When you receive a Phase II SBIR, STTR, RO1, BARDA, or ARPA-E grant or contract, you need to comply with the Federal Acquisition Regulation (FAR), specifically FAR 52.216-7. Of course, there are pitfalls along the way and not having a FAR-compliant accounting system is one of them.
After more than 30 years of specializing in government award accounting, we know the mistakes government awardees make, and how to prevent them. This 10-part blog series, “Top 10 Mistakes Government Awardees Make,” is designed to help you avoid trouble and protect your innovation and business.
It’s simple: When you receive a government award, you have to comply with the Federal Acquisition Regulation (FAR), and that means you must have a FAR-compliant accounting system.
Federal funding agencies knows that if you don’t have an acceptable accounting system, you will not manage their funds properly or be able to report on those funds accurately. There’s also a greater chance that you will commit inadvertent fraud.
What’s more, not having an acceptable accounting system leads to management problems and increases the likelihood of business failure by a factor of five.
Because federal funding agencies know how pivotal it is for you to have an acceptable accounting system in place, most DCAA auditors will require you to demonstrate your accounting system before you receive an SBIR or STTR Phase II award. Here are two examples.
Prior to receiving a DoD Phase II award, your contracting officer will require the Defense Contract Audit Agency (DCAA) perform a “pre-award audit”. This audit will include a thorough review of your chart of accounts and standard accounting processes to ensure that you have the ability to produce timely job cost reports at provisional indirect rates and have the discipline to continuously monitor your actual indirect rates to those provisional targets and take timely, corrective action as appropriate.
When submitting an NIH Phase II proposal and requesting an F&A rate greater than the 40% safe rate, a grantee must submit an indirect rate projection as well as some historical financial information and proof of an acceptable accounting system to the Department of Financial Advisory Services (DFAS) – who are responsible for financial negotiations for NIH.
Clearly, it is worth your while to make sure you have a FAR compliant accounting system.
Concerned about your accounting system, whether it’s compliant and how to make it that way? Get the answers you need by speaking with a government funding award expert! Call Now: 781-862-5170 – or – Schedule A Call
We have our own FAR-compliant accounting system, JamesonWorx. Basically, it combines QuickBooks Online and Microsoft Excel by using Microsoft Power BI and our own government award accounting expertise to create a remarkably transparent and affordable solution. To learn more about it, start with this blog and get more details in this one.
To learn more about FAR-compliant job cost reports, including indirect rate tracking, read this blog
Not all government contracts and grants are the same. Your funding agency, type of award, and funding stage require unique accounting requirements. Provide your information below to schedule a time to speak with one of our government funding experts!
Writing A Government Funding Proposal
Received A Pre-Award Notification
Received A Funding Award
National Institute of Health / HHS
Department of Defense (DOD)
National Science Foundation
Department of Energy (DoE)
SBIR/STTR Phase I
SBIR/STTR Phase II
R01, U01, Carb-X, HEAL or Pioneer Grant
EERE or ARPA-E Award
One of our government funding experts will contact you within 48 hours to schedule a phone call.