When you receive an SBIR, STTR, RO1, ARPA-E, BARDA or BAA grant or contract award, you must comply with Federal Acquisition Regulation (FAR) part 31. This is where SBIR accounting expertise is critical.
With more than 30 years of government contract and grant accounting experience, we know the common mistakes government awardees make, and how to prevent them. Our “Top 10 Accounting Mistakes Government Awardees Make” blog series is designed to help you avoid trouble and protect your business.
MISTAKE #10: Spending too much time on accounting when you’re not an accountant—especially a government award accountant.
Odds are, you would never represent yourself in court or perform surgery on yourself, but we still see awardees without accounting degrees, or government contract or grant experience who attempt to do their own grant or contract accounting and represent themselves when they get audited.
There are obvious reasons why relying on a Google-based education is a bad idea – the most apparent being how expensive findings can be when you’re audited!
So how much time are you willing to spend trying to understand FAR Part 31 as well as the NIH, DoE, or DoD supplemental regulations?
Most of our clients have advanced degrees in engineering, medicine or the like. It’s that special knowledge and experience that drive their innovation forward—the very innovation that earned the government’s attention and funding.
Yet, rather than working on their business, furthering their innovation and helping it achieve its promise, some award recipients opt to spend their time learning accounting. They study the NIH, DoE, and DoD websites, scour Google and read everything they can online (whether it’s factual or not), download all the forms and grind away – spending less time on developing their business, and more time developing their accounting skills.
Tip #1. Be audit-ready, but stay out of the weeds.
If you have a government grant or contract, it’s highly likely that you will be audited.
You need to manage your accounting staff to ensure that you understand the rules and know that your accounts are properly maintained on an ongoing basis. The key word is manage.
Managing means understanding the key performance indicators of your business and what drives them. It means knowing that the job cost reports that you use to bill the government are being maintained properly. It also means knowing where your actual indirect rates are in comparison to the rates you proposed, and how the variance affects your cash flow.
Your expertise is your greatest opportunity
We can’t say this enough: The federal government believes in your innovation and is investing in your business. Your primary job is making that investment pay off. So where is your time best spent – developing your business or teaching yourself accounting?
We’re here to help. If you have any questions about your government award and related accounting, please:
Check out the Learning Center on our website. It’s filled with educational white papers, videos, webinars and blogs.
Talk to one of our experts by contacting Ryan at [email protected] or 781.862.5170 ext. 2106