McNew & Associates, Inc. Blog

QuickBooks Myths

1.    QuickBooks is NOT DCAA compliant

 The insinuation that QuickBooks is not DCAA compliant is only partially true.  Yes, out of the box, the software is not “DCAA Compliant”.  However, the accounting system as a whole, can be made DCAA compliant.

 The DCAA Contract Audit Manual (DCAAM 7640.1) describes an accounting system as:

 The contractor’s accounting system consists of methods and records established to identify, assemble, analyze, classify, record, and report an entity’s transactions and to maintain accountability for the related assets and liabilities.  The accounting system should be well-designed to provide reliable accounting data and prevent misstatements that would otherwise occur.

 This definition never mentions accounting software, but rather a system in the whole that provides reliable and accurate information.  This means that the software (QuickBooks) is simply one component of the overall accounting system.  An accounting system includes software, policies and procedures, internal controls, and routine monitoring.  In order to be DCAA compliant, QuickBooks needs to be supplemented with more robust policies and procedures and a few add-ons to make the system fully compliant.

2.    No Labor Distributions for Exempt Salaried Employees 

QuickBooks payroll has the full capability to perform a fully compliant labor distribution IF used correctly.

3.    No Job Costing Capability

 QuickBooks has the full capability to track costs by contract, and yes, even to the CLIN, SLIN, and task level.  QuickBooks falls short at providing a full job cost as it does not    apply indirect costs to the job level.  This can be corrected through monthly procedures.

4.    QuickBooks Cannot Support A Large Government Contract

McNew & Associates has clients processing $30M+ worth of contracts through its QuickBooks accounting system.  Contract size is not an issue so long as the system in compliant.

QuickBooks Deficiencies

  • Cash Basis Payroll
  • No PTO Accruals
  • Failure to calculate indirect rates
  • Lack of Full Job Status Reporting (Thru Gross Profit Only)
  • User Incompetence about System Capabilities

Corrective Measures

MAI has the specific knowledge and capabilities to complete the system.

  • How do we do it?
  • “Turn On” System Modules and Items not appropriately used by client
  • Additional “Add-Ons” to complete Indirect Rates and Job Status Reporting
  • Implement Pro Forma Policies and Procedures
  • Establish Internal Control Procedures
  • Provide Routine Monitoring Procedures

 Proof of Record

  • Over 30 client QB systems converted for DCAA compliance
  • At least half audited by DCAA
  • 100% passing rate with DCAA

McNew & Associates, Inc.                                                     

No Stress…Just Responsibility




2 Comments so far
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