Estimated read time: 6 minutes Key Takeaways Point 1: The Immediate Fix. Consistency is an absolute legal mandate under FAR Part 31. You cannot classify an expense as a direct cost on one contract and an indirect cost on another when the underlying circumstances are identical. Point 2: The Compliance Risk. Treating direct vs. indirect classifications as a casual data-entry task creates immediate exposure. Under DFARS 252.242-7005, system deficiencies in cost structural accounting can… Read More
GovCon Accounting
Do You Have a PTO Policy in Place? Why It Matters More Than You Think
GovCon Wednesdays – Estimated Read Time: 6 minutes Paid Time Off (PTO) policies are often treated as an HR formality—something documented once and revisited only when issues arise. But in practice, PTO policies directly impact payroll accuracy, financial reporting, and, for government contractors, compliance and audit readiness. If your PTO policy is unclear or inconsistently applied, it can create “fringe” rate distortions that are much harder to defend during an… Read More
When to Upgrade Systems: Timing the Move Without Creating Compliance Risk
GovCon Wednesdays Estimated Read Time: 5 minutes For many government contractors, the decision to upgrade accounting systems is driven by frustration slow closes, audit pain, billing delays, or growing reliance on spreadsheets. By the time the decision feels obvious, risk has already increased. Upgrading too early can waste resources. Upgrading too late can jeopardize awards, compliance, and cash flow. This article explains when a system upgrade makes sense, what triggers the need, and… Read More
401(k) on Supplemental Wages: What GovCons Must Get Right for Compliance
GovCon Wednesdays – Estimated Read Time: 6 minutes When companies process bonuses, PTO payouts, or severance, most of the focus goes to payroll taxes and withholding. But one of the most common—and costly—oversights happens on the benefits side. 401(k) treatment on supplemental wages is not automatic. It depends on your plan document, your payroll setup, and how consistently you apply both. For government contractors, mistakes here don’t just impact employees—they… Read More
System Red Flags That Fail Audits: What DCAA Looks for First
GovCon Wednesdays Estimated Read Time: 5 minutes Most government contractors don’t fail audits because of fraud or bad intent. They fail because their accounting systems show control weaknesses that create risk for the government. Auditors are trained to spot these risks quickly. Certain system red flags immediately trigger deeper testing, additional documentation requests, or formal findings even when total costs appear reasonable. Understanding these red flags is one of the most effective… Read More
Supplemental Wages for GovCons: How They Should Be Handled
Estimated Read Time: 6 minutes When employees receive pay outside their normal base wages, many companies treat it like just another payroll item. That is where problems start. For government contractors, supplemental wages are not only a payroll tax issue. They also affect labor reporting, indirect rate consistency, compensation allowability, and the overall reliability of your accounting system. If the treatment is inconsistent, what looks like a simple bonus or… Read More