For those of my colleagues who may not know what may be requested for an accounting system review, below is a copy of several DCAA auditor's actual request for information from contractors in preparation for an accounting system review.  Review the request so you do not have to be caught unprepared or off guard.

FROM: DCAA Audit Office

TO: Contractor 

Dear Contractor,

I will be performing a review of (Contractor A's) accounting system.

The purpose of the audit is to ensure that the company's accounting system provides for:  

1. proper segregation of direct costs from indirect costs;

2. identification and accumulation of direct costs by contract;

3. a logical and consistent method for the allocation of indirect costs to intermediate and final cost objectives; 

4. accumulation of costs under general ledger control; 

5. a timekeeping system that identifies employee's labor by intermediate or final cost objective;

6. a labor distribution system that charges direct and indirect labor to the appropriate cost objectives;

7. interim (at least monthly) determination of costs charges to a contract through routine posting of books of account;

8. exclusion from costs charges to government contracts of amounts which are not allowable in terms of FAR 31, Contract Cost Principles and Procedures, or other contract provisions;

9. identification of costs by contract; and

10. billings are prepared directly from the books and records (excluding unallowable costs). 

  To accomplish the above, please provide (electronically, if possible) the following:  

1. The software name and model of (Contractor A's) accounting system 

2. Current Chart of Accounts

3. A listing of the current contracts by contract type, prime or subcontract, total amount awarded

4. Trial Balance (YTD)

5. Job Cost Ledger for a sample of current government contracts

6. Examples of timesheets/timecards (electronic and hardcopy) from the most recent pay period

7. Labor Distribution from the most recent pay period

8. Indirect Rates (YTD)

9. Examples of billings: a sample of current government contracts and the source for the costs billed.

I would like to make an appointment later this week with you and your accountant to go through the process.

Thank you and best wishes, 

Auditor