Yes, QuickBooks can be set up to be DCAA compliant, but it doesn’t automatically meet DCAA standards and requires additional configuration to be compliant. Certain elements of the software do meet the standards, including the ability to properly segregate direct costs from indirect costs.
This can be accomplished by using the software’s reporting features to separate costs by project as well as items versus expenses.
Understanding the distinction between direct costs and indirect costs is crucial for potential government contractors looking to bid on specific contracts. While contract types may differ, it is important to grasp the disparities between these two cost categories.
Direct costs are expenses that are linked to the production of goods or services. These costs can vary and include labor costs and manufacturing supplies.
Indirect cost allocations consist of overhead expenses such as rent and insurance, as well as general expenses like accounting department costs. Allocating indirect costs to a specific project or item can be challenging. However, by utilizing a timesheet tracking application along with an accounting package like QuickBooks, you can effectively manage indirect cost allocations, particularly for general and administrative expenses, to the appropriate cost objective.
On the other hand, as a DCAA-compliant accounting system, QuickBooks as is, falls short in a number of ways. For example, it does not automatically calculate indirect rates per your company’s rate structure. It also fails to offer time tracking capabilities required to identify employees’ work according to intermediate or final cost objectives.
Areas to consider:
- Employee time tracking posted daily with required explanations for edits and record locking.
- Printable timesheet reports.
- Policies & procedures oriented toward FAR Compliance Criteria found in DCAA’s SF-1408 pre-award audit checklist.
- Consistently applied labor dollar distribution accommodating uncompensated OT for salary exempt personnel.
- Indirect cost pools and the ability to compute and forecast Indirect Rates applied to Direct costs under Cost Reimbursable Awards.
- Progress billing + Cumulative dollar values reported against award ceilings tied to cost proposals.
- Identification and segregation of Unallowable Costs as defined per FAR 31.205.
This is not a comprehensive list, but it gives a good idea of what to expect. Satisfying these and other requirements calls for expert configuration of the QuickBooks platform as well as integration with time tracking software that provides additional functionality.
QuickBooks Desktop
The QuickBooks Desktop integrated payroll module permits the charging of time directly to the General Ledger. This includes customer, job and service Items, which are immensely beneficial.
QuickBooks Online
QuickBooks Online is a cloud-based solution that is not designed to meet the FAR and DCAA requirements and has some limitations. The good news is that there are ways to make the QuickBooks Online system meet all the government’s requirements without too much effort.
Hour Timesheet partners with dozens of CPA firms and consultants who can assist you with the entire life cycle of getting a DCAA-approved accounting system.
Let us introduce you to our extensive list of experienced partners today.
Debbie Sabin is an accomplished professional with extensive experience in time and attendance solutions. As one of the founders of both Hour Timesheet and Clockwise, she has built a reputation for creating innovative and user-friendly tools that help businesses streamline timekeeping, payroll and invoicing processes.
With a background in business administration and project management, Debbie has always had a passion for finding ways to improve workflow processes and increase productivity. This drive led her to establish Hour Timesheet, a company specializing in time tracking software that simplifies timekeeping and enhances overall workforce management.
Under Debbie's leadership, Hour Timesheet has grown into a highly regarded provider of time tracking solutions for businesses of all sizes. The company's flagship product, a cloud-based timesheet system, offers a seamless and intuitive experience for both employees and managers.
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