The records an auditor asks for, kept as your people work
An auditor of a government contractor asks the same questions. Who entered these hours, and when? Who approved them? What is unallowable, and where did it go? Do the rates you bill at match what the records say, and do the books agree? Audit readiness keeps the answers as the work is done, answers the pre-award survey from them, and hands your accounting product each month as journal entries, as a file or sent straight to QuickBooks Online or Xero.
the less certain the work, the more they pay for uncertainty and the more of your books they expect to see
What an auditor reviews
No software is approved by DCAA, and nothing here says otherwise. An auditor reviews your company's accounting system: its books, its controls and the records behind them. Audit readiness keeps the records and controls an auditor asks to see, and every tab of the screen says the same thing in the same words.
Eight tabs
| Tab | What it does |
|---|---|
| Readiness | The twenty questions of the pre-award survey of an accounting system, each answered from what is on record for the fiscal year you choose, with the evidence and what to do next. |
| Timekeeping | Thirteen weeks of entries made late, weeks not certified, hours approved by the person whose hours they are, corrections with their reasons, and people with no supervisor set. |
| Floor check | One day, and everybody expected to work it: what they entered, to what, by whom and when, and every change made since. |
| Rates and overtime | The provisional billing rates of the year beside what the records say so far, in points and in dollars. And the one stated way uncompensated overtime is handled. |
| Unallowable | Cost flagged under a cost principle of FAR 31.205, out of every pool and listed apart. And the entries that read like one, waiting for somebody to decide. |
| To the books | Each month that has ended, as journal entries in the import layout of QuickBooks Online or of Xero, or sent straight to your company once it is connected. A month already exported is marked, and a later change goes in the next file as a correction. |
| Incurred cost | The schedules of a final indirect cost rate proposal for the fiscal year you choose, worked out from the records, each with what it was drawn from and what is missing. One Excel workbook, a sheet a schedule. |
| Rules | When time is due, who approves the hours of somebody with no supervisor, when a provisional rate warns, and the words a person certifies. Set by the owner or a manager. |
The pre-award survey, answered from the records
The SF 1408 is the pre-award survey of a prospective contractor's accounting system. Its section II asks, item by item, whether the system can account for a government contract. For work with the Department of Defense, DFARS 252.242-7006(c) adds its own criteria. The Readiness tab puts the twenty questions of the two in one list and answers each from what is on record here, for the fiscal year you choose: Met by the records, Partly, Not yet, or Not applicable.
Each answer says what the records hold, with the figures: how many hours were direct and how many indirect, how many costs are on contracts, how many of the last three months had costs posted and were sent to the general ledger. Beside it are links to the evidence, the next thing to do, and the item of the form or the paragraph of the clause the question comes from.
Some questions the records cannot answer by themselves, such as whether your books follow generally accepted accounting principles, or whether the company reviews its own practices. Those say what the records do hold and what is yours to do, such as asking your accountant to confirm it in writing.
- Direct and indirect cost kept apart, cost gathered by contract, and indirect cost spread the same way every time
- Timekeeping and labor distribution, read from what was entered and approved
- Unallowable cost kept out of what is billed, and the months sent to the general ledger
- The survey and its figures as an Excel workbook or a CSV file
Entered daily, certified by the person, approved by somebody else
Hours are entered on Timesheets, each against a contract and its line, or against the kind of indirect work it was. The account's rule says when: by the end of the day the work is done, or by the end of the next working day. An entry made after that is never refused. It is marked late, with the moment it was entered, and counted.
Submitting a week asks the person to certify it, in the account's own words, and the certification is kept with the name it was signed with and the time. Somebody else approves the week: the supervisor set on the person in People and pay, or, where none is set, anybody else on the account or only the owner or a manager, as the account's rule says. Nobody approves their own hours where somebody else can. A correction to submitted hours needs a reason, and the old entry stays beside the new one.
The Timekeeping tab counts all of it over the last thirteen weeks: entries made late, by person and by week, weeks submitted and not certified, weeks certified for somebody with no sign-in, hours approved by the person whose hours they are, corrections with their reasons, and the people working now with no supervisor set.
- Late is recorded, never refused
- A certification keeps the name it was signed with, after the person has left too
- A reopened week needs its certification and its approval again
- Certify your timesheet on the calendar of each person who signs in, every week
Walk the floor on yourself, for any day
In a floor check an auditor picks a day, asks each person what they are working on, and checks the answer against what they entered. Run it on yourself first. Choose a day on the Floor check tab and press Run the floor check: it lists everybody expected to work that day, whether their time is in, what it is charged to, who entered it and when, whether it was entered late, and every change made since, with who made it and why.
Expected means on your books that day, on a working day. Somebody who entered time on a day nobody was expected, a Saturday say, is listed too. Find a person by a few letters of their name. The check downloads as an Excel workbook or a CSV file, with the changes on a sheet of their own, and prints, so you keep the copy.
- Expected, entered, nothing entered and not expected, counted for the whole day
- Each entry with who entered it and the moment, marked when it was late
- The changes since, with the hours before and after and the reason
counted over all of it, not over a sample
Provisional rates, held against what the records say
The rates you bill at during a year are provisional. Keep them as the provisional set on Indirect rates, and the Rates and overtime tab sets each one beside the rate the records work out for the fiscal year so far: fringe, overhead, and general and administrative. The difference is shown in points, and in dollars: the base so far times the difference, which is what billing at the provisional rate has recovered short, or over.
A rate warns once it is further from the provisional rate than the account's threshold, which is a percentage of the rate: 5 percent unless you change it, so 2 points on a 40 percent overhead rate. That is the time to consider asking the contracting officer to adjust it. Review the provisional billing rates is on the calendar of the owner and the managers on the last day of each fiscal quarter.
Uncompensated overtime is handled one stated way: total time accounting, from the adjusted hourly rate of FAR 52.237-10(a). Every hour a salaried person who is exempt from overtime records carries the same share of the week's salary, and the salary is never spread over fewer hours than the standard week. The owner or a manager chooses it once for each fiscal year, and it is kept for the whole year. It applies until then all the same.
- Fringe, overhead, and general and administrative, each in points and in dollars
- A warning past the threshold, which you set
- A review of the provisional rates on the calendar every quarter
each pool sits on the total under it, which is why the order is not a style choice
Unallowable cost, flagged by somebody and kept apart
An entry on no contract is flagged under the cost principle of FAR 31.205 it falls under, chosen from the forty-six the regulation lists by number and title. A flagged entry leaves every pool, so none of it is spread over a contract, and it is listed apart, by principle, with the totals for the fiscal year. The change is kept in the audit trail with the principle as its reason, and taking a flag off asks for a reason of its own.
Nothing is flagged by itself. An entry whose words read like alcohol, entertainment, lobbying, fines and penalties, donations, interest or a bad debt waits under Waiting for a decision, for somebody to flag it or keep it. One that is kept is not suggested again. The same presses are on the entry itself in the Cost ledger.
A cost on a contract is corrected on the contract. Hours from a timesheet are charged to Unallowable on the timesheet.
- Flag it, Keep it, and Take the flag off, each written to the account's history
- Totals by cost principle for the fiscal year
- A person's unallowable hours in dollars shown only to the people who may see pay
To the books: each month, as journal entries your accounting product imports
Your general ledger stays in your accounting product. Once a month has ended, To the books writes a journal file for it. The file is a CSV of two balanced journal entries: the labor distribution of the hours approved for that month, and the other costs recorded that month, on contracts and off them. Each line is on the account of your chart of accounts it belongs to, and each entry balances against the clearing account where the wages or the bills were first booked. It is laid out for one of two products: the journal entry import of QuickBooks Online, or the manual journal import of Xero. Dates are written month, day, year.
Set the accounts once: the name of each in QuickBooks Online and its code in Xero, with the tax rate Xero puts on a journal line. A month that has been exported is marked, and downloading it again gives the same file. A change to that month afterwards is never written over what was sent. The next file carries a reversing entry and the month as corrected, or you make a file of corrections only. The files made are listed, newest first, and each downloads again exactly as it was made.
A month's entries carry what labor cost by contract, so the owner or a manager who may see pay makes the files.
- Export for QuickBooks Online, or Export for Xero
- Each month marked Not exported, Exported, or Changed since it was exported
- Labor under the year's overtime method, and unallowable cost on an account of its own
Or send each month straight to QuickBooks Online or Xero
Beside the file, the account owner or a manager can connect the account's own company in QuickBooks Online or in Xero, from To the books. You sign in to the product and choose the company there. Each account connects its own company, and can disconnect it at any time. The access it gives is kept sealed and never shown on a screen.
Once it is connected, the chart of accounts is read from that company, so each account an entry goes to is picked from your own list instead of typed, and an account picked that is no longer there is said. A month that has ended is sent as the same entries the file holds, each balanced, as a journal entry in QuickBooks Online or a manual journal in Xero, with a memo naming the month.
Each entry is sent once. A press that did not hear back finishes the same entry rather than making a second one. A change after a month was sent goes as a reversing entry and the month as corrected. Nothing in your books is edited or deleted from here, and the file stays.
- What was sent, when and by whom, with a link to each entry in your books
- The product's own message, and what to do, when it refuses an entry
- Sent by the owner or a manager who may see pay, and written to the account's history
- Until it is offered on your account, the journal file is the way across
the same joined record carries the search, the price and the invoice
Try a test import first
The two layouts follow the columns of the import templates of QuickBooks Online and Xero, and they have not yet been checked against a live import. Before the first real one, import a file into a test or demo company, or have your accountant check it, and confirm that every line lands on the account it should and every entry balances.
The incurred cost schedules, as working papers for your accountant
A company with a contract under FAR 52.216-7, Allowable Cost and Payment, owes a final indirect cost rate proposal for each fiscal year, within the six months after the year ends. FAR 52.216-7(d)(2)(iii) lists what an adequate one includes, item by item. The Incurred cost tab works out each of those schedules for the fiscal year you choose, from the records the other tabs keep: the claimed rates with their pools and bases, the fringe, overhead and G and A pools by element of cost, the bases, direct cost by contract with indirect expense at the claimed rates and the share of each base on each type of contract, cost claimed and billed to date by contract, subcontracts, hours on time and materials and labor hour contracts, payroll against labor by quarter, the decisions of the year, the contracts that ended, and the certificate of FAR 52.242-4 for an officer of the company to sign.
Each schedule says Complete, Partly, Not yet or Nothing to list, what it was drawn from, and what is missing in plain words, with a link to where each gap is fixed. What the records do not hold is left for your accountant, and the schedule says so: the wages on IRS Form 941, a subcontractor's address, the compensation of your most highly paid people. No figure is filled in that the records do not give. The figures are shown to the people allowed to see pay.
These are working papers. The proposal is your company's: your accountant checks the schedules against the general ledger and adds what is missing, and an officer of the company signs the certificate. Where the company has cost reimbursement, time and materials or labor hour work, the date each proposal is due is on the calendar of the owner and the managers.
- Each item of FAR 52.216-7(d)(2)(iii), A to O, with the subsidiary schedule of H
- Every gap in plain words, with where it is fixed
- One Excel workbook, a sheet a schedule
- The due date on the calendar, six months after the fiscal year ends
UEI, CAGE, then normalized name
The rules, and who sets them
The Rules tab holds the account's timekeeping rules: when time is due, who approves the hours of somebody with no supervisor set, the threshold at which a provisional rate warns, and the words a person certifies when they submit their week. Leave the words empty and the plain ones come back. The owner or a manager sets them. Everybody else sees them, so everybody works to the same rules, and each change is written to the account's history.
A supervisor is set on each person in People and pay, by the owner or a manager, and nobody can be set to approve their own hours. A viewer reads Audit readiness and changes nothing. Pay stays with the people allowed to see it: To the books, and a person's unallowable hours in dollars, are shown only to them. Audit readiness is a screen like any other in Roles and access, so a role decides who opens it.
Where it stops
Audit readiness comes with every paid plan. It keeps records and reads them. It does not make an accounting system adequate: that is a determination a government auditor makes about your company, and no software is approved by DCAA. It sends nothing to DCAA or to the government. It sends to your accounting product only the months the owner or a manager sends, once your company is connected; otherwise you download a journal file and import it yourself. A question the records cannot answer, such as whether your books follow generally accepted accounting principles, is yours and your accountant's to answer. Nothing here is accounting advice.
Where it is in the app
Audit readiness, under Finance in the menu. Finance is the part of LastAwarded that tracks the money, one of the eight parts, and it opens on the Finance overview.
Related
- The booksTimesheets, People and pay, the Cost ledger and Indirect rates, which these records are read from.
- Contract administration NewWhere approved hours become cost on a contract, and invoices are prepared.
- Your teamSeats, roles, and who sees pay.
- Roles and access NewWho opens Audit readiness.
- Module 16: Audits and complianceWhat an auditor looks at, and why.
- The platform NewWhere this sits among the eight parts of the product.
See who was last awarded in your NAICS
Every code, every buying office, every vendor and every recompete, organized from the federal record and read nightly. Open it with a plan.