Accounting System, DCAA Relations, Incurred Cost Proposals

I Tossed it Out Six Months Ago, What Are You Going to do About it?

I Tossed it Out Six Months Ago, What Are You Going to do About it?

FAR 4.7 is fairly specific on the length of time contractors must retain financial records for government audit. The individual contract can make exceptions and the failure to turn in an incurred cost proposal creates another, but four years is the typical maximum. The relevant section from the FAR reads as follows:

4.705-1 Financial and cost accounting records.

(a) Accounts receivable invoices, adjustments to the

accounts, invoice registers, carrier freight bills, shipping

orders, and other documents which detail the material or services

billed on the related invoices: Retain 4 years.

(b) Material, work order, or service order files, consisting

of purchase requisitions or purchase orders for material or services,

or orders for transfer of material or supplies: Retain

4 years.

(c) Cash advance recapitulations, prepared as posting

entries to accounts receivable ledgers for amounts of expense

vouchers prepared for employees’ travel and related

expenses: Retain 4 years.

(d) Paid, canceled, and voided checks, other than those

issued for the payment of salary and wages: Retain 4 years.

(e) Accounts payable records to support disbursements of

funds for materials, equipment, supplies, and services, containing

originals or copies of the following and related documents:

remittance advices and statements, vendors’ invoices,

invoice audits and distribution slips, receiving and inspection

reports or comparable certifications of receipt and inspection

of material or services, and debit and credit memoranda:

Retain 4 years.

(f) Labor cost distribution cards or equivalent documents:

Retain 2 years.

(g) Petty cash records showing description of expenditures,

to whom paid, name of person authorizing payment, and date,

including copies of vouchers and other supporting documents:

Retain 2 years.

4.705-2 Pay administration records.

(a) Payroll sheets, registers, or their equivalent, of salaries

and wages paid to individual employees for each payroll

period; change slips; and tax withholding statements: Retain

4 years.

(b) Clock cards or other time and attendance cards: Retain

2 years.

(c) Paid checks, receipts for wages paid in cash, or other

evidence of payments for services rendered by employees:

Retain 2 years.

Is anyone surprised that DCAA is ignoring this in light of their billions of dollars in late audits? Even more so in the light if the recent Statute of Limitations cases, which I fondly refer to as SOL.

And things get lost, golly gee, the government loses as much or more records as anyone else.

In my book Accounting Policies And Procedures: For Small Government Contractors Working With the DCAA And Other Government Agencies I recommend six years and provide model polices and procedures for implementing document control.

I am curious what kind of results contractors have had disputing findings where the audit period is past the requirements? We always try to avoid this, but I anticipate it happening again and again.

Advertisements
Standard

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s