SF 1408 Self-Check
SF 1408 readiness self-check
Answer 11 yes, partly or no questions about your accounting system and see how it lines up with the criteria DCAA tests in a pre-award accounting system survey. Your result lists the specific gaps and what the auditor asks to see for each one.
About 3 minutes, 11 questions, no sign-up to see your result. This is a self-check, not an audit and not an opinion on your system, and no software or score means a system is “approved.”
- 12 years inside DCAA
- 100+ DoD contractors audited
- CPA led
- Built for 3 to 50 employees
- Remote, nationwide
Before you start
Answer for how your books work today, not how they will work after the award. The survey tests design, so an honest “partly” is more useful to you than a hopeful “yes.”
- Yes: it is in place, written down where it should be, and running every month.
- Partly: it exists, but it is informal, incomplete, or not done every time.
- No: it is not in place yet, or it is only planned.
The questions follow the accounting system criteria in DFARS 252.242-7006(c) and the items on Standard Form 1408. Your answers are scored in your browser. Nothing is sent to us unless you ask us to email you the results.
The Self-Check
11 questions
Do you keep direct costs and indirect costs in separate general ledger accounts, with a written rule for what gets charged direct?
Is every direct cost recorded against a specific contract or project inside your accounting system, not in a spreadsheet beside it?
Does every employee, owners and salaried staff included, record time daily against contract and indirect charge codes, with supervisor approval and a record of every correction?
Each month, do timesheet hours tie to payroll, and does the labor charged to contracts and indirect accounts tie to payroll expense in the general ledger?
Do you have defined indirect cost pools (such as fringe, overhead and G&A), each with an allocation base, and calculate the rates from your books the same way every period?
Are unallowable costs, such as entertainment, alcohol and lobbying, recorded in their own accounts and kept out of your indirect rates and invoices?
Can you reconcile each invoice, both current and cumulative amounts, to the costs in your books (or, if you have no cost-type contract yet, show how a sample invoice would tie)?
Do you keep your books on the accrual basis and post and close them every month, so contract costs are current at least monthly?
Does your job cost detail reconcile to the general ledger every month, and are adjusting journal entries documented and approved?
Do you have written accounting procedures that match what you actually do, and does someone periodically review that they are being followed?
Could you trace one timesheet and one vendor bill from the source document through job cost and the general ledger to an invoice, with the change history kept in your software?
Answer all 11, then see your result. Nothing is sent unless you ask for an emailed copy.
Your Result
Your gaps, and what the auditor looks for
No gaps on your answers. The next test is whether a walkthrough backs them up.
This list is based only on your answers. An auditor tests what is actually running.
Next step: the SF 1408 pre-award readiness review
We walk your system against the SF 1408 criteria the way the auditor will, tell you what would fail today, and help you fix it. The review is from $2,500 for a company whose books are current; cleanup is billed hourly or quoted. How the review works or see GovCon prices.
Email me my results (optional)
Your result is above either way. If you want a copy in your inbox, leave your name and work email.
We send one email with your results from info@m2cpa.com and may follow up once about your answers. No mailing list. See our privacy policy.
Scoring
How the result works
The result comes from a simple rule, not a statistical model. It is our judgment of where to start, based on what decides pre-award surveys from the auditor’s side, and it is not a DCAA scoring method.
- Build before the survey: you answered “no” to any core question (1, 2, 3, 5, 8), or “no” to three or more questions in total.
- Ready for a mock review: no “no” answers and no more than two “partly” answers.
- A few gaps to close: everything in between.
The core questions cover direct and indirect separation, cost by contract, timekeeping, indirect rates and monthly books. In our experience a gap in any one of those can decide a survey on its own, because the rest of the system depends on it.
The Criteria
What each question tests, and what the auditor looks for
Each question maps to a criterion in the DFARS accounting system clause and, where the form has a matching box, an SF 1408 item. The notes say what evidence the auditor asks to see.
Under the FAR overhaul, DoD applies the clause as 252.242-7999 under Class Deviation 2026-O0050, effective March 16, 2026, with the same paragraph (c) criteria. Daily time entry, approvals and the corrections trail come from DCAA’s Information for Contractors manual, which is guidance rather than clause text. Unallowable cost exclusion is in FAR 31.201-6. DCAA also publishes a Pre-award Accounting System Adequacy Checklist, and our DCAA pre-award audit checklist guide walks through every SF 1408 item.
1. Direct and indirect costs kept separate
Criterion: DFARS 252.242-7006(c)(2) · SF 1408 item 2a
What the auditor looks for: A chart of accounts where direct labor, materials, subcontracts and other direct costs sit apart from indirect accounts, plus a short written rule for what is charged direct. The auditor then checks that the same kind of cost gets the same treatment on every job, not direct on one contract and indirect on another.
2. Costs accumulated by contract
Criterion: DFARS 252.242-7006(c)(3) and (c)(13) · SF 1408 items 2b and 2i
What the auditor looks for: A job cost report for each contract, broken out by cost element (labor, materials, subcontracts, travel, other direct costs), with totals that tie to the general ledger. If the contract prices or funds line items separately, sub-jobs for each line item. A side spreadsheet that never ties to the books does not count.
3. Timekeeping by cost objective
Criterion: DFARS 252.242-7006(c)(9) · SF 1408 item 2e · daily entry, approvals and corrections are DCAA guidance
What the auditor looks for: Timesheets for everyone who works, charged to contract or indirect codes, not just to “salary”. Entries made each day, signed by the employee and approved by a supervisor, and every change showing the original entry, the corrected entry, who made it and why. The clause itself requires time by cost objective; daily entry, approvals and the corrections trail come from DCAA guidance (Information for Contractors, DCAA Manual 7641.90), and they are what the auditor tests against.
4. Labor distribution reconciled
Criterion: DFARS 252.242-7006(c)(10) and (c)(6) · SF 1408 item 2f
What the auditor looks for: A monthly reconciliation that walks hours from the timesheets to the payroll register, and labor dollars from payroll to the amounts charged to each job and indirect account in the general ledger. Payroll booked as one salary line with no distribution to jobs fails this test.
5. Indirect pools and bases applied consistently
Criterion: DFARS 252.242-7006(c)(4) and (c)(15)(ii) · SF 1408 item 2c
What the auditor looks for: A list of your pools, the base used for each, and a rate calculation built from the trial balance that someone else could recompute. Bases that stay the same from period to period, and rates applied to every job the same way. One blended “overhead rate” nobody can rebuild from the ledger is the usual problem.
6. Unallowable costs identified and excluded
Criterion: DFARS 252.242-7006(c)(12) · FAR 31.201-6 · SF 1408 item 2h
What the auditor looks for: Separate general ledger accounts for unallowable costs, a written policy naming the categories and who reviews coding, and proof those accounts are left out of the rate calculation and billings. FAR 31.201-6 requires expressly unallowable costs, and their directly associated costs, to be identified and excluded from any billing, claim or proposal. Alcohol and entertainment buried in “meals” is a common finding.
7. Billings reconcilable to the books
Criterion: DFARS 252.242-7006(c)(16)
What the auditor looks for: A billing worksheet that ties each invoice, for the period and cumulative to date, to the job cost report and the general ledger, with the indirect rates on the invoice matching the rates you are supposed to bill. If you are new to cost-type work, a mock invoice for the prospective contract built from a real job cost report.
8. Monthly posting and cost determination
Criterion: DFARS 252.242-7006(c)(11) and (c)(18) · SF 1408 items 1 and 2g
What the auditor looks for: A dated month-end close checklist, an accrual-basis trial balance and a current job cost report. Accrual accounting is what makes the monthly number complete: costs land in the month they were incurred, including goods and services received but not yet billed by the vendor, and labor for days worked but not yet paid (that is the period cutoff). Cash-basis tax books or quarterly catch-up bookkeeping do not meet the at-least-monthly test.
9. General ledger control and adjusting entries
Criterion: DFARS 252.242-7006(c)(5), (c)(6) and (c)(7) · SF 1408 item 2d
What the auditor looks for: A monthly reconciliation showing job cost totals agree to the general ledger control accounts, with any differences explained. Adjusting entries that carry an explanation, support and an approval, and closed periods locked so nobody posts into them later without an approved entry.
10. Written procedures and management review
Criterion: DFARS 252.242-7006(c)(1) and (c)(8)
What the auditor looks for: Short written procedures for timekeeping, job setup, indirect pools, unallowable costs, month-end close, billing and adjusting entries, and evidence of review: a signed-off close, periodic timesheet spot checks, notes on what was found and fixed. The auditor reads the procedures, then watches the process to see whether they match. A purchased manual describing approvals nobody performs works against you.
11. Audit trail from source to invoice
Criterion: Supports DFARS 252.242-7006(c)(1), (c)(5) and (c)(7) · tested in the survey walkthrough
What the auditor looks for: The walkthrough. The auditor picks a timesheet and a vendor bill and follows them into payroll or payables, job cost, the general ledger and an invoice. Source documents kept, the audit log in your software turned on, and no transactions deleted or overwritten in a way that hides the original. “Audit trail” is not a stand-alone clause criterion; it is how the auditor tests the internal control and general ledger criteria.
Questions
Frequently asked
Is this self-check a DCAA audit or a prediction of the result?
No. It is a self-check you answer on your own, not an audit, a review or an opinion on your accounting system. Only the auditor’s survey produces a recommendation, and no software, checklist or score makes a system “approved.” Use it to find the gaps worth closing before the survey.
What does the SF 1408 check?
Whether your accounting system is designed to capture contract cost correctly: GAAP accounting, direct costs kept apart from indirect and accumulated by contract, consistent indirect allocation, general ledger control, timekeeping and labor distribution, costs determined at least monthly, unallowable costs excluded, and data for funding limits, progress payments and future pricing.
Can a new company with no government revenue pass the survey?
Yes. The survey tests design, not history. The form asks which parts of the system are running, set up, or still planned, so describe it honestly and expect to be asked to show the parts you say are running.
Do you see my answers?
Not unless you ask for them. The self-check is scored in your browser. If you choose to have the results emailed, we receive your name, email and answers. There is no sign-up, and you see your result right away.
What does the SF 1408 pre-award readiness review cost?
From $2,500 for a company whose books are current. Cleanup is billed at $160 per hour or quoted separately. If your survey date is inside two weeks, tell us the date on the first call; if we can’t make it, we tell you the same day.
More
Related services and guides
SF 1408 pre-award surveys
Gap assessment, fixes, a mock review and support through the real survey.
Guide: DCAA pre-award audit checklist
Every SF 1408 criterion, what the auditor asks to see, and a 30-day plan to get ready.
Guide: DCAA timekeeping requirements
What is regulation and what is DCAA guidance, a sample policy and floor check questions.
DCAA-compliant accounting systems
Set up the chart of accounts, jobs, pools and procedures, and keep them running every month.
Found gaps? Close them before the auditor does.
Tell us your survey date and how you keep your books today. We reply to every inquiry within one business day.