Your Responsibilities as a Contractor
The sloppy answer is “Whatever DCAA says they are”. The accurate answer is a bit more complicated and is found in the thousands of pages of statute, case law, and regulation but NOT necessarily in government guidance such as the DCAA Contract Audit Manual.
The Department of Defense discusses specific expectations and requirement of government contractors in DFARS 252.242-7006. Other government departments such as the Department of Energy adopted almost identical standards These can include:
Generally Accepted Accounting Principles (GAAP)
A contractor is required to follow GAAP. There are hundreds of GAAP pronouncements that may apply to a contractor and DCAA normally looks first at the contractor’s use of accruals
Federal Acquisition Regulations (FAR)
The current FAR is 1891 pages in length not to include the appendixed Cost Accounting Standards (CAS) that are typically not applicable to small business contractors.
In addition to the FAR, different federal departments are allowed to publish supplements to the FAR specific to their acquisition efforts. The Department of Defenses supplement, often referred to as the DFARS, currently numbers exactly 2,000 pages.
Cost Accounting System
Contractors are required to utilize an accounting system that captures and records costs in accordance with GAAP and the FAR. This includes the ability to provide costs by final cost objective (typically a contact), direct costs, indirect pools, and claimed costs.
Accounting software is only a small part of a complete compliant accounting system. Active and functional Polices and Procedures are primarily utilized by the contractor to demonstrate a complete cost accounting system.
Contractors are required to comply with legal requests for information by DCAA and this means almost anything.
BUT it does not mean everything. On occasion DCAA auditors request copies of documents such as employee driver licenses or other sensitive documents (See “Dear Auditor, Before You Ask for My Driver’s License Could You Read This?“), contractors should consider such requests carefully before complying.