Accounting System Design & Implementation
Build an Audit-Proof Financial Foundation for Federal Contracts and Grants
Your Accounting System Is the First Test of Federal Readiness
Before you can win—or even perform—on a federal award, your accounting system must meet the standards of
FAR Part 31,
DFARS 252.242-7006, and
DCAA’s Pre-Award Survey (SF 1408).
An inadequate system can lead to disapproved billings, delayed funding, and a lost opportunity before the first invoice ever goes out.
At
Peter Witts CPA PC, we design, implement, and maintain
federal-compliant accounting systems tailored to your business size, structure, and contract mix.
Our goal is simple: build an integrated system that satisfies auditors, informs leadership, and scales as you grow.
Why Accounting System Design Matters
Federal agencies judge your business system on four criteria:
- Compliance: Alignment with FAR 31.201-2/-4 cost principles, CAS 401/402 consistency, and DCAA adequacy standards.
- Traceability: Ability to track every transaction from invoice to labor record to general ledger.
- Segregation: Clear distinction between direct, indirect, and unallowable costs.
- Internal Controls: Policies and approval workflows that prevent errors and unauthorized charges.
- Our designs are built to meet each requirement—documented, testable, and ready for review under DFARS Business System Audit criteria.
System Design & Configuration
We translate compliance into structure. Each implementation begins with a system blueprint that defines:
- Chart of Accounts: Segregated by cost pools and contract identifiers.
- Job Costing Framework: Tracks costs by project, CLIN, or funding increment.
- Indirect Pool Setup: Fringe, Overhead, and G&A allocations following FAR 31.203.
- Labor Distribution: Integration between payroll and project accounting for DCAA-compliant timekeeping.
- Unallowable Cost Codes: Isolation of expenses under FAR 31.205 (advertising, interest, bad debt, etc.).
- Audit Trail Controls: Transaction documentation and electronic approvals for accountability.
We configure platforms such as
QuickBooks Online/Enterprise,
Deltek Costpoint, and
Unanet, selecting and tailoring tools that match your size and compliance needs.
Pre-Award Accounting System Reviews (SF 1408 Readiness)
Before awarding a
cost-type contract, the government or DCAA will conduct an
SF 1408 Accounting System Survey.
We guide you through every readiness step:
- Gap assessment against DCAA’s Pre-Award Checklist.
- Policy and procedure documentation mapped to survey criteria.
- Chart-of-accounts validation and job-cost reporting demonstration.
- Corrective actions and pre-audit mock reviews.
- Management briefings to prepare for auditor interviews.
Our clients routinely achieve “Adequate” determinations on the first submission.
Timekeeping and Labor Controls
Labor costs are the cornerstone of audit risk. We implement DCAA-compliant timekeeping systems that:
- Require daily time entry and employee attestation.
- Record approvals and corrections with full audit trails.
- Segregate direct, indirect, and unallowable labor.
- Integrate with payroll and billing systems.
- Support remote and hybrid environments while maintaining security.
These controls meet FAR 52.232-7 and DCAA Manual Chapter 5 standards—ensuring accuracy from first timecard to final invoice.
Policies, Procedures, and Internal Controls
An adequate accounting system must include written documentation of internal practices.
We draft and implement:
- Accounting Policies and Procedures Manual referencing FAR, CAS, and DFARS requirements.
- Timekeeping and Labor Distribution Policy consistent with §200.430 (Uniform Guidance).
- Indirect Rate Policy Manual outlining cost pools, allocation bases, and variance analysis.
- Procurement and Subcontract Oversight Policy aligned with §200.317–§200.327.
- Delegation of Authority (DoA) matrices for expenditure approvals.
These manuals not only meet audit standards but also train your staff in day-to-day compliance.
System Implementation & Training
We manage the full rollout of your accounting infrastructure:
- Configuration: Build your chart of accounts, indirect pool logic, and reporting templates.
- Data Migration: Clean and import historical data with reconciliation and tie-outs.
- Testing: Validate cost segregation, indirect rate calculations, and reporting outputs.
- Training: Conduct workshops for accounting, project management, and executive teams.
- Go-Live Support: Oversee first close and first compliant invoice submission.
Deliverables include:
- System Design Document (SDD)
- Configuration Workbook and User Guides
- ICE Schedule Crosswalk Template
- Training Materials and SOPs
- Go-Live Verification Checklist
System Adequacy and Business System Compliance
Beyond implementation, we maintain compliance as your contract volume grows.
- Conduct Internal Adequacy Reviews using DCAA and DCMA checklists.
- Support Business System Audits under DFARS 252.242-7005/7006.
- Prepare Corrective Action Plans (CAPs) for deficiencies and follow-up documentation.
- Update policies for new FAR or DFARS revisions.
We ensure your accounting system remains adequate across the life of every award.
With Peter Witts CPA PC, you gain the financial architecture to manage contracts, satisfy auditors, and make confident decisions as your federal footprint expands.
Build right. Report right. Grow confidently.
Frequently Asked Questions
What is “government contract accounting,” and how is it different from regular accounting?
Government contract accounting involves following specific federal rules, standards, and compliance requirements (e.g. cost allowability, audit readiness, indirect rates, DCAA standards). Unlike general accounting, your financial systems need to withstand audits, cost proposals, and strict oversight. We structure your accounting and reporting so you stay compliant and reduce risk.Do I need to worry about DCAA audit compliance?
If you hold or are bidding on U.S. federal contracts (especially cost-reimbursable, time & materials, or fixed price with cost elements), the Defense Contract Audit Agency (DCAA) may audit your accounting systems. We can help you build or review systems so you pass audits when they arrive.Can you help with indirect cost rates, cost proposals, and incurred cost submissions?
Yes — we support designing indirect cost rate structures, preparing cost proposals, and submitting incurred cost reports. These are critical tasks in government contracting, and we ensure your supporting records align with regulatory expectations.How much experience do you have in the federal contracting space?
Peter Witts CPA PC has over 36 years of experience in government contract accounting, including first-hand DCAA knowledge. We’ve worked with clients across DoD, NIH, DOE, and other agencies, helping them navigate the compliance landscape.What kind of businesses or projects do you work with?
We work primarily with companies engaged in federal contracts or grants (especially research, development, support services). If your business isn’t in that space, we’ll help you determine whether our services are the right fit or recommend alternatives.How do I get started with you?
You can schedule a free consultation via our website. During that call we’ll explore your current standing, challenges, and needs, and map out how we might support you. (Then we’ll formalize scope, pricing, and next steps.)What should I provide for an initial assessment?
Financial statements, accounting policies, prior audits (if any), contracts and grant agreements, cost accounting structure, payroll records, indirect cost allocations, and any compliance documents. We’ll review what you have, identify gaps, and propose next steps.How often will we interact / how do you deliver services?
That depends on the scope. For outsourced accounting, we could work on a monthly or quarterly basis. For compliance or audits, we may engage more intensively. We'll agree up front on communication frequency, deliverables, and review cycles.What are your fees or how is billing handled?
Our fees are fixed monthly fees and depend on the complexity and scope of your work — number of contracts, volume of accounting entries, compliance risk, etc. We’ll provide a proposal after our initial assessment. We only work on an hourly basis for audit support services for audits relating to government contracts or grants conducted by government agencies or outside CPA firms.What if my business is outside of your specialization—can you still help?
At Peter Witts CPA PC, we focus exclusively on our core strength: federal contract and grant compliance. We serve businesses operating within the government contracts and grants space, offering specialized outsourced accounting and tax services tailored to the unique requirements of this industry. This is our sole focus — we don’t try to be everything to everyone. Our expertise is deep, not broad, and it’s dedicated to helping government contractors navigate complex compliance and maximize their opportunities.What happens if there's a federal audit or examination?
We support audit responses, documentation requests, and work with your team to ensure you respond properly. Because we build systems with compliance in mind, we aim to minimize surprises and help you maintain defensible records.How do you keep up with changing federal regulations and compliance standards?
We continuously monitor federal regulatory updates (DCAA rules, OMB circulars, FAR/DFARS, audit guidelines) so our clients’ accounting systems remain in alignment with best practices and compliance requirements.
