Josef Kamara CPA, CISSP, CISA, ACCA

Government contractor bookkeeping follows FAR Part 31 and CAS on top of GAAP. Learn why commercial bookkeeping fails DCAA audits and SF 1408 surveys.

Prepare your incurred cost submission with this month-by-month checklist. Covers all 15 ICS schedules, top rejection reasons, and reconciliation steps.

A forward pricing rate proposal establishes the indirect rates a contractor uses to price future government contracts. DCAA audits every FPRP before it becomes a negotiated rate. Errors in the proposal delay contract awards and inflate questioned costs.

A DCAA accounting system audit failure triggers payment withholding, corrective action deadlines, and contracting officer scrutiny. Recovery starts with understanding the exact process and building a corrective action plan the ACO will approve.

The FAR 31.205-6(p) compensation cap limits what government contractors bill for employee compensation. For 2026, the estimated cap is $695,000, up from $671,000 in 2025. Here is what the change means for your indirect rates, your incurred cost submission, and your next DCAA audit.

The Service Contract Act (41 U.S.C. 6701-6707) requires government service contractors to pay prevailing wages and fringe benefits on contracts over $2,500. Violations trigger back pay, contract termination, and three-year debarment. This guide covers wage determinations, fringe benefit calculations, record-keeping rules, and how SCA differs from Davis-Bacon.

A government contract cost proposal is more than a pricing spreadsheet. It is a certified financial document built from your accounting system and governed by FAR 15.408 Table 15-2. Getting a single cost element wrong does not lose you points on a scoring rubric. It triggers a DCAA audit of your entire rate structure.

Government contract closeout takes 6 to 36 months depending on contract type. The FAR 4.804 timeline, quick-closeout procedures, and final indirect rate settlement process determine how fast you receive final payment and release retained funds.

An in-house GovCon bookkeeper costs $65,000-$85,000 per year when you add benefits, training, software, and turnover. Outsourced CPA-managed bookkeeping runs $1,500-$3,500 per month and includes DCAA compliance expertise most staff bookkeepers lack.

DCAA audits are not random. Specific contractor behaviors and contract conditions trigger them. These eight red flags tell you exactly what DCAA watches for and how to reduce your audit risk before the notice arrives.