Step 7: Invoicing and Booked vs. Billed (preview)
MEETS THE FOLLOWING DCAA REQUIREMENTS
- Proper segregation of direct costs from indirect costs
- Accounting system in accordance with GAAP
- Exclusion from costs not allowable under FAR 31
- Identification of costs by contract line item and by units
We examine invoicing using items in Quickbooks. Proper dating of customer invoices and expense in Quickbooks is presented. We discuss differences between direct costs and indirect costs and proper accounting treatment. A sample report, Booked vs. Billed, created in Quickbooks, is presented and its use along with our Booked vs. Billed excel template is demonstrated. The proper technique to enter a Cost Plus invoice into Quickbooks is shown. We review FAR 31 unallowables and the penalties associated with improper accounting and billing.
Using Items in Quickbooks
The use of Items in Quickbooks is the least understood aspect of the software, and consequently, its use is either ignored or is not properly implemented. However, the proper use of Items in Quickbooks will allow you to create powerful reports and eliminate almost all manual reconciliations of your billings to your costs.
If you have created an invoice in Quickbooks, you are familiar with Items, because you are forced to select one when creating an invoice. Many companies will create a very simple, generic item, such as "Consulting", to be placed on the invoice, and then wonder why they are required to do so. To many, this seems like an unnecessary step, since they can easily include the text "Consulting" in the description field on the invoice. So, why do you need to use Items for DCAA compliance?
The screen shot above shows the . . .