Pre-Award Audit Help
Pre-award audit coming up fast? Start here.
A contracting officer, an agency or DCAA just asked about your accounting system, and the date is days or a couple of weeks away. Some of that gap can be closed quickly and some of it can’t. Tell us the date on the first call. If we can’t make it, we tell you the same day.
- 12 years inside DCAA
- 100+ DoD contractors audited
- CPA led
- Built for 3 to 50 employees
- Remote, nationwide
First Two Days
What to do in the next 48 hours
Find out exactly what was asked, lock the date down, and pull six documents. That is enough for us to tell you on one call whether the date is realistic. Short notice is normal: FAR 9.106-2 tells contracting officers to normally allow at least 7 working days for the survey itself.
Confirm who is asking and what exactly they want
Is it the contracting officer, DCAA, DCMA or an agency grants office? Is it an SF 1408 accounting system survey, a questionnaire, or a general responsibility check? If it came by phone, ask for it by email.
Get the date in writing
Ask whether that is the date documents are due or the date the review starts, and get the name of the person running it.
Pull the trial balance and chart of accounts
Export both from QuickBooks or whatever you use, as of the last month you closed.
Pull a job cost report and a sample timesheet
If you can’t produce cost by project, or no timesheets exist, write that down. It is the most useful thing we will learn on the call.
Gather any written procedures
Accounting policies, a timekeeping policy, anything written. Having none is common before a first cost-type award.
Find the solicitation or award notice
The contract type drives the test. Under FAR 16.301-3(a)(3), a cost-reimbursement contract can be used only when your accounting system is adequate for determining costs applicable to the contract.
Realistic Scope
What can be fixed in days, and what can’t
Design and documentation can be built fast. History can’t. A reviewer looks at whether your system is set up to accumulate cost correctly and whether it is actually running.
Can be done quickly
- Written accounting procedures that describe how you actually work
- A timekeeping policy: daily entry, hours by project, supervisor approval, corrections with an audit trail
- Chart of accounts restructured to separate direct, indirect and unallowable costs
- Projects set up in QuickBooks so cost accumulates by contract
- Staff briefed on the new process before anyone interviews them
Can’t be rushed
- Months of job costing that were never recorded by project
- Timesheets that were never kept
- A track record of the new system running
Never backdate anything. Don’t create timesheets for past periods and present them as records kept at the time. The honest approach is to start the system now, say plainly when it started, and show it working since that day. We will not help build anything else. For the full timekeeping standard, see our DCAA timekeeping policy guide. If you are on QuickBooks, our QuickBooks setup guide covers jobs, the direct and indirect split and unallowable accounts.
SBIR and STTR
Why an accounting system review shows up after an SBIR selection
Because Phase II is often a different kind of award. SBIR.gov says Phase I awards are usually firm fixed price and that no pre-award accounting system survey is required for firm fixed price awards. Phase II awards are often cost reimbursement, and SBIR.gov notes that this level of DCAA involvement often surprises new awardees.
SBIR.gov also says that an agency considering you for a Phase II award may require a preaward survey, and that most SBIR/STTR agencies rely on DCAA to perform it, except NIH and NSF. At NSF, a Phase I company recommended for Phase II gets an external review by an NSF-selected CPA firm of its financial systems and related factors, and NSF lets Phase I awardees spend up to $10,000 of the Phase I budget on CPA services for this purpose. At NIH, the step before award is called Just-in-Time: NIH asks for additional information once an application is considered fundable. Answer exactly what the request lists.
Pricing
What pre-award audit help costs
Our SF 1408 readiness review starts at $2,500 for a company with current books. If the books are behind, cleanup is quoted separately once we see the trial balance.
| Work | Price | Notes |
|---|---|---|
| SF 1408 readiness review | From $2,500 | For a company with current books. We test your system against the SF 1408 criteria and fix the design and documentation gaps. |
| Cleanup | Quoted separately | Books that are behind, missing project coding, or a chart of accounts that needs rebuilding. |
| Timekeeping policy and training | From $1,200 | Written policy plus staff training. |
| Support during the review | $160 per hour | Entrance conference, document requests and follow-up questions, with a not-to-exceed cap agreed in advance. |
We reply to every inquiry within one business day. Full detail is on our pricing page.
If You Are Not Ready
What happens if you are not ready
The contracting officer has to find you responsible before awarding the contract. FAR 9.103 says contracts go only to responsible prospective contractors, and that without information clearly showing responsibility, the contracting officer must find nonresponsibility. One of the general standards in FAR 9.104-1(e) is having the necessary accounting and operational controls, or the ability to obtain them.
Small businesses have a second step. Under FAR subpart 19.6, a contracting officer who finds an apparent successful small business nonresponsible must withhold award and refer the matter to the SBA Area Office. Award is held for 15 business days after SBA receives the referral, or longer if SBA and the contracting officer agree. SBA can issue a Certificate of Competency, which certifies you are responsible for that specific contract. The program does not apply to 8(a) sole-source awards.
A referral is a way back, not a plan. It is far better to show up with a working system. For every criterion the reviewer tests, use our DCAA pre-award audit checklist.
Questions
Frequently asked
Our DCAA pre-award audit is next week. Can you still help?
Maybe. Tell us the date on the first call. If we can’t make it, we tell you the same day. What decides it is what already exists: books that are current, some record of hours by project, and a chart of accounts we can restructure quickly.
What is an SF 1408?
Standard Form 1408 is the Preaward Survey of Prospective Contractor-Accounting System. FAR 9.106-4 lists it among the forms the surveying activity completes. On DoD work, DCAA usually performs it and follows the SF 1408 attributes.
Does an SBIR Phase II award trigger an accounting system review?
It can. SBIR.gov says there is no pre-award accounting system survey for firm fixed price awards, which is what most Phase I awards are. Phase II awards are often cost reimbursement, and an agency considering a Phase II award may require a preaward survey. NSF uses its own CPA review instead of DCAA.
We have no cost accounting system at all. Is it too late?
Not always. Written procedures, a timekeeping policy and a restructured chart of accounts can be built quickly. History cannot. If you never recorded hours by project, the honest answer is to start now and show the system running from the day it started.
Can we recreate old timesheets so the reviewer sees history?
No. Never backdate records or present after-the-fact timesheets as if they were kept at the time. Tell the reviewer when the new system started and show it working since then.
How much does pre-award audit help cost?
Our SF 1408 readiness review starts at $2,500 for a company with current books. Cleanup is quoted separately. Support during the review itself is $160 per hour with a not-to-exceed cap we agree on in advance.
What happens if the contracting officer finds us not responsible?
If you are a small business, FAR 19.602-1 requires the contracting officer to withhold award and refer the matter to SBA for a Certificate of Competency. SBA can then certify your responsibility for that specific contract. This does not apply to 8(a) sole-source awards.
More
Related pages
DCAA pre-award audit (SF 1408) support
What the survey covers, where contractors fail, and how we prepare you when there is more time.
Guide: DCAA pre-award audit checklist
Every SF 1408 criterion and what the auditor asks to see.
Guide: DCAA timekeeping policy
Timekeeping requirements, a sample policy and the questions staff get asked.
Guide: QuickBooks and DCAA
No software is compliant by itself. How to set QuickBooks up so the system is.
Got a date on the calendar?
Tell us the date on the first call. If we can’t make it, we tell you the same day. If we can, you get a written proposal within two business days of the call.