What is the DCAA, and What Audits Do They Perform?
by Kim KosterGovCon, Government Compliance
Aug 08, 2019
What is the DCAA? Let’s quickly level set on the mission of the Defense Contract Audit Agency (DCAA). Their primary function is to perform contract and financial audits for agencies that are responsible for acquisition and contract administration for the US Government. DCAA audits ONLY government contractors. They conduct these audits in accordance with the Generally Accepted Government Auditing Standards (GAGAS). The principles that GAGAS embodies are unbiased audit conclusions based on facts. DCAA is a very vital part of the acquisition process for the Department of Defense (DOD) and certain other agencies. Their charter is to make sure that the taxpayers’ money is spent responsibly and ethically by conducting audits that ensure the validity of costs throughout the acquisition process. They have a tremendous amount of influence because they communicate with the Contracting Officer (CO) and make recommendations that have an impact on contract negotiations. The recommendations help the CO understand what the price of the contract should be. In the past, the relationship between the government contracting community and DCAA has been strained. DCAA is making a concerted effort to improve overall relationships with government contractors by improving communication and coordination. Common DCAA Audits Understanding the various audits the DCAA tends to run is necessary for preparing for them. In future blogs, we will dive deeper into each audit, but for now, here is a quick description of some of the most common ones: Incurred Cost: The most common type of DCAA audit, an incurred cost audit exists to ensure that claimed actual costs and billed costs reconcile. Forward Pricing: This audit is conducted on contract proposals, are related to a specific contract, and are conducted prior to award. The purpose of this audit is to ensure out year rates are reasonable and realistic for use in forward pricing. Pre-Award: Accounting System Audit: An Accounting System Audit is performed to ensure that a government contractor’s accounting system complies with laws and regulations, is reliable, there is a minimal risk of misallocations and mischarges, and allocations and charges are consistent with billing procedures. Timekeeping: This audit aims to ensure the contractor is compliant with its timekeeping practices, that the employee time records are correct, that employees perform in their assigned job classifications, and time is charged to the proper cost objective. Special Audits: Special audits may be performed for a variety of reasons, but typically occurs when a Contracting Officer needs an independent financial opinion on specific portions of a contract for a contractor’s accounting business system. Other Audits: These audits are usually performed for a variety of reasons, usually when there is potential for a high risk of misallocation or mischarging of costs. Ease the Path to Compliance with Unanet What is the DCAA? Something you don’t have to fear with the help of Unanet! Remember that there is no such thing as DCAA compliant software. It is your organization and procedures that will be assessed for compliance. That said, Unanet is uniquely designed for government contractors and has been battle-tested for compliance rules and regulations. Our compliance features are built into the tool, making compliance part of the fabric of your business. Unanet currently has over 2,000 clients using and trusting the system. Unanet supports compliant accumulation and allocation of costs utilizing time keeping, expense accounting, cost pools, indirect rates, revenue recognition, and project management all in one truly integrated system. Whether you are a small new or a seasoned larger GovCon, you can count on Unanet for your compliance needs. Unanet is recognized by the audit agencies as being “compliant ready,” giving you an immediate advantage in the audit process. To learn more about the DCAA, download our white paper, “A GovCon’s Essential Guide to DCAA Compliance.”
Unlocking Growth Strategies
by Kim KosterBusiness Development & Growth, Professional Services
Aug 07, 2019
Using your financials to make sound business decisions and craft growth strategies. Growing is the goal of most businesses. What is difficult is formulating a plan to make the growth a reality. Where do you start? The answer is in the financials, both past and current. Best in class companies know that using financial information and measurable key performance indicators (KPIs) is the key to unlocking growth strategies. This blog will help you understand how to use financial information to find possibilities for growth. Data Quality Data quality deserves its own discussion because without it, there are no reliable KPIs. Here are some tips that will help ensure that you can gather reliable financial data that can be used confidently for making critical business decisions: Treat data like any other asset Use an integrated system (system = people, processes, and tools) Establish processes and procedures Train team members on tools and processes Have the discipline to enforce process adherence Have both historical and current data accessible to decision makers Good quality data can be put to work to help unlock growth strategies with the six steps below. Define the KPIs that help drive your strategy Use internal and external benchmarks Look for trends in the data Account for Anomalies Take the time to probe deeper Utilize an Integrated Tool Set STEP 1 – Define the KPIs that help drive your growth strategy What is your overall strategy? Is it to grow a by a certain % over time? Or to grow a specific region or product line? Once a basic strategy is defined then associated KPIs can be identified. For instance: If the desire is to grow 30% in 3 years the Compounded Annual Growth Rate (CAGR) is a KPI that can be utilized. If the goal is to grow one product line then looking at profitability and CAGR for each of the business portfolios would be an indicator of which product line to invest in. STEP 2 – Use internal and external benchmarks Benchmarking is a great methodology to look internally and externally to see what others are doing to be successful. Internal benchmarking across divisions, departments, portfolios can be very helpful. Unfortunately, many companies are still siloed with varying processes and procedure and disparate systems making the exchange of information difficult. External benchmarking can be very powerful and there is no prep or manipulation of the data internally ultimately saving money and time. Why is benchmarking externally so important? Gives a perspective of the overall industry Provides an understanding of what others are doing to be successful Produces ideas for improvement Makes the company more competitive Helps win more business and grow the organization STEP 3 – Look for trends in the data Data analysis is the process of inspecting, cleansing, transforming, and modeling data with the goal of discovering useful information, suggesting conclusions, and supporting decision-making. It requires that you look for patterns and relationships within the data. For instance, when looking at labor forecasts or utilization there will likely be more vacation taken in June, July, and December. Looking at trends will help you have a better understanding of the data and what it is telling you. Step 4 – Account for anomalies Look for special occurrences in the data. Occurrences like a huge snow storm that shuts the office down for a week resulting in no billable work performed should be analyzed and understood. It may not snow that much for another 20 years so make sure that does not skew the data you are making decisions from. Step 5 – Take the time to dig deeper KPIs are great but is can be worthwhile to understand what the underlying data looks like. An example is that the overall company profit rate was 10% and that is great! It would be important to drill down further to see what each portfolios and project contribution is to that number. You may have one portfolio that is excelling and other that is dragging down the average. Growth will likely happen in the successful portfolios and projects. Step 6 – Use an integrated tool set A fully integrated system will assure that the data is linked together properly increasing the probability of the data being correct. There will be no manual efforts to mash the data together from disparate systems. The “mashing” takes labor to join the data into one source costing money and introducing human error. Integrated systems like Unanet give you an all-inclusive look at financial data and there are easy to use reports and dashboards that provide all of the information you need to develop a growth strategy backed by great quality data.
Time Tracking Software
by Kim KosterProfessional Services
Jul 18, 2019
Time tracking software is a critical first step to adopt in improving the performance of project-based services organizations, as it enables managers to understand: What is everyone working on? How much does each initiative, or project, cost? What work is billable (and non-billable)? How much margin/benefit is being produced for every hour charged? How much time are we actually spending on the key business priorities versus what we anticipated? What portion of labor cost is eligible for R&D tax credits? Beyond these questions, you will also want to consider how time tracking software can support these common requirements: Making it easy for staff to record time daily through a secure, user-friendly application accessible via a web browser, anywhere and anytime. Ensuring that people only charge to projects they are authorized to work on, for appropriate time periods, and using the correct labor categories for the work being performed. Tracking work by location for audit, or other, purposes. Recording ‘estimate to complete’ data from end users as input to project management and forecasting. Ensuring compliance with DCAA TimeKeeping Requirements, if you are government contractor. Supporting enforcement of other business rules, such as overtime rules, capturing comments on billable work performed, or change reasons. Offering timely approvals without undue overhead, taking into account your organization structure which may include project manager approvals, matrix management, alternate approvers, or customer involvement in the timesheet approval cycle. Facilitating online leave requesting and management capabilities for employees and line managers, ensuring visibility of staff ‘coverage’ in upcoming weeks and months. Providing detailed, itemized supporting information for customer invoices. Enforcing PTO accruals and leave balances Having consultants and subcontractors charge their labor hours in your time tracking system, delivering earlier knowledge on non-employee project costs, and optionally to avoid the need to receive and process a vendor invoice for those hours Delivering robust standard reporting, and simple ad-hoc report writing tools, for the project management team so that they can understand status in real-time, and address issues related to delays or overruns before they impact performance. Integrating with financial and contract management systems to leverage existing investments and current ways of working To understand how Unanet supports these time tracking software requirements and many more, visit the Unanet timesheet software overview.
The Benefits of Digital Transformation for Government Contractors
by Kim KosterGovCon
Jul 02, 2019
Digital transformation appears to some as a just a buzzword. However, it’s fast becoming an essential business priority for the C-suite in all sizes of government contractors in the drive for sustainable competitive advantage. What is the significance of digital transformation for government contractors, and what outcomes are being reported? C-suite executives are finding enormous value in automating time-consuming and inefficient tasks by integrating project management, accounting, and finance. This eliminates time wasted in reconciling transactions between systems and thereby freeing up time and resources to focus on strategic priorities. This is the foundation for digital transformation. Small and mid-sized GovCons have reported the following startling improvements: We have been able to grow topline revenue by almost 40% without having to add $1 of G&A support” “We reduced our invoicing process from 20 to 7 days, we can complete all month close procedures in 5 –7 days and improved our DSOs from 60 to 50. Additionally, we grew top line revenue by 25% in one year with no additional accounting staff. “Since implementing Unanet, invoicing takes between five to ten days, a reduction of more than 20 days from before. While major clients are demanding credit terms to 60 days, DSOs are reduced in 2014 from 160 to 70 days.” “We reduced invoice processing time by 65%. All invoices are now delivered with 48 hours of period end.” “We eliminated all off-system accounting, shortening the time to ‘close the books’ by 60%” “Our profit margin improved by 4% since Unanet went live.” “We increased the revenue dollars processed per $1 of accounting department salary by more than 300%” Unanet Customers Share Their Experience with Digital Transformation for Government Contractors At the 2019 Unanet Champions Conference in San Diego, four GovCon Financial Executives shared their perspectives on how their businesses have been transformed with Unanet, driven by both quantitative and qualitative improvements: Mark Rothman, CFO, NETE Shilpa Amato, Executive VP, Nalas Engineering Services Thomas Batty, Corporate Staff Operations, Frontier Technology Lisa Martin, Contracts/Accounting, Trevet “What was life like before Unanet?” Mark: Information was not timely, it was hard to get the data out, and we needed technical experts to write custom reports. Shilpa: We had disparate systems; our accounting system couldn’t provide Project Managers with information on project cost and project health. Billing was a nightmare. We couldn’t do Cost Plus billing directly from the system and had to resort to complex workarounds in Excel. Thomas: Before Unanet, data was always behind the times. We needed multiple spreadsheets to track everything. To make it worse, we received very poor response/support from our legacy vendor (Deltek) who was always focused on upselling. It was a bad time and lasted 10 years! Lisa: We were using a legacy product (Deltek GCS) which was being sunset and we were not happy with the idea of Deltek and Costpoint as a future solution due to the poor service we experienced, and the complexity of Costpoint. With Deltek GCS we leaned heavily on Excel to fill the gaps in the reporting we needed. We also relied on custom reporting which required Impromptu expertise. The relevant project information in the financial system was not accessible to Project Managers. Unanet’s one system solved all our problems. And in Deltek GCS the ability to only have two periods open was a major limitation. “What was the most significant benefit of moving to Unanet?” Lisa: Simply a more up-to-date integrated system where we did not need to import and export data; a huge improvement was the accessibility of data to Project Managers and executives. Thomas: The real-time availability daily of labor information was a game-changer. Project Managers know their status and backlog now rather than in 45 days. With all the information in one place wasting time reconciling data is eliminated. Shilpa: I can get any answer to any question at any time in minutes. Accounting is happy, Project Managers are happy, leadership is happy. I love depth of standard reports. Billing is shortened from a week to a day. Mark: The real-time visibility for Project Managers without resorting to home-grown spreadsheets (which very likely had errors) is now critical to how we manage our business. We slice and dice data in different ways and in whatever periods are required; daily, weekly, semimonthly, quarterly etc. Immediate visibility of timesheet status helps with accuracy and efficiency too. Learn How Unanet Can Provide Digital Transformation for Government Contractors Unanet is now the clear market leader for small and medium-sized GovCons. Not just an alternative to Deltek, but as a clearly superior choice for organizations who want to transform their business. To schedule your personal consultation, contact us.
DCAA Compliant Software
by Kim KosterERP Software Best Practices, GovCon, Government Compliance
Jun 13, 2019
Just to be clear, there is no such thing as DCAA Compliant Software! It is your organization and procedures that will be assessed for compliance. That said, software such as Unanet, that is purpose-built for government contractors can significantly help you with achieving compliance. DCAA compliance requires that your accounting and related business processes which collectively including policies, manual procedures and tools be compliant. Software alone is not audited for DCAA compliance or certified, nor approved as DCAA compliant. However, Unanet software has been reviewed by DCAA auditors at more than one thousand customer sites and, along with the customer policies and procedures, approved as supporting DCAA requirements. Unanet software makes implementation of the DCAA regulations easy and efficient. Here is a small sampling of the DCAA regulations that a compliant accounting system must include and that are directly supported by Unanet accounting software: Proper segregation of direct and indirect costs Identification and accumulation of direct costs by contract Method for allocation of indirect costs A Timekeeping System that enforces specific requirements related to charging hours Labor distribution – how costs are allocated to charged time Segregation of unallowable costs Accumulation of costs under General Ledger Control To learn more, download A GovCon’s Essential Guide to DCAA Compliance.
Quick Tips to Improve your Go/No-Go Assessment
by Sarah LorekAEC, Architecture and Engineering, Construction, Cosential, Uncategorized
Jun 11, 2019
Quick Tips to Improve your Go/No-Go Assessment When designing your Go/No-Go process, it’s helpful to leverage the metrics you’re already tracking like relationship strength, competitive analyses, teaming partners, internal resources, hit rates, etc. to make more strategic decisions on which projects to chase. These questions will guide you toward building a Go/No-Go form to identify your firm’s winnable projects: Is the project in alignment with our Core Values? Do we have the staff available to take on the project? Do we have the marketing resources available? Is this a strategic owner, client, or prospect? Do we offer all the services in-house or do we have to contract them out? What is our relationship like with the client? Are we prepositioned for the RFP? What is the client payment activity like? Characterize our competitors’ relationships with the client? Is the contract with a developer or any other entity other than the owner? Is the project funded? Is a bid bond required or surety letter required? What are the project’s risk elements (i.e. schedule penalties)? If you’re using Unanets Go/No-Go functionality, you may want to add a workflow that alerts all necessary parties. Notify leaders if the score is too low so they can decide whether the project should be pursued Staff can be alerted when the score passes a certain threshold to take on next steps If the score is too high, leaders can be notified to confirm that the form was filled out accurately We hope these quick tips can help you make more informed decisions in your Go/No-Go strategy. Our clients have reported an increased hit rate and decrease in wasted resources after implementing a successful Go/No-Go process. If you are in need of a solution for your data, proposals, or customer relations we would love to show you our CRM. Book your demo now! Feel free to also reach out to our sales team or 800-505-7089 ext. 1 with any questions you may have. Here are other articles that may be of interest to you: Expert Advice: How to Make the Right Go/No Go Decision How to Get free Construction Leads Unique Project Costing Challenges for Architecture and Engineer firms Don’t forget about our resources page. It is packed full of whitepapers, case studies, ebooks and other goodies to help out your business.