Tuesday, February 13, 2024

Quickbooks Government Approved Accounting System

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Implement Catalogs For Easy Search

Free QuickBooks DCAA Compliance Review ReliAscent

The next step is implementing a better purchase process in Quickbooks is the use of catalogs.

Catalogs allow you to group together commonly purchased items so that your users dont have to keep on entering the same data again and again.

Catalogs can be used for products and services. For example, if you have a contract with a temp agency for temporary resources, then configure that in the catalog. Next time, someone needs to purchase temp services, they can just pick it up from the catalog instead of calling procurement.

For items like office supplies, you can use external catalogs, also called punch-outs.

Punchouts are external catalogs managed by suppliers but with your specific pricing and product catalog. For example, instead of creating a catalog with 1000s of items from Staples or Office Depot, you can just use their existing catalog.

When Punchout is integrated with a procurement system, it allows the user to go out and browse the items but then the system routes the requisition back for approval before the order can be placed.

This is the best of both worlds, your users get the online shopping experience and you are routing the purchases to your preferred vendors.

Improve the productivity of the Purchasing team by implementing a request and quote process.

A purchase order is a final step in the purchasing process. Before that, you would normally see a request and a quote process.

Lets take an example

The History Of Dcaa Compliant Accounting

The escalation of U.S. involvement in Vietnam after the Gulf of Tonkin incident led to a rapid rise in the number of government contracts awarded for military equipment. In his 1961 farewell address, when he used the term militaryindustrial complex, President Dwight D. Eisenhower offered a warning about the growing fiscal relationship between the defense industry and policy legislators.

The following year, in a study known as Project 60, Secretary of Defense Robert S. McNamara ordered an examination of the contract management and administration processes of all branches of the armed services. As a result of this study, many of the Defense Departments contract administration responsibilities were shifted to the Defense Logistics Agency. The study also resulted in the creation of the Defense Contract Audit Agency in 1965.

Key Element No : Accounting For Unallowable Costs

The contractor must demonstrate its ability to meet the requirements of FAR 31.201-6. This means that contractors must segregate costs determined to be unallowable based on FAR 31.2 separately from direct and indirect cost pools. These costs are typically accumulated and segregated in an unallowable cost pool. Unallowable costs must be excluded from the indirect cost pools when developing indirect cost rates. Such costs cannot be included in any billing, claim or proposal. To demonstrate this capability, contractors must show the unallowable cost pool by account. Also, it should maintain a policy defining the procedures it uses to meet this requirement. It should demonstrate that personnel responsible for coding transactions are adequately trained and knowledgable in FAR 31.2. Generally speaking contractors should make the provisions of FAR 31.2 readily available for employees as a reference document. On a separate note, indirect cost rates must be developed in a manner that allocates indirect costs to unallowable direct and allocation base costs. If a cost is normally included in an allocation base it must be included whether allowable or not. For example any direct, fringe, or overhead cost that is determined to be unallowable per FAR 31.2 must be included in the appropriate allocation base if allowable direct, fringe and overhead costs are included in the allocation base.

Key Element No. 10:

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Quickbooks Setup And Support

DCAA-Assist specializes in the setup and maintenance of DCAA compliant QuickBooks Accounting Software implementation. We can help design a system to best fit your business needs and provide the support needed on an ongoing basis. We can provide assistance via remote access for your convenience. The benefits of this simple and integrated approach include:

  • Utilize simple QuickBooks financial accounting to comply with DCAA requirements.
  • Project/Contract financial reports available direct from QuickBooks utilizing the Customer:Job recording feature.
  • Accurate and detailed progress billings based on actual direct and indirect costs synchronized with your payroll cycles.
  • Project cost management including period and cumulative labor + costs compared to total contract value and project budgets.
  • Creation of cost pools for capturing all fringe benefits, general & administrative, overhead and indirect dollars/rates.
  • Periodic calculation and review of rates applied to progress billings to insure accurate recovery of indirect costs.
  • Minimized duplicate data entry.

How To Create A Purchase Order In Quickbooks Online

DCAA Compliant Quickbooks

The easiest way to create a purchase order in Quickbooks is to create is by clicking the option on the top right-hand side of your QuickBooks Online menu.

That will open the below menu, click on Create purchase order option

Once you click on the purchase order, Quickbooks opens the following screen where you can key in the details of the purchase order. The screen is self-explanatory but we have highlighted the key sections of the purchase order screen.

The key section includes

1. Payee name which is also called supplier name.

2. Email: This is where the Quickbook online will send the purchase order to the supplier.

3. The ship to address and the item details for the purchase order.

4. The total amount is displayed on the right-hand side.

5. Ship to is the address where the order needs to be shipped.

6. Item details: is the list of items which needs to be put on the

QuickBooks also allows you to add items directly from the item master so it is easy to reorder commonly purchased items.

From there on you can save the purchase order or send the purchase order to the supplier.

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Apply For The Productivity Solutions Grant In Four Simple Steps

Step 1

Speak to us and we will connect you to a pre-approved QuickBooks Pro-Advisor who will provide a quote for software, system design, training and implementation.

Step 2

Submit your grant application online. Applications are processed within four to six weeks. Once approved you will receive a letter of offer outlining the subsidy amount.

Step 3

Once you have approval contact the Pro-Advisor that supplied the quote and get started. Confirm and sign the quotation so that implementation can begin.

Step 4

You have 6 months to finalise the implementation. Once complete submit the claim and you will receive reimbursement within two months.

Check Gaap Compliance With Chart Of Accounts

A compliant accounting system must have a chart of accounts that follows the Generally Accepted Accounting Principles and can distinguish cost pools with ease.

The chart of accounts is a list of general ledger accounts with posted transactions. When configuring QuickBooks, it is important to divide direct and indirect costs through a chart of accounts sequencing.

The indirect cost accounts need to be broken down into pools for general and administrative, overhead, and fringe. You must also establish a separate sequence of accounts for unallowable expenses. The general ledger needs to include accounts such as payables and receivables, along with unearned revenue and prepaid expenses, to show that it is using an accruals basis.

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Quickbooks Purchase Order Approval Process

Now lets talk about what happens before you go to the purchase order screen and create a purchase order.

The request for a purchase order is initiated by an employee who needs a certain product or service.

That request is probably sent via email and most likely attaching a requisition form.

That request is then being approved through a series of email chains back and forth and finally, when it is approved, it is sent to the purchasing team or some administrator to create the purchase order.

In this section, we will talk about implementing a purchase order approval process on top of the existing purchase order process in QuickBooks.

However we will not just limit the discussion to the approval of purchase orders, but we will cover many aspects of how to make the whole purchasing process better by improving the end to end purchasing process in QuickBooks.

Dcaa Compliant Accounting System Setup

Outsourced, Virtual DCAA-Compliant Accounting

Establishing a DCAA compliant accounting system is essential for government contractors but many business owners aren’t sure where to start. You’re probably wondering if it’s possible to make your existing accounting system DCAA compliant and the answer is often yes. If you’re using a popular accounting program like QuickBooks you don’t need to learn a new, expensive accounting software in order to maintain DCAA compliance. Instead, we’ll modify your current system to satisfy the reporting requirements of U.S. government contractors.

When you become our client, we create an entirely DCAA, FAR, and CAS compliant accounting system that tracks costs for all your government contracting work by reconfiguring your chart of accounts. We’ll convert your existing data file and design a custom chart of accounts that’s optimized for your business and compliant with government guidelines.

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Can I Use Quickbooks For Government Accounting

Many people think that to be compliant with DCAA requirements you cannot use QuickBooks for your accounting system. While QuickBooks is not designed to meet the FAR and DCAA requirements , and it has some limitations on meeting all the requirements, there are ways to make a QuickBooks system meet all the government’s requirements.

If youre reading this you may already know that DCAA stands for Defense Contract Audit Agency and since 1965 they have been responsible for auditing pretty much all Federal contracts for DoD, GSA, FAA, NASA, etc. Typically the DCAA follows a very prescribed program in auditing an accounting system. It is easy to prepare for the audit when you know exactly what they will be looking for. It may not be so easy in figuring out how to make QuickBooks meet all these requirements.

There are 3 major components in converting a QuickBooks system into a government approved accounting system :

  • Structuring QuickBooks in a proper job cost type format
  • Providing current QuickBooks information to an external engine to calculate job cost reports and calculate indirect billing rates
  • Provide a compliant labor recording system that interfaces and reconciles with the QuickBooks file
  • The first component is the structure of QuickBooks. The major structure elements are clearly outlined by the FAR and the DCAA but include:

  • General Ledger set-up, numbered chart of accounts & pooled indirect expenses
  • Labor distribution system
  • Segregation of direct and indirect expenses
  • Automatically Create Purchase Orders In Quickbooks

    We talked about a couple of ideas in the sections above on how to improve the purchasing process in Quickbooks.

    But all this would be useless if you have to then manually create the purchase order in the QuickBooks systems.

    Luckily, this process can be fully automated using purchasing systems. By integrating your purchasing system with QuickBooks online version, you can easily streamline the workflow for purchasing.

    Once the order is fully approved in your purchasing system, or any other front end module for the PO process, the purchase order can then be sent to the QuickBooks system for further processing.

    The integration with Quickbooks is straight forward, but you should clearly define the use cases for integration and test them to ensure that purchase orders are moving to Quickbooks seamlessly.

    For example, In ProcureDesk implementation, we clearly identify all the use cases by working with our customers and then set up a test plan for ensuring successful integration.

    Automate transmission of a purchase order to suppliers

    As we saw in the earlier sections, Quickbooks allows you to send the purchase order out to your suppliers. You can email it to your suppliers or download the purchase order and send it out to the suppliers.

    Since we have already automated the purchase order process so far, why not fully automate it by automatically sending the purchase order to the supplier.

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    Ensure Your Chart Of Accounts Follows Gaap

    Fundamental to a compliant accounting system is a chart of accounts that follows Generally Accepted Accounting Principles and is structured to distinguish cost pools easily.

    The chart of accounts is essentially a list of general ledger accounts where transactions are posted. Some business owners mistakenly believe that getting this right would automatically result in DCAA audit compliance, but the chart of accounts is just the first step.

    When configuring your QuickBooks, its essential to be deliberate about dividing direct and indirect costs through your chart of accounts sequencing. Indirect cost accounts should be broken down into pools, such as fringe pool, overhead pool, and general and administrative pool, but it can be difficult for a business to decide between a two-tier or three-tier indirect cost pool structure.

    Additionally, youll need to have a separate sequence of accounts for unallowable expenses.

    Your general ledger should include accounts like payables and receivables, as well as prepaid expenses and unearned revenue, to demonstrate your accounting system is on an accruals basis.

    Make Use Of The Profit & Loss By Class Module

    16 Best DCAA Compliant Accounting Software of 2020 ...

    One of the most useful features of QuickBooks for government contractors is the P& L by Class report. This presents a condensed view of each individual project broken down by profitability and cost element.

    However, there is one important caveat: every transaction entered into the software that should be allocated to a direct project needs to have the appropriate project selected under the Class: Customer: Project field to avoid inaccuracies this includes journal entries.

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    Key Element No : Contract Costs Must Be Controlled By The General Ledger

    Most accounting system packages address this concern automatically. That is the job cost subsidiary ledger is controlled by the general ledger. As transactions are added or deleted or changed in the job cost subsidiary ledger, the general ledger for these direct cost accounts is updated automatically. A common DCAA test is to compare the summary of job costs by job or project to the direct cost account balances in the general ledger. Failure to demonstrate this test is a formula for failure for sure.

    What Is The Purchase Order Cost

    Purchase order cost is the cost of sending the purchase order out to the supplier. This includes the cost of all the resources required to send the purchase order to the supplier. What do we mean by resources?

    That includes everyone included in the process and the time spend by them. Lets understand what these resources are

    Time spent to create a requisition-This could vary from minutes to a couple of minutes depending upon the length of the requisition.

    Time spent to get it approved This includes the time spent to get the requisition approved. That also includes the time spent by executives to approve the order.

    In case if the requisition is not routed to the correct person, then it needs to re-routed to the correct person.

    Time spent on creating the purchase order:Once the requisition is approved, someone needs to create the purchase order in the system and then send the purchase order to the supplier.

    So every step mentioned above adds to the cost of the purchase order process.

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    Let Us Show You How Dcaa Compliant Quickbooks Can Revolutionize Your Accounting

    Our GCRS add-on system for QuickBooks has helped our customers obtain an approved accounting system status from DCAA which has qualified them for Cost Plus, Time & Material, and Fixed Price contracts.

    The GCRS system provides our customers with:

    • Reporting by contract and/or detailed task or CLINS
    • Indirect rate computation with the rate on contracts computed at actual or provisional rates
    • Revenue Recognition can be set up using whatever is required, including % complete, Cost Plus fee on cost, or based on billings
    • Invoices can be generated and tracked in the GCRS system
    • Company budgets and forecasted for rates for pricing, including Profit & Loss, Balance Sheet, and Cash Flow Statements can be maintained in the GCRS system. Change one employees utilization rate, and see the impact instantly on your year-end rates, P& L, Balance Sheet, and Cash Flow Statements
    • Actuals from your accounting system can be easily exported into the GCRS to provide you with a spot rate, and a forecasted year-end rate

    Dcaa Compliant Accounting Systems Include:

    DCAA Compliant Accounting System for Government Contracting
    • DCAA compliant accounting system setup
    • Organize the chart of accounts to segregate direct costs from indirect costs
    • Organize indirect costs into groups and segregate unallowable costs
    • Chart of accounts redesign to properly track job costs
    • Indirect pool design
    • Creating DCAA compliant accounting policies and procedures
    • Implementation of internal controls

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    Track Customer Jobs With The Customer Center

    The Federal Acquisitions Regulations stipulate that accounting systems must identify and accumulate direct costs by contract. QuickBooks can be set to track customer jobs, tasks, and subtasks at different levels using the Customer Center. This allows you to specify the type of contract, such as firm fixed price, cost plus fixed fee, or time and material contract, and to set up several jobs under a single customer.

    Key Element No 1: Track Costs By Contract Line Item

    Under certain types of contracts, the tracking of costs by Contract Line Item may be required. This means the project must be segregated by CLIN. The accounting system must treat each CLIN as a project or cost objective and charge costs to the CLIN in the same manner as it charges costs to projects. These CLIN accumulations should be reported or rolled up to the contract level.

    Compliance with this requirement can be demonstrated by showing CLIN level project numbers within a contract and reporting costs to each contract line item.

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    Utilize The Enter Bills Function

    Some contractors might be tempted to use the Write Checks function to pay bills in QuickBooks because it seems faster, but this can compromise the requirement for accrual-based reporting.

    QuickBooks Write Check function allocates expenses to the month in which the check was actually written rather than the month in which the expense needs to be allocated under accrual-based accounting, so stick with the Enter Bills module instead.

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