Public procurement is highly regulated to instill accountability and transparency in government spending. Federal Acquisition Regulations (FAR) and Cost Accounting Standards (CAS) are regulatory frameworks that govern federal procurement with federal agencies, including the Defense Contract Audit Agency (DCAA).
DCAA compliance is exceptionally challenging because of federal procurement regulations’ complex and dynamic nature. Companies must comply with DCAA regulations to establish government contract eligibility and avoid penalties, suspension, or debarment from future federal procurement opportunities.
This blog will discuss strategies for maintaining DCAA compliance.
Understanding DCAA Regulations
Established in 1965, the DCAA is a federal auditing agency for the Department of Defense (DOD). The agency is responsible for contract acquisition, administration for the DOD and other federal entities, and financial advisory services.
The DCAA has no regulatory framework but relies on the DCAA Contract Audit Manual (CAM) for operation management and auditing standards.
The CAM enforces existing federal contracting regulations, such as FAR and CAS. The DCAA may also enforce agency-specific FAR supplements, such as the Defense Federal Acquisition Regulation Supplement (DFARS).
How to Stay Updated on DCAA Regulatory Changes
Changes in federal procurement regulations mentioned above directly affect DCAA auditing standards. As such, contractors must stay up-to-date with all relevant regulations. Below are effective ways to stay ahead of DCAA regulatory changes.
Follow the Federal Register
The Federal Register is the official publication of the federal government. It publishes proposed, interim, and finalized regulations for federal agencies, including the DCAA. Government contractors should periodically browse the Federal Register website, subscribe to email alerts, or follow their social media accounts for real-time updates.
Monitor Official DCAA Resources
All changes in DCAA regulations and auditing standards are officially published in the CAM in detail and announced on the DCAA website. Keeping tabs on these sources helps contractors become aware of any changes. Contractors should also monitor relevant regulatory frameworks such as FAR and CAS.
Join Industry Associations and Follow Publications
Associations such as the Professional Services Council (PSC) and the National Contract Management Association (NCMA) focus on helping government contractors properly deal with federal procurement regulations.
They hold conferences and webinars that discuss updates on DCAA regulatory changes. Contractors should also monitor industry publications such as the Federal Times and Government Executive.
Subscribe to Relevant Newsletters
Keeping track of the above channels is challenging and time-consuming. Some DCAA compliance consultants address this by sending regular newsletters with updates on DCAA regulations. Subscribing to such newsletters ensures that contractors are promptly notified of regulatory changes.
How to Maintain DCAA Compliance Amid Changing Regulations
Being up-to-date with the changes in DCAA regulations is only half of the compliance efforts. Federal contractors must also make certain that their processes, systems, and practices align with the new standards. Accomplishing this involves the following measures:
Implementing Internal Controls
Government contractors’ business systems, policies, and procedures must be geared toward DCAA compliance. The systems and accounting practices must be compliant with all tracking, allocation, and reporting requirements outlined in various regulations.
Policies and procedures must promote DCAA compliance and prevent contract fraud, waste, and abuse. Regular internal audits can help identify shortcomings in the systems and address them before DCAA audits.
Conducting Internal Audits
The DCAA evaluates government contractors’ processes, systems, and financial statements for compliance with FAR and CAS. The agency conducts this assessment through audits, which are lengthy, intrusive, and may have short notice. Contractors should conduct mock audits to identify and address operational deficiencies before the official audits.
Staff Training and Compliance Culture
DCAA compliance is an organizational effort in which various departments, from the contract management team to the finance and accounting departments, have a role. All employees must understand the regulations relevant to their domains and their roles in promoting compliance.
Proper training and a compliance culture can help achieve this. The training should be conducted by seasoned professionals to be sure that contractors fully grasp all the relevant regulations. A compliance culture entails periodic compliance reviews, transparency in reporting violations, and positive reinforcement for exemplary compliance efforts.
How Diener & Associates Can Help
DCAA compliance requires constantly monitoring changing regulations to update systems and practices accordingly. If your organization finds this task too demanding and overwhelming, consider getting expert help from DCAA compliance specialists.
The seasoned DCAA compliance experts at Diener & Associates keep up with all changes in DCAA and other federal regulations, saving contractors time and ensuring that they remain in good standing with the federal government.
We can help train accounting staff, establish internal controls, implement compliant systems, and conduct internal audits. Contact Diener & Associates today for expert guidance on DCAA compliance.