Federal Contract Accounting & Invoicing
Precision Financial Management Built for FAR Compliance and Federal Billing Standards
Keep Your Contracts Funded and Your Cash Flow Moving
Federal contracts bring opportunity—but also complexity. Each invoice, journal entry, and rate calculation must meet Federal Acquisition Regulation (FAR) standards and align with your approved indirect rate structure. A single mismatch between your books and billing can trigger audit scrutiny, payment holds, or loss of funding.
At Peter Witts CPA PC, we specialize in federal contract accounting that integrates seamlessly with agency billing requirements. From cost-type and T&M contracts to firm-fixed-price agreements, our systems ensure your financials stay compliant, transparent, and reconcilable—every time.
We help you design, operate, and maintain an accounting environment that meets DCAA and DFARS expectations, satisfies contracting officers, and supports sustainable growth.
Why Federal Contract Accounting Requires More Than Standard Bookkeeping
Unlike commercial work, federal contracting comes with nonnegotiable accounting standards that govern how you record, allocate, and bill every dollar:
- FAR Part 31 defines allowable and unallowable costs.
- CAS (Cost Accounting Standards) govern cost accumulation and consistency.
- DFARS Business System Criteria require robust internal controls over accounting, purchasing, and estimating.
- OMB 2 CFR 200 (Uniform Guidance) applies additional requirements for grant-funded work.
- Your accounting system must produce traceable, auditable data—from timesheets and expense reports to indirect cost allocations and billing reconciliations. We ensure your books are not only accurate but also audit-proof and payment-ready.
Accounting System Design & Configuration
A compliant accounting system does more than capture transactions—it demonstrates to auditors that your financial processes meet federal requirements. We design and implement systems that:
- Segregate direct and indirect costs in accordance with FAR Part 31.
- Maintain consistent allocation methods for overhead, fringe, and G&A.
- Support job-cost reporting by CLIN, task, or funding increment.
- Integrate labor distribution, purchasing, and billing modules for transparency.
- Facilitate electronic submissions through platforms like WAWF, IPP, and PMS.
We configure and support platforms including
QuickBooks, Unanet, Deltek Costpoint, and custom-built systems, tailored to your award types and internal staffing capacity.
Contract Billing and Invoicing Management
Federal invoicing isn’t a simple accounts receivable task—it’s a compliance exercise. Each invoice must follow the correct submission protocol, cost structure, and rate application to be accepted.
We manage end-to-end billing processes that meet federal standards:
- Invoice Preparation: Generate compliant invoices for WAWF, IPP, and PMS systems.
- Funding Reconciliation: Match billed costs to obligations, contract modifications, and incremental funding.
- Indirect Rate Application: Apply provisional or negotiated indirect rates consistently across cost elements.
- Supporting Documentation: Assemble backup (labor reports, subcontractor invoices, materials lists) per agency requirements.
- Audit Readiness: Maintain crosswalks between GL, project ledgers, and billing schedules for DCAA traceability.
Our approach ensures invoices are
approved faster, paid sooner, and fully defensible during audits.
Indirect Rate Tracking & Billing Accuracy
Billing accuracy depends on properly calculated and applied indirect rates. We help contractors establish, monitor, and adjust rates in alignment with their provisional billing rate agreements (PBRAs) and forward pricing rate proposals (FPRPs):
- Calculate provisional billing rates based on projected pools and bases.
- Reconcile actual rates monthly to detect variances early.
- Track underbillings and overbillings to maintain clean receivables.
- Support ICE and NICRA submissions for DCAA and grant oversight offices.
By integrating rate management into monthly accounting, we prevent cumulative errors that could delay final invoice approval or trigger cost disallowance.
Revenue Recognition & Cost Reconciliation
Different contract types require unique revenue recognition approaches:
- Fixed-Price Contracts: Percentage-of-completion or deliverable-based recognition.
- Cost-Reimbursable Contracts: Revenue tied to allowable cost recovery.
- Time & Materials Contracts: Billable labor and materials reconciled against rate ceilings.
We align your recognition policies with FAR 52.216 clauses and GAAP principles, ensuring your financial reporting reflects both compliance and business performance.
Our reconciliation procedures ensure:
- Costs billed to the government equal costs recorded in your general ledger.
- Advances, retainage, and progress payments are tracked accurately.
- Unbilled receivables and revenue-in-excess-of-billings are properly presented.
We empower our clients to grow with confidence by delivering high-quality, customized financial services that meet the exacting standards of the DCAA, NIH, DOE, and other federal agencies.
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.
