When you are in the running to win a government contract the DCAA will perform a preaward survey of your business to determine if it is capable of perform all the duties that the contract entails. Their main focus will be on two categories. First, they will want to ensure that if your company is awarded the contract that it has the financial means to complete all the tasks that are required. Second, they want to check if your accounting system is good enough to keep track of all the costs properly that are required by the contract.
Preaward Financial Survey
To determine if your company is financially viable to complete the contract the DCAA will want to look at certain documents to include cash flow forecasts, the company’s financial history, financial reports given to stockholders and banks, SEC fillings, any loan agreements with statements showing your good standing, and employee federal payroll tax returns. After fully reviewing this information the auditor will make their recommendation of whether they feel that your company is financially stable enough to fulfill the contract. If your company is considered not to be financially viable, you will be notified immediately and you will told of where you need to correct the deficiencies that the auditor found.
Preaward Accounting Survey
A DCAA preaward accounting survey will consist of the auditor determining if your company’s accounting system for accumulating costs complies with what the government requires when awarding a contract. The preaward survey is not as in depth as an actual audit, it will be limited to the auditor getting a working knowledge of your accounting system to see if it is acceptable under the governments standards for cost accumulation.
If your accounting system is deemed unacceptable for use the auditor will notify your company and the DCAA along with recommending solutions so that your accounting system will become acceptable. It is up to you to make the necessary adjustments to your accounting system to make it acceptable. Once you have followed through on the auditor’s recommendations you will need to contact the DCAA so they can perform a follow up audit.
It is up to you to be prepared for the DCAA. You know when you are going to be bidding on government contracts, so why not get everything you need in order before you bid on any contracts? This will save you time and money in the long run and make any preaward surveys go much smoother than if you are trying to get your company in compliance at the same time as being surveyed. That will only reflect badly on your company and perhaps decrease your chances of winning a government contract in the future if your company becomes known to DCAA auditors as one that does not have it together. Become familiar with the process and you will find that it is not as daunting a process as it appears.