DCAA Accounting System Deficiencies: Common Findings and How to Address Them

A company can have accurate financial statements, established bookkeeping procedures, and functioning accounting software and still have an accounting system that is not adequately prepared for certain federal contracts.

This distinction becomes particularly important when a government contractor undergoes an accounting system evaluation.

The Defense Contract Audit Agency (DCAA) may identify weaknesses involving direct and indirect cost classification, contract-level cost tracking, timekeeping, labor distribution, indirect rates, general ledger reconciliation, or government billing support.

For contractors pursuing cost-reimbursable work, these issues can be significant.

Some weaknesses may affect the company's ability to demonstrate accounting system adequacy before contract award. Others may create problems during contract performance, including unsupported costs, inaccurate indirect allocations, billing discrepancies, or unreliable financial reporting.

When deficiencies are identified, the appropriate response is not simply to make the accounting records look correct.

Contractors need to understand the underlying cause of each deficiency, address any affected financial transactions, implement appropriate controls, and maintain evidence that the corrective actions are working.

At Peter Witts CPA PC, we help emerging and established government contractors evaluate accounting system readiness, identify weaknesses in cost accounting procedures, and strengthen financial controls that support federal contract performance.

What Are DCAA Accounting System Deficiencies?

DCAA accounting system deficiencies are weaknesses identified in a contractor's accounting system design, procedures, internal controls, or operating practices relative to the requirements applicable to the review.

These issues may involve how costs are recorded, classified, allocated, reconciled, and reported.

For example, a contractor may be unable to:

Separate direct expenses from indirect costs.
Accumulate direct costs by individual contract.
Support indirect rate calculations.
Identify employee labor by cost objective.
Reconcile labor distribution to payroll.
Reconcile subsidiary cost records to the general ledger.
Identify unallowable costs.
Produce reliable interim contract cost reports.
Reconcile contract invoices to recorded expenditures.
Maintain adequate documentation of accounting adjustments.

Not every isolated bookkeeping error constitutes a formal accounting system deficiency.

However, repeated errors, missing procedures, or weaknesses that affect the reliability of contract cost information can indicate broader problems.

The significance of a deficiency depends on the applicable accounting system criteria and the scope of the government review.

Why Accounting System Deficiencies Matter for Government Contractors

Cost-reimbursable federal contracts place substantial importance on the contractor's ability to identify and support incurred costs.

Under FAR 16.301-3, an adequate accounting system for determining contract costs is required before award of a cost-reimbursement contract.

The contractor must therefore be able to demonstrate that its accounting system can properly accumulate and report costs associated with the contemplated work.

Accounting system weaknesses may affect:

Eligibility for certain cost-reimbursable awards
Direct contract cost reporting
Indirect rate development
Payroll and labor allocation
Government invoices and vouchers
Cost allowability determinations
Contract funding monitoring
Financial statement reliability
Government financial reviews
Management's ability to forecast project costs

These are not exclusively compliance issues.

A company that cannot determine actual contract costs may also struggle to price new work, evaluate profitability, plan hiring, and manage working capital.

An adequate accounting system supports better financial decision-making as well as federal contract requirements.

Understand the Difference Between Pre-Award Findings and Post-Award Accounting System Reviews

Before responding to an accounting system finding, determine which evaluation is being conducted.

The purpose, requirements, and corrective action procedures may differ.

Pre-Award Accounting System Survey

A pre-award survey generally evaluates whether the contractor's accounting system is designed to meet the criteria associated with Standard Form 1408 (SF 1408).

The review may be relevant when a company is pursuing its first cost-reimbursable government contract.

It focuses primarily on the accounting system's design and capability.

A contractor may need to demonstrate how the system would accumulate costs even if the company has not yet performed a cost-reimbursable contract.

Post-Award Accounting System Review

A post-award review may examine whether the contractor's accounting system and internal controls operate effectively during contract performance.

The applicable criteria depend on the contract and review.

For certain DoD contracts, DFARS 252.242-7006 establishes accounting system criteria and formal procedures relating to identified material weaknesses.

Why the Distinction Matters

A pre-award system design problem may require new accounting procedures, cost codes, or reporting configurations.

A post-award weakness may also require the contractor to evaluate historical costs, submitted invoices, indirect cost calculations, or previously reported information.

A contractor should never assume that every DCAA evaluation follows the same procedures or that every finding has the same consequences.

Deficiency 1: Direct and Indirect Costs Are Not Properly Segregated

One of the most fundamental government contract accounting requirements involves distinguishing direct costs from indirect costs.

Direct costs can be identified specifically with a particular contract or other final cost objective.

Indirect costs benefit multiple activities and must be accumulated and allocated using an appropriate methodology.

What the Problem Looks Like

A contractor may experience problems such as:

Administrative labor charged directly to contracts without appropriate support
Shared operating expenses assigned to individual projects inconsistently
Overhead expenses recorded in direct cost accounts
Similar expenses treated differently among contracts without justification
Direct and indirect expenses combined in broad general ledger accounts

For example, a company may record all payroll in one expense account without distinguishing direct engineering labor from administrative labor.

That classification may support basic financial statements but may not provide the necessary information for government contract cost accounting.

How to Address It

Start with the chart of accounts and cost classification policies.

The company should:

Identify its direct and indirect cost categories.
Establish written cost classification procedures.
Review account mappings.
Assign costs to the appropriate cost objectives.
Train employees responsible for coding transactions.
Test representative expense entries.
Reconcile the resulting reports to the general ledger.

The goal is consistent classification based on the nature and benefit of the costs.

Deficiency 2: Direct Costs Cannot Be Accumulated by Contract

Cost-reimbursable contractors must be able to determine the costs associated with individual contracts.

An accounting system that reports total company expenses without contract-level detail may be insufficient.

Common Warning Signs

Multiple contracts share one project code.
Vendor invoices are not assigned to individual contracts.
Labor expenses are recorded without project identification.
Contract reports require extensive manual reconstruction.
Internal R&D expenses are mixed with contract charges.
The company cannot produce a reliable contract-level cost report.

Example: Establishing Contract-Level Cost Codes

Cost Code	Activity
DOD-001	DoD Cost-Reimbursable Contract
NASA-002	NASA Research Contract
NIH-003	NIH SBIR Grant
COMM-004	Commercial Customer Project
IRD-005	Internal Research and Development
ADMIN-006	General Administration

Illustrative coding structure.

How to Address It

Configure the accounting system to support contract-specific cost accumulation.

This may involve project codes, subprojects, cost centers, or other tracking dimensions.

The company should also establish procedures for identifying the correct contract when recording payroll, purchases, consultant expenses, and other direct charges.

After implementation, test whether contract cost reports reconcile to the underlying accounting records.

Deficiency 3: Indirect Cost Pools and Allocation Bases Are Unsupported

Indirect cost accounting is a frequent source of complexity for government contractors.

A business may maintain separate pools for fringe, overhead, and general and administrative expenses.

However, the appropriate structure depends on the company's operations and applicable requirements.

What the Problem Looks Like

Potential weaknesses include:

No clearly defined indirect cost pools
Inconsistent classification of expenses
Allocation bases that are not supportable
Indirect rates calculated using outdated information
Unallowable costs improperly included
Incorrect treatment of commercial projects
Rate schedules that do not reconcile to the general ledger

Example: Indirect Rate Reconciliation

Suppose a contractor maintains the following records:

Financial Measure	Amount
Eligible overhead cost pool	$180,000
Eligible allocation base	$360,000
Calculated overhead rate	50%

If the company uses a 60% overhead rate without applicable support, the difference may affect contract cost allocations and billing.

For $100,000 of eligible base costs, the difference between the two rates would be $10,000.

Illustrative example only. Actual billing and final cost treatment depend on the applicable rate arrangement, allocation methodology, accounting period, and contract provisions.

How to Address It

Rebuild the indirect cost calculations from supporting records.

Review:

Pool definitions
Allocation bases
General ledger accounts
Direct and indirect labor
Fringe benefit treatment
Unallowable costs
Commercial activity
Applicable rate periods
Billing rates

The resulting calculations should be reproducible and reconcile to the company's accounting records.

Deficiency 4: Timekeeping Procedures Are Incomplete

Employee labor often represents a substantial portion of government contract costs.

Timekeeping procedures should provide reliable information about employee work by the applicable cost objective.

What the Problem Looks Like

Examples include:

Employees reconstructing time at month-end
Hours assigned using proposal percentages instead of supported activity
Missing project identification
No process for correcting timesheets
Timekeeping entries changed without adequate history
Inconsistent employee or supervisor review
Direct and indirect labor not distinguished

How to Address It

Establish timekeeping procedures appropriate to the contractor's operations and applicable requirements.

These should address:

Employee responsibility
Work dates and hours
Cost objectives
Direct and indirect activity
Timely time entry
Required review and approval
Correction procedures
Record retention

The company should also verify that employees understand the procedures and follow them consistently.

A written timekeeping policy does not resolve a deficiency if the actual records remain unreliable.

Deficiency 5: Labor Distribution Does Not Reconcile to Payroll

Payroll and timekeeping are connected through labor distribution.

Payroll shows how much an employee was compensated.

Timekeeping shows the activities performed.

Labor distribution assigns compensation to the relevant cost objectives.

Example: Labor Distribution

Suppose an engineer receives $6,000 in gross wages during a pay period.

Activity	Labor Allocation
DoD Contract A	$3,000
NASA Contract B	$1,500
Internal R&D	$900
General Administration	$600
Total	$6,000

Illustrative allocation based on supported work and an appropriate compensation methodology.

If the accounting system records $4,000 against DoD Contract A while the supported labor distribution shows $3,000, the company should investigate the difference.

How to Address It

Create a controlled labor distribution process.

The process should connect:

Timekeeping → Payroll → Labor distribution → General ledger → Contract cost report

Review each payroll period or accounting close to confirm that:

Compensation is accurately recorded.
Work allocations are supported.
Labor charges are assigned to the correct cost objectives.
Direct and indirect labor is properly classified.
Corrections are documented.
Labor distribution reconciles to payroll and the ledger.

Recurring discrepancies may indicate a larger configuration or control problem.

Deficiency 6: General Ledger and Project Reports Do Not Reconcile

Contract-level financial reports should be supported by the official accounting records.

A common problem occurs when project costs are maintained in spreadsheets that do not reconcile with the general ledger.

Potential Causes

Missing transactions
Incorrect project coding
Unposted payroll allocations
Duplicate vendor expenses
Unsupported journal entries
Reporting period differences
Incorrect indirect charges

How to Address It

Establish a monthly reconciliation process.

For each contract:

Compare project reports with the general ledger.
Reconcile payroll and labor distribution.
Review direct cost transactions.
Verify indirect allocations.
Investigate adjustments.
Document explanations for differences.
Retain evidence of management review.

The company should be able to reproduce reported contract costs using the underlying financial records.

Deficiency 7: Unallowable Costs Are Not Identified

Not every legitimate business expense is allowable for government contract reimbursement.

Applicable FAR cost principles may restrict or prohibit charging certain expenses to federal contracts.

Examples can include specified entertainment, lobbying, penalty, or other restricted costs.

What the Problem Looks Like

A contractor may:

Include unallowable costs in overhead.
Lack accounts for identifying unallowable expenses.
Include restricted costs in contract billings.
Apply inconsistent cost allowability decisions.
Fail to review indirect pools for prohibited costs.

How to Address It

Establish procedures for identifying and segregating unallowable costs.

This may involve:

Appropriate general ledger accounts
Expense coding rules
Internal approval procedures
Periodic transaction reviews
Indirect rate exclusions
Billing reconciliation
Documented corrections

The company should also train the personnel responsible for purchasing, expense approval, and accounting classification.

Deficiency 8: Interim Contract Cost Reporting Is Unavailable

Government contractors may need to determine contract costs during performance rather than only at fiscal year-end.

A system that cannot produce timely project cost information may create compliance and management problems.

What the Problem Looks Like

The company may be unable to generate reports showing:

Direct labor
Direct materials
Consultants
Subcontractor costs
Other direct costs
Indirect allocations
Total costs incurred
Remaining authorized funding
Estimated costs to complete

How to Address It

Establish routine contract cost reporting.

The system should support interim financial information that reconciles to accounting records.

For contractors subject to DFARS 252.242-7006, the accounting system criteria include determining contract costs at least monthly.

This reporting can also help management identify cost overruns and funding concerns before they become more significant.

Deficiency 9: Contract Billing Does Not Reconcile to Cost Records

Cost-reimbursable billing depends on appropriate cost support.

A contractor may have complete invoices but lack the accounting schedules needed to explain how billed amounts were calculated.

Common Problems

Direct labor billed does not match labor distribution.
Incorrect indirect billing rates are used.
Subcontractor invoices are missing.
Duplicate costs are included.
Credits are not reflected.
Billed amounts do not reconcile to contract cost reports.

How to Address It

Establish a process connecting incurred costs to applicable billing requirements.

The company should reconcile:

General ledger costs
Contract cost reports
Labor distribution
Indirect billing rates
Vendor and subcontractor expenses
Amounts previously billed
Current invoice amounts
Payments received

For contracts containing FAR 52.216-7, billing and allowable cost requirements must be evaluated under that clause and other applicable contract provisions.

Deficiency 10: Accounting Corrections Lack Documentation or Approval

Accounting corrections may be legitimate and necessary.

However, the contractor should preserve a clear record of changes made to historical charges.

What the Problem Looks Like

Potential issues include:

Journal entries without explanations
Labor transfers made only to reduce overruns
Original records overwritten
Missing review approvals
Corrections not reflected in billing records
Unsupported prior-period adjustments

How to Address It

Establish an adjustment procedure that identifies:

Original transaction
Error discovered
Reason for correction
Correct cost objective
Supporting evidence
Date of adjustment
Authorized approver
General ledger impact
Contract billing implications

Corrections should reflect actual cost treatment rather than simply move expenses toward a contract with remaining funding.

Deficiency 11: Accounting Policies Are Not Followed

A contractor may have written accounting policies but fail to implement them consistently.

For example:

Employees do not follow timekeeping procedures.
Monthly reconciliations are skipped.
Expense approvals are incomplete.
Indirect cost methods differ from policy.
Review responsibilities are unclear.

How to Address It

Compare the documented procedures with actual accounting practices.

Where gaps exist:

Identify the process weakness.
Update outdated procedures.
Assign responsibility.
Train affected employees.
Establish review controls.
Test implementation.
Maintain evidence of compliance.

A corrective action should improve the actual process—not merely revise policy language.

Deficiency 12: Contract Funding and Cost Limitations Are Not Monitored

A contractor should understand how expenditures compare with authorized funding and applicable contract limitations.

This is particularly important for cost-reimbursable arrangements.

Example: Forecast Funding Shortfall

Financial Measure	Amount
Authorized contract funding	$500,000
Costs incurred	$365,000
Remaining funding	$135,000
Forecast additional costs	$160,000
Projected shortfall	$25,000

Illustrative example assuming commitments are included appropriately in the forecast.

If management does not identify the potential shortfall until after additional costs are incurred, it may face unreimbursed expenditures.

How to Address It

Implement contract funding reports showing actual costs, relevant commitments, remaining funding, and estimated costs to complete.

Evaluate applicable limitation-of-cost or limitation-of-funds clauses and associated notification requirements.

How to Develop a DCAA Accounting System Corrective Action Plan

Identifying individual deficiencies is only part of the process.

A contractor should develop a structured corrective action plan that addresses the causes, consequences, and controls associated with each issue.

Step 1: Identify the Exact Finding

Start with the actual review report, internal assessment, or contracting officer correspondence.

Determine:

What requirement is involved?
Which accounting process is affected?
What evidence supports the finding?
Is the weakness related to system design, operation, or both?

Avoid preparing corrective actions based only on broad assumptions.

Step 2: Evaluate the Root Cause

A root-cause assessment identifies why the problem occurred.

For example, unsupported labor distribution may result from:

Missing timekeeping procedures
Incorrect project coding
Payroll integration failures
Lack of supervisory review
Incomplete employee training

The corrective action should address the cause rather than only the resulting accounting entry.

Step 3: Determine Whether Historical Costs Were Affected

Some deficiencies affect the design of the system but have not yet caused incorrect contract charges.

Others may already have affected financial records.

Evaluate:

Direct contract costs
Payroll allocations
Indirect rates
Vendor expenses
Government invoices
Prior financial reports
Contract funding calculations

Where errors are identified, determine the appropriate accounting and reporting response.

Step 4: Assign Corrective Actions and Owners

Each action should identify:

Required change
Responsible individual
Expected completion date
Resources needed
Supporting documentation
Validation method

The company should use achievable deadlines that account for required system changes and testing.

Step 5: Implement the Corrective Controls

This may involve:

Chart of accounts revisions
Contract coding changes
Timekeeping implementation
Payroll and labor distribution procedures
Indirect cost schedules
Billing reconciliation
Written policies
Staff training

Step 6: Test the Corrected Process

Testing is important because a process may appear adequate on paper without functioning reliably.

Use representative transactions to determine whether the system now provides the required information.

For example:

Labor test: Trace recorded time through payroll, labor distribution, and contract costs.

Indirect cost test: Reconcile the cost pool and allocation base to the general ledger.

Billing test: Trace an invoice to supported contract costs.

Reconciliation test: Reproduce a contract cost report from the accounting records.

Step 7: Maintain Evidence of Completion

Keep records showing:

What changed
When the change occurred
Who approved it
How the new procedure works
What testing was performed
Whether remaining deficiencies exist

This evidence may be important during follow-up review.

Sample DCAA Accounting System Corrective Action Plan

Deficiency	Corrective Action	Evidence of Completion
Direct and indirect costs mixed	Update chart of accounts and classification procedures	Account mappings and transaction tests
Contract costs not separately tracked	Establish contract-specific cost codes	Contract cost reports
Unsupported indirect rates	Rebuild pools and bases	Reconciled indirect rate schedules
Incomplete timekeeping	Implement timekeeping procedures	Approved time records and correction history
Labor distribution mismatch	Establish payroll reconciliation	Labor distribution reconciliation
Project reports do not match ledger	Introduce monthly cost reconciliation	Completed reconciliation reports
Unallowable costs not identified	Establish expense classification controls	Updated accounts and reviewed transactions
Billing records incomplete	Implement invoice-to-ledger reconciliation	Supported billing schedules

Illustrative plan. Formal response requirements and deadlines depend on the applicable government process.

In practice, the contractor should add a responsible owner, target completion date, current status, and follow-up testing result for each action.

What Happens After DCAA Identifies Accounting System Weaknesses?

The next steps depend on the review and applicable contract provisions.

During a Pre-Award Survey

DCAA's pre-award survey may provide information that helps the government evaluate whether the contractor's system is adequately designed for the proposed work.

If weaknesses are identified, the contractor should determine what corrective actions are needed and coordinate with the responsible government officials.

An inadequate system may affect a contemplated cost-reimbursable award because FAR 16.301-3 requires adequacy before award.

During an Applicable DFARS Post-Award Review

Under DFARS 252.242-7006, formal procedures apply when the contracting officer identifies material weaknesses in a contractor's accounting system.

Under the current clause:

The contractor must respond within 30 days to a written initial determination identifying material weaknesses.
Following a final determination of material weaknesses, the contractor must correct them or submit an acceptable corrective action plan within 45 days of receiving that determination.
System disapproval and payment withholding may apply under specified contract conditions.

These procedures are not universal deadlines for every DCAA review.

Contractors should confirm which clauses and requirements apply to their agreements.

Should a Contractor Replace Its Accounting Software After a DCAA Finding?

Not necessarily.

Accounting system weaknesses can result from poor configuration, incomplete procedures, inconsistent employee practices, or missing reconciliations.

Some problems may be corrected without replacing the underlying accounting software.

For example:

Missing contract codes may require configuration changes.
Weak labor distribution may require better integration and procedures.
Unsupported indirect rates may require revised schedules and accounting classifications.
Incomplete reconciliations may require stronger monthly controls.

Other companies may benefit from implementing specialized government contract accounting software.

The decision should follow an assessment of the system's actual capabilities and the complexity of the company's contracts.

DCAA does not universally certify commercial accounting software. A company's overall accounting system design and operation determine whether it can satisfy applicable requirements.

Documentation to Prepare for a Follow-Up Accounting System Review

A contractor addressing deficiencies should organize supporting records.

These may include:

Accounting System Overview

Software configuration, chart of accounts, contract codes, and reporting structure.

Policies and Procedures

Timekeeping, labor distribution, indirect rates, purchasing, billing, and accounting corrections.

General Ledger Records

Contract-level costs, account reconciliations, and supporting schedules.

Payroll and Labor

Payroll registers, timesheets, labor distribution, and reconciliations.

Indirect Costs

Pool schedules, allocation bases, rates, and supporting calculations.

Billing Records

Invoices, vouchers, billing reconciliations, and relevant adjustments.

Corrective Action Documentation

Finding descriptions, root-cause analysis, completed changes, testing results, approvals, and outstanding actions.

The contractor should accurately distinguish controls that are fully operational from procedures that are still being implemented.

DCAA Accounting System Gap Review Checklist

Before an accounting system evaluation or corrective action submission, review the following:

Applicable accounting system criteria are identified.
Any formal government findings have been reviewed.
Direct and indirect costs are properly segregated.
Direct costs can be accumulated by contract.
Contract codes are established and used consistently.
Indirect cost pools are defined.
Allocation bases are supported.
Indirect rates reconcile to accounting records.
Unallowable costs can be identified and excluded appropriately.
Timekeeping procedures are documented and operational.
Employee labor is recorded by appropriate cost objective.
Labor distribution reconciles to timekeeping and payroll.
Payroll charges reconcile to the general ledger.
Contract cost reports reconcile to general ledger accounts.
Interim contract costs can be determined.
Contract billing is supported by cost records.
Contract funding and cost limitations can be monitored.
Accounting corrections retain an appropriate audit trail.
Monthly reconciliations are documented.
Written procedures reflect actual operations.
Root causes of deficiencies are identified.
Historical accounting impacts have been evaluated.
Corrective actions have assigned owners.
Implementation deadlines are documented.
Corrected controls have been tested.
Supporting evidence has been retained.
Management has reviewed remaining gaps.
Applicable government response requirements have been addressed.

If several items remain incomplete, a focused accounting system assessment may help identify the controls that require attention before the next evaluation.

Frequently Asked Questions About DCAA Accounting System Deficiencies

What Are Common DCAA Accounting System Findings?

Accounting system findings may involve direct and indirect cost segregation, contract-level cost tracking, timekeeping, labor distribution, indirect cost allocation, general ledger reconciliation, unallowable costs, or billing support.

The actual findings depend on the contractor and the type of review.

Does a DCAA Accounting System Deficiency Automatically Prevent a Contract Award?

Not every weakness has the same effect.

However, cost-reimbursement contracts require an adequate system for determining applicable contract costs before award under FAR 16.301-3.

The government evaluates the specific circumstances and applicable requirements.

Can Contractors Correct DCAA Accounting System Findings?

Yes. Contractors may implement appropriate corrective measures.

Whether those measures resolve a formal government finding is determined through the applicable government review and contracting process.

What Is the Difference Between SF 1408 and DFARS 252.242-7006?

SF 1408 provides criteria used in pre-award accounting system surveys.

DFARS 252.242-7006 establishes accounting system requirements and related procedures for contracts containing that clause.

They are related but not interchangeable.

Are DCAA Accounting System Deficiencies Always Caused by Software?

No.

Weaknesses may involve procedures, internal controls, transaction coding, labor distribution, reconciliations, or employee practices.

Software may be only one part of the problem.

Can QuickBooks Support a Government Contract Accounting System?

Potentially.

A QuickBooks-based system may be suitable when properly configured and supported by appropriate accounting controls and procedures.

The applicable system requirements determine suitability.

Does a Corrective Action Plan Need to Address Historical Costs?

When deficiencies have affected recorded costs, billing, or reporting, the company should evaluate and address those historical effects.

A new procedure does not automatically correct previous accounting errors.

How Long Does It Take to Correct an Inadequate Accounting System?

The timeline depends on the identified weaknesses, the state of the existing records, the complexity of the accounting system, and applicable government deadlines.

There is no universal remediation timeline.

Can an Accounting Firm Help Prepare a DCAA Corrective Action Plan?

Yes.

A government contract accounting specialist can assess the financial and control weaknesses, help implement corrective measures, prepare reconciliations, and organize supporting documentation.

Formal accounting system determinations remain the responsibility of the appropriate government authorities.

Final Thoughts: Correcting Accounting System Deficiencies Requires Stronger Controls

DCAA accounting system deficiencies can reveal important weaknesses in a contractor's cost accounting procedures.

Some issues involve basic system design, while others arise from incomplete timekeeping, unsupported indirect cost allocations, missing reconciliations, or inconsistent accounting practices.

The most effective corrective approach begins with identifying the actual requirement and understanding why the weakness exists.

The contractor should then evaluate whether historical costs were affected, implement appropriate controls, test the revised procedures, and maintain evidence of the corrective actions.

For growing government contractors, these improvements can support more than audit readiness.

They can strengthen contract cost reporting, indirect rate management, billing accuracy, pricing decisions, and financial oversight.

At Peter Witts CPA PC, we help contractors build and maintain accounting systems designed around the financial requirements of federal contracting.

Founded by a former DCAA auditor, our firm brings decades of specialized experience in accounting system design, government contract accounting, indirect rate management, and federal compliance support.

Need Help Reviewing Your Accounting System Gaps?

If your company has received accounting system feedback, identified weaknesses during an internal review, or is preparing for a DCAA evaluation, now is the time to determine whether your accounting procedures can support the applicable requirements.

Peter Witts CPA PC can help assess your direct and indirect cost classification, contract cost tracking, timekeeping, labor distribution, indirect rates, general ledger reconciliation, cost accounting procedures, and government billing support.

Whether you are addressing a specific accounting system finding or preparing for your first cost-reimbursable federal con tract, our team can help identify gaps and strengthen the financial controls supporting your business.

Review Your Accounting System Gaps

Schedule a consultation with Peter Witts CPA PC to evaluate your accounting system, identify potential deficiencies, and establish a clearer corrective action strategy.