Step 6: AP and Expense Reports

meets the following DCAA Requirements:

  • Proper segregation of direct costs from indirect costs
  • Accounting system is in accordance with GAAP
  • Exclusion from costs not allowable under FAR 31

Download:

Download excel expense report - click here

Synopsis

The proper use of the Enter Bills screen is reviewed. I discuss prepaid accounts, accrued expenses and how to post accounts payable to the proper period.  Entering expense reports into Quickbooks is discussed and a sample expense report is provided in excel format which complies with Joint and Federal Travel Regulations. We discuss receipts requirements and per diem rules and visit the GSA website for per diem rates.  A web-based DCAA compliant expense system is recommended.

Accounts Payable and DCAA Compliance

You will need to keep your books on an accrual basis, rather than a cash basis, to be DCAA compliant.  Accrual basis means that expenses are recorded when incurred rather than when paid (cash basis). An expense is incurred when it is consumed by the business.  For instance, you may hire a subcontractor to perform services in the month of January, but may pay the subcontractor for those services in the month of February.  Accrual basis accounting records the expense in January, the month in which the expenses were incurred.

In Quickbooks, you will use the Enter Bills screen to record an expense on an accrual basis. In the date field, enter the date that the expense was incurred, not the date of the vendor invoice.  This is important because this date field controls the period in which the expense will be recorded which, on an accrual basis, should be the date that service was delivered or the product consumed.  Then, when you actually pay the bill, you'll apply the payment against the open vendor bill and date the payment on the actual date that you pay the bill.

Quickbooks also allows you to enter a Check directly in the accounting system, bypassing the vendor module.  This method will only work for accrual based accounting if in fact the expense was incurred within the same month as the payment date.

Prepaid Expenses

Another accrual-based accounting concept important for DCAA compliance is . . .

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