Ways how to Avoid DCAA Audit

  1. DCAA audit

What is DCAA?

It stands for “Defense Contract Audit Agency”; and it’s an agency of US department of the defense under direction of Under-Secretary of Defense. This was established in the 1965 to perform all the contract audits for department of defense.

If you have a small, medium and large company with a government contracts in tens of-thousands, if not millions of the dollars. And, you aspire for grow & obtain the more government-contracts. That project’s revenue might represent a large portion of the company’s livelihood, if not most of it. Do you really want to risk a DCAA audit, and the chances of losing some or all of it? You’ve three main parts to your DCAA strategy, policies, process, or training, at solid software tools. And these are discussed below. So un-fortunately, you must do lot of upfront task on your policies & procedures before any the software can helps implement those procedures. It’s up for you to make sure that you’re compliant; software can only come alongside for make the job easier.

A Process

To initial step, you must define the process, which in itself should involve several DCAA audit required the components, such as creating the charts of accounts to segregate indiscernible, direct or unallowable-costs. The major-component, which someone-performing a DCAA audit wants to see, is how you categorize & define the labor-costs. It is where you’ll create the pools of direct & indirect costs. For instance, of indirect-costs are accountings, payroll, billing or other human resource processes. The direct costs are generally clearer & include the activities immediately related to contract work, like machine-operator and engineer. You’ll need to be able to show the indirect & direct labor-costs, per-contract, and’ve immediate access to such the reports. Just a few examples of unallowable costs are entertainment costs and most advertising costs. The travel costs that exceed lowest available coach-fares & pre-contract costs aren’t allowed unless specifically approved through contracting agency.


The other next is you’ve to put the policies in place to make the processes accurate or accountable. The one main field that will help to avoid a DCAA audit is to have the time keeping system to help manage the projects. The policy should involve clear the language that states that it’s the employee’s responsibility for completely & accurately fill-out their time sheets. The DCAA is also requires a daily time entry through the employee or supervisors to sign-off & approve that time. The policies should also the outline clear disciplinary activity to employee failure to comply.


The train employees to enter hour’s daily, not at end of week and next week. The supervisors should know a proper process to approving & locking down the timesheets. Trained your employees to use these tools & be prepared for defend your data, when called to do so. A excels spreadsheets will not meet these needs.

 DCAA Proposal

At last, here’re some tips for putting together the DCAA proposal. It included in your process of attaining the contract, there must be a solid “Bases of Estimate”. It is where the software can help, but you mustbe clear. Just stick for most common possibilities that’re fairly-realistic.

Checklist of DCAA Compliance

  • Creates the charts of accounts for segregate indirect, direct & unallowable-costs
  • Categorize & define the labor-costs
  • Creates pools of the direct & indirect costs
  • Put the policies in place to make the processes accurate & accountable
  • Write the clear policy language to completely or accurately fill-out the time sheets
  • The daily timesheet entry through employees
  • Supervisors sign-off or approve the timesheets
  • Write the clear disciplinary policies to failure to comply
  • Consult the DCAA experts
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