What Kind of Accounting Is Needed for Government Contractors?

As a government contractor, the work you perform can be both highly rewarding and highly regulated. Between the high stakes, constant oversight, and tight deadlines, you don’t just need good accounting–you need specialized assistance.

Whether you’re bidding on your first federal contract or managing multiple ongoing projects, you need an accounting system that can keep up, one that’s built for adaptability, transparency, and compliance. When it comes to accounting for government contractors, here’s everything you need to know.

Common Accounting Challenges

There are two significant accounting challenges government contractors face:

1. Complying With Federal Acquisition Regulations (FAR)

The FAR sets the ground rules for doing business with the U.S. government. It outlines things like:

• How costs are tracked
• What expenses are allowable
• How internal controls should be structured

Sound like a lot? That’s because it is. Many government contractors run into issues because they use accounting systems or methods that weren’t built with FAR compliance in mind. A big risk? Your books falling out of sync with federal requirements, which puts your contracts (and revenue) at risk.

2. Navigating Audits by the Defense Contract Audit Agency (DCAA)

Do you work with the Department of Defense or other associated federal agencies? Then you’ll likely face audits from the DCAA, which can happen at any stage, even before you’re awarded the contract. Failing an audit can lead to disallowed costs or even the termination of your contract.

To survive under this level of scrutiny, you need bulletproof government contracting accounting practices. That means:

• Reliable timekeeping systems
• Airtight internal controls
• Detailed cost tracking

All of which need to be up to the DCAA’s standards.

The Critical Accounting Services You Need

Compliance and Reporting

Government reporting is best left to professionals, such as the team here at Monocacy. We have over three decades of experience and specialized knowledge in both reporting and compliance. We’ll help ensure your reports are timely, accurate, and FAR-compliant, freeing you up to focus on delivering exceptional work–not digging through spreadsheets.

Budgeting

Because many government contracts come with strict guidelines and fixed ceilings, there’s no room for error. Our experts can help you craft a well-structured budget that allows you to easily manage project performance, control costs, and ensure profitability.

Forecasting

With our accounting services, you can prepare for contract changes, anticipate future expenses, and allocate resources effectively and strategically. No matter where you are in your career, whether looking to grow or maintain your current pace, our proactive forecasting gives you a competitive edge.

Cash Flow Analysis

For many, cash flow is a big pressure point. Waiting on reimbursements and managing payroll between payment milestones can put a serious strain on your financial resources. A comprehensive cash flow analysis gives you the real-time insights you need into your financial standing, helping you avoid coming up short for necessities.

Business Tax Services

The business tax implications of government contracts are rarely straightforward. If you’re trying to navigate these implications and identify deductions on your own, the best-case scenario is that you leave money on the table. Worst-case scenario? You’re not compliant. We’ll keep an eye on both the present (ensuring compliance while reducing liabilities) and look to the future, focusing on your long-term success.

Tired of Juggling Contracts and Accounting? Let’s Talk.

Government accounting can be complex, but with the right team on your side, it doesn’t have to be difficult. If you’re a government contractor navigating business and the accounting for it, our full suite of financial services and industry expertise can give you the assistance, clarity, and competitive edge you deserve. Connect with us to get started.