Deltek Insight 2011: Meeting DCAA Expectations

CP-239: Meeting DCAA Expectations

Presented bySusan Zimmermann – ZooM Consulting LLC

April 12, 20232 ©2011 Deltek, Inc. All Rights Reserved

Project Manufacturing

Human Resources

Project Management

Financial Management

Enabling Success

Winning More Business

Reducing the Cost of Compliance

Increasing Project Visibility

Improving Cash Flow

CRM and Capture Management

Teaming Solutions

Market Intelligence

Business Performance Management

Know More

Win More

Do More


Project Manufacturing

Human Resources

Financial Management

Project Management

Do More

CRM and Capture Management

Teaming Solutions

Market IntelligenceWin More

Do More

Project Execution & Management

Reporting, GRC & Compliance

Project & Corp Accounting

Time, Expense, Labor, Payroll

Business Performance Management

Know More

©2011 Deltek, Inc. All Rights Reserved

Agenda

April 12, 20234

Overview of what will be covered during session Key session takeaways Reaching a Balance in the Current Environment Common Problems and Solutions Questions


Key session takeaways

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How the DCAA audit environment has changed How to evaluate the possibility of an accounting system change Learn possible solutions to some of your biggest DCAA issues


Reaching a Balance in the Current Environment



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What is going on? Increase in companies with unapproved accounting systems Increase in unfavorable reports coming from DCAA

No issues removed once documented Documentation of responses included

Multiple years of incurred cost audits open Contracting officers have to muddle through lengthy reports



April 12, 20238

Why is this happening? GAO Reports

Determined there was an issue with audit quality such as: Insufficient testing Inadequate planning and supervision Reporting problems Compromise of Independence Inadequate understanding of controls by the auditor

Caused increased focus on the effectiveness of Contractor Systems Accounting Estimating Property Management Purchasing



April 12, 20239

Evaluating a Change Legitimate Issue versus misunderstanding

Expressly unallowable cost Interpretation

Business Impact of Change Cost of Changing Effects on Project Costs Small pocket affected or entire organization Pending Contract Awards

Ease of making change systematically FAR and CAS support position


Common Problems and Solutions



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Labor Costing Issue

The auditor has determined that your methodology of labor costing is inappropriately allocating costs to projects

Myth There is only one way to cost labor

Factors affecting the appropriate costing method for your business Timekeeping Policy Labor Costing period versus pay period Reporting period Amount of Uncompensated Overtime


Common Problems and Solutions Labor Costing Sample Government Contractor

Attributes Collects time on a weekly basis Pays employees on a bi-weekly basis Adheres to total time accounting Salaried Employees Standard 40 hour work week


Common Problems and Solutions Labor Costing - Auto Adjust Functionality

Takes a percentage of the employees salary per pay period and divides it by the number of hours in the timesheet period.

Percentage is assigned in Timesheet Period Control Screen An employee with a $2000 bi-weekly salary at 50% would have $1000

apportioned over the hours for a weekly timesheet period

Project Hours Cost Hourly Rate

Fringe 16.00 $344.09

IRD 8.50 $182.79

OH 7.50 $161.29

Direct 1 14.50 $311.83

46.50 $1000.00 $21.50537


Common Problems and Solutions Labor Costing – Auto Adjust Functionality Pros

Most precise measure of costs to associated cost objective Ease of reconciliation of labor costing to amount paid

Cons

If timesheet period and pay period are not synchronized could inappropriately cost in total time accounting environment with flex time.

1st Wk Hours

1st WkCost

2nd WkHours

2nd Wk Cost Total

Total if portioned over Bi-Weekly Difference

Fixed Price

0 $0 56 $1200 $1200 $1400 ($200)

CPFF 24 $800 0 $0 $800 $600 $200

24 $800 56 $1200 $2000 $2000 $0


Common Problems and Solutions Labor Costing – Standard Variance Functionality

Uses the Estimated Annual Hours and corresponding Hourly rate fields to cost labor per hour.

Labor posting calculates difference between labor cost and payroll cost Posts difference to standard cost variance account and employee home

org (from employee defaults screen in employee master) Automatically adds a line to the timesheet.

Hours Auto Adjust Std Var Diff

OH 32.0 $842.10 $800.00 ($42.10)

Direct 2 6.00 $157.90 $150.00 ($ 7.90)

Variance Line 0.00 $50.00

38.00 $1000.00 $1000.00


Common Problems and Solutions Labor Costing – Standard Variance Functionality

Pros Allows all cost objectives to receive consistent hourly rate from week to

week regardless of hours. Associates variance with specific timesheet

Cons Only one account can be used for variance posting Must determine allocation methodology for variance that appropriately

allocates. Can only be run on individual employee basis Must be careful when correcting timesheets if hours are increasing or

decreasing


Common Problems and Solutions Labor Costing – Payroll Variance Functionality

Uses the Work Hrs in Year and corresponding Hourly rate fields to cost labor per hour.

Payroll posting calculates difference between labor cost and payroll cost Posts difference to payroll variance account and employee home org (from

employee defaults screen in employee master)

Hours Auto Adjust Payroll Var Diff

OH 32.0 $842.10 $800.00 ($42.10)

Direct 2 6.00 $157.90 $150.00 ($ 7.90)

38.00 $1000.00 $1000.00


Common Problems and Solutions Labor Costing – Payroll Variance Functionality

Pros Allows all cost objectives to receive consistent hourly rate from week to

week regardless of hours. Ease of timesheet corrections

Cons Only one account can be used for variance posting Must determine allocation methodology for variance that appropriately

allocates. Mingling of variance and legitimate payroll issues Only calculated and posted when payroll is run



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Billing Issue

The auditor has determined that you are not appropriately excluding costs from a bill.

How do you ensure someone doesn’t mistakenly bill something? Resolution

Code costs to an unbillable account with an unallowable function code assigned in the project account group.

Code costs to a regular account and exclude that account from the billable accounts in the billing setup. Caution! - unless using a revenue formula of equal to billings, revenue will

still calculate on this account leaving a balance in Unbilled Accounts Receivable.


Common Problems and Solutions Directly Allocated Costs

The auditor has determined a CAS 403 Noncompliance stating 9904.403-40(a)(1) Home office expenses shall be allocated on the

basis of the beneficial or casual relationship between supporting and receiving activities. Such expense shall be allocated directly to segments to the maximum extent practical. Expense not directly allocated, if significant in amount and in relation to total home office expenses, shall be grouped in logical and homogeneous expense pools…..

Example – Costs for Health Insurance for all segments come in on one bill that is received at the home office and coded to a service center that is allocated out over a basis instead charged directly to the benefiting segments.



Costpoint has the flexibility to calculate complex rate structures Multiple ways to allocate costs that facilitate compliance

Directly coding upon entry to the appropriate segment when using a multiple company organization structure in one database.

Use of a Service center to allocate the costs based on a homogeneous base.

Use of a multi-job allocation that allocates costs from one project to another project.

Cost pool allocation for residual allocations



REMEMBER No pre-defined way to allocate costs Must be reasonable and accurate reflect causal/beneficial relationship For central payments made by a home office on behalf of a segment CAS

9904.403-40(b)(4): Allocated directly to segments to the extent that they can be identified Items not identifiable to specific segments should be allocated to

benefitted segments using a base that represents the factors on which the total payment was based.


Conclusion

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Change could be coming your way

The flexibility of the system

Know your options


Q&A

April 12, 202324

Open to audience

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Call to action

April 12, 202325

Visit the Meet the Experts in the Solution Pavilion

Reach me by email or phone

[email protected] (703) 867-7189

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Deltek Insight 2011: Meeting DCAA Expectations

Education

Transcript of Deltek Insight 2011: Meeting DCAA Expectations