A Simple Step Toward Becoming DCAA Compliant

Let's face it, DCAA compliance can be an overwhelming task for some small contractors. Some may feel the cost to maintain a compliant accounting system outweigh the benefits. However when a contract award is up for grabs, having an existing DCAA compliant system is like having an insurance policy when you need it most.

Where do you start? DCAA compliance is an ongoing task and it is loaded with a list of requirements. One requirement is a written accounting policy. Below is a recommendation for drafting an accounting policy:

Document your existing accounting procedures

It sounds like a tedious task. The thought of drafting accounting procedures reminds me of a Ph.D. candidate writing a dissertation. The end result is a thick stack of papers. Documenting accounting procedures does not need to be complicated nor does it have to be a minimum number of pages.

  1. One of the easiest methods for drafting accounting procedures involves documenting current procedures. This is best done by the person performing your accounting tasks. For example, one month, request your accounts payables person to document every step taken to record and pay bills while he or she is actually recording the transaction. Those steps become the outline of the accounting procedures.
  2. The next step is to have another person test the procedures on a few payables. During this process some changes may be made to reflect the actual steps. The key is making sure there is consistency in the process.
  3. The last step is to ensure the existing accounting procedures above are DCAA compliant. The requirements of a contractor's accounting system are defined in DFARS 252.242- 7006 (a) (2). Additional details can be found on the DCAA Small Business portal. After identifying potential discrepancies, modify the draft of the accounting procedures.

Repeat this step for every task currently being performed by the accounting staff. It will provide a documented outline of your company's accounting procedures. Modify the existing procedures to conform to DCAA accounting system requirements. Starting with one accounting task keeps it simple. Repeating these simple steps will yield a draft of a written accounting policy required by DCAA.