With the Defense Contract Audit Agency (DCAA) under increasing pressure as the lead auditor for government contractors, companies competing for their first federal government contracts should be prepared to pass an audit even before winning a contract.

DCAA can audit contractors before a contract is awarded. If a company’s accounting system doesn’t pass the DCAA audit, the contract officer can choose to award the contract to someone else. Companies that look at the time and expense of making their accounting system DCAA compliant sometimes decide not to bother until they win a government contract. Then they have to scramble to get ready for a ‘make or break’ audit.

DCAA can evaluate a contractor’s financial situation to ensure the contractor is financially capable of fulfilling the contract, as well as determine if the contractor’s accounting system accumulates and allocates costs based on Federal Acquisition Regulations (FAR). They also want to see that the contractor has controls and policies in place to ensure the accounting system remains DCAA compliant during the life of the contract.

Companies thinking about bidding on government contracts should visit the DCAA Resource Center at DCAAPortal.com to see what DCAA accounting involves.

VBP OutSourcing offers DCAA accounting assistance to those contractors that would like to outsource their accounting needs. They also offer mock audits, which can identify potential issues in time to correct them before an audit.