L-10_Accounting_System_Survey.doc

Attachment L-10

W911KB-13-R-0014

Preaward Survey of Prospective Contractor Accounting System Checklist

Instructions:

1. Mark “X” in the appropriate column.

2. On Page 4 provide a narrative describing how the current accounting system supports your response to each item.

1. Is the accounting system in accord with generally accepted accounting principles?

2. ACCOUNTING SYSTEM PROVIDES FOR:

a. Proper segregation of direct costs from indirect costs.

The system is designed to preclude direct charging of indirect expenses and indirect charging of direct contract costs. (SF 1408, Section II, 2a)

b. Identification and accumulation of direct costs by contract.

The system is designed to produce a subsidiary job cost ledger which accumulates costs by contract at a level of detail consistent with that used by the prospective contractor in its proposal. (SF 1408, Section II, 2b)

c. A logical and consistent method for the allocation of indirect costs to intermediate and final cost objectives. (A contract is final cost objective.)

The system is designed to accumulate indirect costs in logical groupings. Groupings are allocated based on benefits accrued to intermediate and final cost objectives. The cost accounting system is documented, with a written description of the contents of bases and pools (SF 1408, Section II, 2c)

d. Accumulation of costs under general ledger control.

The contractor’s system is designed to allow the contractor’s job cost ledger, or its equivalent, to be reconcilable and routinely posted to the general ledger control accounts (e.g. totals for direct labor, direct material, subcontracts, other direct costs). (SF 1408, Section II, 2d)

e. A timekeeping system that identifies employees' labor by intermediate or final cost objectives.

The system is designed to allow labor charging to intermediate and final cost objectives based on a timekeeping document (paper or electronic timecards). The contractor has policies, procedures or instructions that require timesheets be completed and certified by the employees and approved by the employees’ supervisors. (SF 1408, Section II, 2e)

f. A labor distribution system that charges direct and indirect labor to the appropriate cost objectives.

The contractor must demonstrate that the system is designed so that labor cost distribution records (i) are reconcilable to payroll records and (ii) can be reconciled to and from the cost accumulation records in labor subsidiary or general ledger accounts. (SF 1408, Section II, 2f)

g. Interim (at least monthly) determination of costs charged to a contract through routine posting of books of account.

The contractor must demonstrate that it posts, or has a documented plan to post, contract costs at least monthly to books of account. (SF 1408, Section II, 2g)

h. Exclusion from costs charged to government contracts of amounts which are not allowable in terms of FAR 31, Contract Cost Principles and Procedures, or other contract provisions.

The contractor can demonstrate that it has a plan/has the necessary understanding to identify and exclude unallowable costs (both FAR Part 31 and in accordance with contract provisions) if the contract is awarded. (SF 1408, Section II, 2h)

i. Identification of costs by contract line item and by units (as if each unit or line item were a separate contract) if required by the proposed contract.

Contractor is able to demonstrate that its system is designed to be expanded to the requisite level of detail (i.e. costs can be accumulated by sub accounts within the job cost ledger and includes details by multiple contract line items specified by the contract). (SF 1408, Section II, 2i)

j. Segregation of preproduction costs from production costs.

Contractor can demonstrate that its system is designed to routinely segregate preproduction from production costs in order to assist in repricing or follow-on contract pricing. (SF 1408, Section II, 2j)

3. Accounting system provides financial information:

a. Required by contract clauses concerning limitation of cost (FAR 52.232-20) or limitation on payments (FAR 52.216-16).

Contractor can demonstrate its system is designed so that interim indirect expense rates can be readily calculated from the books of accounts and are routinely monitored. Contractor’s system identifies the person responsible for monitoring total contract expenditure against contract limitations on price or cost. The contractor’s system is designed to include a statement of the frequency for monitoring this. Contractor’s system includes controls in place to ensure compliance with the reporting requirements of FAR 52.216-16(g) or FAR 52.232-20 (SF 1408, Section II, 3a)

b. Required to support requests for progress payments/public vouchers The contractor can demonstrate the system is designed so that billings can be reconciled to the cost accounts for both current and cumulative amounts claimed.

The contractor has procedures to ensure that subcontractor and vendor costs are only included in billings if payment to the subcontractor or vendor will be made in accordance with the terms and conditions of the subcontract or invoice and ordinarily within 30 days of the contractor’s payment request to the Government.(SF 1408, Section II, 3b and FAR 32.504)

4. Is the accounting system designed, and are the records maintained in such a manner that adequate, reliable data are developed for use in pricing follow-on acquisitions?

The contractor’s system is designed to produce cost information at a sufficient level of detail for use in pricing follow-on contracts (SF 1408, Section II, 4)

5. Is the accounting system currently in full operation? (If not, describe in Page 2 narrative which portions are (1) in operation, (2) set up, but not yet in operation, (3) anticipated, or (4) nonexistent.)

Instruction: Use this section to explain how the current accounting system supports your response to each item. If a response is N/A provide further explanation. Use as much space as needed. Provide references to current policies and procedures if applicable.

[Insert name and title of individual responsible for design of the accounting system] Name: ______________________

Signature: ___________________________

Title: ______________________

Date: ______________________________

Contractor: ______________________________________________________________