Becoming a Top Engineering Firm – Zoom Like a Rocket Ship!

A professional service firm such as an engineering design firm or construction engineering and inspection firm can be thought of as a rocket ship. Looking at the business as a rocket ship, it gets easier to remember and share the elements of developing a successful business.

Like a rocket ship a business has two basic parts, the engines that power the ship, and the guidance systems to set course. Our rock ship has five engines and four guidance systems.

Thinking back to when you first started your firm, if you did not go through the checklist you see below formally, you did so informally.

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10 Traits of a FAR Compliant Accounting System

10-Traits-of-a-FAR-Compliant-Accounting-SystemA FAR compliant accounting system is a common prerequisite for becoming a pre-qualified consultant for a state transportation department. 

Your accounting system must, among other functions, properly segregate direct and indirect costs in accordance with the Cost Accounting Standards (CAS) of Federal Acquisition Regulation (FAR) Part 31 for you to work government contracts.

If you do not have a FAR compliant accounting system, you could fail to get or keep pre-qualified consultant status and perhaps miss opportunities to bid on transportation contracts all together.

A FAR compliant accounting system does the following, according to the the American Association of State Highway and Transportation Officials' AASHTO Uniform Audit and Accounting Guide and the Defense Contract Audit Agency's DCAA Pamphlet 7641.90. AASHTO cites DCAAP 7641.90 as a guide for transportation departments and consultants.

  1. Segregates direct costs and indirect costs
  2. Accumulates direct costs by contract
  3. Allocates indirect costs to intermediate and final cost objectives (contracts) based on “a logical and consistent method”
  4. Reconciles the job-cost ledger and other books of account with the general ledger, and is controlled by the general ledger
  5. Tracks employee time by work activity
  6. Charges direct and indirect labor costs to the appropriate contracts
  7. Produces interim reports of charges to contracts, at least monthly
  8. Excludes unallowable costs
  9. Identifies costs by line item and units, if required by contract
  10. Segregates pre-production costs and production costs

The DCAA offers additional guidance in a presentation on accounting system requirements for government contractors, as well as an accounting system requirements checklist for government contractors.

Please contact us here  or call (904) 731-9222 if you have additional questions, or if you would like to see if you have a FAR compliant accounting system.

Hunter & Associates
ABOUT THE AUTHOR | Hunter & Associates
At Hunter & Associates, P.A., we are driven by the belief that within each of us is the power to achieve greatness. This belief is not just for us, but for our clients as well. In fact, our client roster includes a great many small businesses with aspirations for greatness. We have even been recognized as an award-winning firm for client diversity.

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