.
By collaborating with Cherry Bekaert, you can strengthen your accounting systems, support compliance with DCAA requirements, and maintain readiness for government audits.
Fixed-price Contracts Versus Cost-reimbursable Contracts
Fixed Price Contracts: Typically, fixed-price contracts are not subject to the same level of cost-based audit scrutiny because reimbursement is based on the agreed-upon contract price rather than actual costs incurred. However, you are still responsible for meeting applicable contract terms and performance requirements.
Cost-reimbursable Contracts: Cost-reimbursable contracts require contractors to properly account for all project-specific direct costs and the proportional indirect costs associated with contract performance. Because reimbursement is based on actual incurred costs, you are subject to increased oversight and audits. Maintaining a compliant accounting system, accurate records, and appropriate supporting documentation is critical to supporting compliance and audit readiness.
Cherry Bekaert can help you align your accounting and compliance practices with federal requirements.
DCAA Audits of Cost-reimbursable Awards
To prove you’re adhering to government award requirements, you will be audited. With cost-reimbursable awards you are responsible for accounting for the costs you will be reimbursed for, and therefore subject to several types of DCAA audits, including:
- Pre-award Audits
- Indirect Cost Rate Projection Audits
- Progress Billing Audits (including examining your WAWF billing)
- Annual Incurred Cost Submission Audits
- Surprise Floor Check Audits
- Accounting System Audits
- Contract Close Out
Most of the audits listed above are performed by the DCAA on a judgmental basis, or as requested by your technical customer or contracting office. The annual incurred cost submission has a 100% chance of being audited, although DCAA may rotate between desk audits and live, in-person audits, based on your overall risk assessment.
Our government contracting practice is skilled in DCAA audit preparation, so you can undergo the process with greater confidence.
Maintaining Business Systems Compliance
DoD contractors may be required to demonstrate that their accounting and business systems meet government requirements. Business systems compliance extends beyond accounting practices and can include areas such as estimating, purchasing, earned value management, government property management, and material management systems. Establishing compliant processes and controls can help support contract performance while reducing compliance risk.
Our experienced government contracting advisors can help you strengthen business systems compliance, improve internal controls and support contract performance throughout the contract lifecycle.
Navigating FAR, DFARS and CAS Requirements
DoD contracts are subject to a complex regulatory framework that includes the FAR, DFARS, and CAS. These requirements influence how contractors manage costs, accounting practices, business systems, reporting and contract administration. Maintaining compliance with applicable regulations is critical to supporting contract performance and responding to government oversight.
Cybersecurity and CMMC Requirements
Cybersecurity is a key component of DoD contracting. Depending on the confidentiality of the data you handle, you may need to address Cybersecurity Maturity Model Certification (CMMC) requirements to help protect sensitive information with applicable cybersecurity standards. Cherry Bekaert supports DoD contractors with CMMC readiness and assessment-related services and is an authorized CMMC Third-Party Assessment Organization (C3PAO), as well as a Registered Practitioner Organization (RPO).
