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Recently, DCAA was taking exception to rental costs of a small business contractor, claiming the cost was a related party transaction as an owner was the lessor or leasing the facility to the contractor. Truth was the lessor was a minority (less than 50% owner). DCAA claimed that since the owner of the building was also an owner of the the company it qualified as a

Recently the DCAA has revised its guidance to its auditors significantly. One such change is how they assess accounting systems. Now auditors are supposedly limited to a pass/fail evaluation. In the past auditors had the flexibility to `consider materiality, and contractor actions in making an assessment. This guidance was presumed to be focused on the major contr

Recently I received information confirming that DCAA is applying a full court press on a number of subjects. One is compensation. For small and medium sized businesses this means owner and partner compensation. The DCAA will be looking closer at these costs to make sure they meet the requirements of FAR 31.205-6. The costs to participate and run the business are g

This is an information post. DCAA on December 10, 2009 provided direction and audit guidance to its auditors to determine compliance with the 2009 Appropriations Act. This Act limits indirect costs on DoD research grants and other contract vehicles. The limit is 35% of total costs. DCAA has instructed its auditors to verify compliance with this requirement and to a

Over a year ago DCAA made an abrupt change in how it handles audits by considering even minor deviations from compliance requirements a major deficiency. As a result, it has been recommending a host of negative actions including rejecting the adequacy of accounting systems for government contracting. Initially this was aimed at large DoD businesses. However it is a

Contractors that execute cost reimbursable contracts or other contracts that invoke the Allowable Cost and Payment Clause (FAR 52-216-7) are required to submit its Incurred Cost Proposal submission within six months after the the completion of the accounting year. This proposal establishes final direct cost and indirect rates for the fiscal year. For calendar year