The winning cost plus the reward can be a time to celebrate... or swear. With the right cost accounting system and the right processes, you can fully enjoy the newly discovered business growth. It's important to build the right system, and it needs to be audited and implemented through future bids and ongoing revenue streams.
The right cost accounting system is required when you are pursuing a cost plus contract. That is, if you want to win them and get income from them. When you have the right system and the accounting policies and practices that come with it, you get more costs and rewards. While the right cost accounting system does not guarantee you to be rewarded, it can make these rewards easier to get... and stay the same. Let us explore the three components involved.
Consistency
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All government contractors, regardless of compliance with cost accounting guidelines [CAS], must comply with CAS 401 and 402. Most small contractors typically lose this problem. Most people believe that because they are not bound by CAS, they do not have to comply with CAS 401 and 402. Both standards require contractors to be consistent in estimating, accumulating and reporting costs and the costs associated with allocating the same purpose. The important thing here is that your estimation system [including practice] should follow a consistently applied cost accounting approach. Your work in compliance with the cost accounting system approach in practice will apply to what you do when estimating new projects. This solid approach will reduce your chances of pricing defects. Consistent in pricing and cost accumulation methods.
2. Credibility
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To be a reliable government contractor, you need not only the right accounting system, but also the "other" part, which gives you a complete package, an acceptable compliance system, and allows you to be more free in a cost plus environment. action. Most contractors think this is just the system itself. Without adequate accounting policies, procedures/conventions and personnel, the system is incomplete - the employee benefits manual does not work either. A truly reliable contractor has written accounting policies and procedures. Your best pricing estimates should be supported by data from your managed cost accounting database. When you use real-time historical data to support your estimates, you are reliable. You must include profitable bidding considerations in your design bids - otherwise why keep your business. DCAA expresses a reliable business system that can be supported by good historical data and estimates using that data. You must have reliable source integrity to support the credibility of the estimate.
Conflict
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When you have the right accounting system, and the appropriate accounting policies, procedures/practices and people, you will greatly improve your external auditor [whether DCAA or others] and agree to almost all, if not all, of what you have. The opportunity for content. this way. Once the auditor has purchased your temporary system, your review will be smoother and easier. Your system will generate the results they are looking for, and they already know that your policies and practices have met the standards. This means that the time spent by the auditor with you is greatly reduced. This gives you and your employees more time to produce - rather than answering easy questions. The interaction time between your employees and auditors will be greatly reduced. The policies and practices you have accepted have listed a roadmap showing your consistency.
These three elements are just the beginning of winning costs and rewards through the right accounting system. While there are several other factors, these three factors combine the practice backbone you will be asking to support your bid. When you combine these factors with a well-designed accounting system, you get more rewards.
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