The field of government contracting is unlike any other. In addition to the standard challenges facing every small and medium-sized business, government contractors must comply with a special set of accounting rules, and they must meet federal procurement standards.
Staying on top of these requirements is no easy task because compliance is complex and time-consuming. When business leaders attempt to manage government contractor accounting while simultaneously overseeing core operations, costly errors are more likely.
Outsourcing to a CPA with government contractor expertise reduces the need for management to invest time into accounting work. More importantly, these experts stay up-to-date with regulatory changes, and they are prepared to take action when those changes impact your business.
BradyRenner CPAs: Simplified Accounting for Government Contractors
Many business owners have studied basic accounting, which is helpful when you are running a small business that is not involved in government contracts. However, government contractors have special responsibilities outside of the Generally Accepted Accounting Principles (GAAP) that form the foundation of most accounting training courses.
For example, government contractors must comply with Federal Acquisition Regulations (FAR) and Cost Accounting Standards (CAS). These apply regardless of how large or small your business is. The BradyRenner CPA government contractor team can walk you through the key points of GAAP, FAR, and CAS, then work with you to validate that your company is in compliance.
Ten GAAP Principles That Your Government Contracting Business Must Consider
A cursory understanding of GAAP principles isn’t enough to get by if you are a government contracting business. That’s why a qualified CPA for government contractors is so critical. BradyRenner will ensure that your business complies with these ten GAAP principles:
- Conservatism – In all accounting activities and statements, transactions and figures must be verified and presented using the most conservative interpretation of the data.
- Cost – Assets are to be recorded at the cash amount at the time of acquisition.
- Economic Entity – Business finances must be separated from the owner’s personal finances.
- Full Disclosure – Companies must disclose all information relevant to an investment or lending decision in financial statements.
- Going Concern – This is the assumption that the business intends to continue operations indefinitely.
- Matching – Businesses must use the accrual basis of accounting, and business income must be matched to business expenses in the relevant timeframe.
- Materiality – This is the practice of rounding or otherwise omitting insignificant amounts (for example, most companies round figures to the nearest dollar).
- Monetary Unit – All accounting transactions must be recorded in US dollars, and inflation is not considered retroactively for dollar amounts previously recorded.
- Revenue Recognition – Revenue must be reported in the period it is earned, whether or not the funds have been received.
- Time Period – Principal business activities can be reported over time in regular, distinct intervals. Examples include months, quarters, calendar years, or fiscal years. (Note: The federal fiscal year is October 1st to September 30th, while the state fiscal year can vary. Government contracting businesses are not limited to one or the other.)
A single misstep that transgresses of any of these GAAP principles can lead to financial and reputational harm. BradyRenner’s deep experience in government contracting and financial management minimizes the risk of errors that could harm your business.
Understanding the Impact of the Federal Acquisition Regulations (FAR) and Cost Accounting Standards (CAS)
Federal Acquisition Regulations (FAR) add another layer of complexity to managing the affairs of government contractors. These regulations set guidelines to ensure that the purchase of goods and services by federal government agencies is handled in a fair, consistent manner.
Under the umbrella Federal Acquisition Regulations, there are enhanced guidelines for particular federal agencies. For example, Department of Defense contractors must be familiar with the Defense Federal Acquisition Regulations, better known as DFAR.
In addition to Federal Acquisition Regulations, government contractors are responsible for compliance with Cost Accounting Standards (CAS). There are 19 distinct standards that contractors must observe in measuring, accumulating, allocating, and assigning costs. The goal is to ensure a level playing field among government contractors, which is a win for everyone. However, meeting the standards can be challenging. Fortunately, BradyRenner can help.
BradyRenner demonstrates its commitment to excellence by staying close to regulatory changes. When you partner with BradyRenner, you will have a personal escort through the maze of Federal Acquisition Regulations and Cost Accounting Standards.
Why Choose BradyRenner CPAs and Business Consultants?
Growing a government contracting business is only possible when your strategy is executed precisely. That requires careful analysis of every element of that strategy, from pricing to creating a competitive edge. Enlisting the support of experienced professionals with expertise in the field of government contracting ensures that every “i” is dotted and every “t” is crossed when it comes to certifications, prime and subcontractors, and teaming strategies.
That’s where BradyRenner comes in. BradyRenner CPAs and Business Consultants have a deep understanding of the government contracting field, and they can be relied upon to stay ahead of any changes in the regulatory environment. They have the skills necessary to keep you in compliance with standard accounting practices, as well as the special accounting regulations that are specific to government contractors.
With BradyRenner, you can spend less time worrying about regulatory compliance and more time focusing on business operations and growth. Contact the team at BradyRenner CPAs today to learn more about simplifying government contractor accounting.