Mistake #10: Spending too much time on accounting when you’re not a CPA.
When you receive a Phase II SBIR, STTR, RO1, APRA-E, BARDA or BAA grant or contract, you need to comply with the Federal Acquisition Regulation (FAR) Part 31, and specifically FAR 52.216-7.
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.
Odds are, you would never represent yourself in court or perform surgery on yourself, but we still see government grantees and contractors hire non-degreed accountants, or worse – do the accounting themselves – with no government contract or grant experience and represent themselves when they get audited “to save money” at their own peril.
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!
How much time are you willing to spend 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.
SBIR Accounting is NOT = Preparing Your 1040 EZ.
Ongoing FAR Part 31 Accounting, and SBIR Accounting is NOT akin to preparing your own 1040 EZ!
Your 1040 probably has a 0.5% chance of being audited. Your government funding has a 100% chance – It’s just a question of which type of audit.
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 firstname.lastname@example.org or 781.862.5170 ext. 2106