What You Should Know About DCAA Compliance

A government contract can be a lucrative opportunity for your business in the aerospace and defense industry.

In order to win those contracts, your company must achieve and maintain Defense Contract Audit Agency (DCAA) compliance. That’s in addition to meeting other relevant standards. Examples include AS9100 compliance, ISO 9000/01 compliance, and any other regulation that applies to your business.

Cre8tive Technology & Design is ITAR registered. We will assist you with your compliance needs, putting your business in a better position to grow and prosper.

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How Cre8tive Can Help With DCAA Compliance Requirements

Are you wondering: "What is DCAA compliance? or Why is DCAA compliance important?

The professional governmental compliance experts at Cre8tive are here to help.

In this blog, our first in a series on DCAA compliance, we have provided guidance regarding the DCAA. We also cover how contractors within the aerospace and defense industry can successfully meet compliance requirements.

Aerospace and defense companies that partner with Cre8tive exceed standards set by the U.S. Department of Defense (DoD). thanks to our DCAA compliance software solutions.

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What is the DCAA?

DCAA is an acronym for the Defense Contract Audit Agency. This agency provides audit services for the DoD and other federal agencies.

The organization acts as an overseer to ensure governmental and military contracts are kept on budget in the accounting process. The overarching goal is to avoid wasting tax dollars.

The DCAA initiates audit services on contracts with a significant influence on contract pricing, services, and overall negotiations with prospective contractors.

However, the agency does not determine contract awards. That said, the DCAA provides recommendations to the departments and agencies that award contracts. Officials who complete the negotiations for thousands of aerospace and defense contracts use and value these recommendations.

What is the Difference Between DCAA and DCMA?

The DCAA is responsible for auditing and providing additional monitoring of contractor accounting.

The Defense Contract Management Agency (DCMA) also has a broad range of responsibilities. That includes overseeing operations for contractors on behalf of the DoD and other organizations. This agency manages product delivery and supply and service acquisition on the government's behalf.

For the purposes of this blog, we will focus on the DCAA. Learn more about DCMA vs. DCAA with this comparison of the two agencies.

What Comes Before a DCAA Audit?

DCAA compliance generally consists of two major parts:

  • An Audit
  • Accommodating the recommendations from the agency in order to comply with federal rules and regulations.

Before you can prepare for a full DCAA audit, your A&D business must pass pre-award surveys. The DCAA requirements covered in these surveys are not nearly as in-depth as full audits. However, they will check to see if your company has the following:

  • Enough financial capital and the means to take on and complete a government contract.
  • A robust accounting system that can keep track of different itemized costs associated with a government contract.

An effective ERP system, including procedures that your employees buy into, is crucial. It will set you up for success when bidding for a government contract from the U.S. military.

Cre8tive Technology and Design provides professional integration of Epicor Kinetic. This powerful ERP that can be custom configured for aerospace and defense companies to achieve compliance progression. We are the preferred Epicor partner for A&D ERP implementation.

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What is a DCAA Audit?

The DCAA audit process is complex with various types of audit categories.

It’s entirely possible to pass a DCAA audit. Companies have done so for decades and continue to do so today.

However, that doesn’t mean the DCAA audit process is simple, or a mere formality. It’s an in-depth process that closely reviews compliance. You must set your business up for success to have a realistic path to successfully completing this audit.

We have a dedicated resource available to address the process. Our approach to DCAA compliance covers everything from forward pricing to incurred cost, and other audits. This DCAA compliance manual helps our clients achieve positive results.

What Costs Need to be Organized for DCAA Compliance?

A DCAA audit is essentially a robust check on everything financial within your company. That means the more specific your accounting processes are the better.

Broadly, DCAA auditors are looking for different types of costs, like direct costs, allowable costs, unallowable costs, and cost pools. Having a DCAA-compliant accounting system is critical.

Just one example: If you employ hourly employees, it is crucial that exact hours and wages are documented in a dependable timekeeping system. The same concept applies to the many costs associated with government contract projects. The more granular your recordkeeping, the easier it is to achieve compliance with these government regulations.

You can see the full list of relevant costs on the government's Federal Acquisition Regulation website.

How Can an ERP System Help with DCAA Audits?

Simply having an ERP system will not automatically guarantee DCAA compliance. In general, ERP is focused on automating processes and creating a single source of truth for businesses.

However, a strong and dependable ERP system will go a long way in helping you achieve it compliance. Accounting compliance becomes far easier with accurate and detailed records, for example.

Utilizing an ERP system will help keep your business organized and optimized. Our team of experts can design and implement ERP solutions, like those from Epicor Kinetic, that will help you achieve DCAA compliance. Because we focus on serving companies in the A&D space, we have a deep understanding of relevant compliance needs.

In turn, that creates better conditions to bid for, win, and complete federal government contracts. Working with the right partner goes a long way toward addressing key compliance needs and positioning your business for success.

Partner with Cre8tive

Have unique aerospace and defense DCAA compliance needs? The experts at Cre8tive Technology and Design can help. Once you reach out, one of our knowledgeable representatives will help you get started with a custom compliance plan.