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SBIR Accounting – What Your CPA Should Be Doing

July 18, 2023 / Ed Jameson / Blog Posts
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In general, the cost of staffing your Small Business Innovation Research (SBIR) Company´s accounting department is driven by the following three elements:

1. Number of employees

2. Annual revenue and volume of transactions

3. Reporting requirements and other terms and conditions imposed by contract or grant.

The administration of government contracts and grants requires an experienced accountant with a strong cost accounting background and an understanding of the Federal Acquisition Regulation (FARs).

According to salary.com an experienced CPA with this specialized knowledge would command an average salary exceeding $180,000 per year plus benefits…..and most small SBIR Companies couldn´t keep that person busy on a full time basis until they generate > $5MM per year in revenue.

As a result, smaller SBIR companies are forced to be as creative staffing their accounting department as they are developing their technology.

In smaller SBIR companies the day to day accounting should be handled by a competent bookkeeper with a working understanding of Generally Accepted Accounting Principles (GAAP). At a minimum, this person will need at least an associate´s degree in accountancy from an accredited school. Depending on your location $30-$60/hour is a fair range. Cost accounting experience or coursework is extremely important and a working knowledge of QuickBooks and Excel is essential. As you grow, a degreed accountant will command $80,000 – $120,000 per year plus benefits.

The key functions that your CPA needs to assist with:

  • Structuring the accounting system required by FAR Part 31 including the chart of accounts, timekeeping, and job cost reporting systems
  • Creating “allowable” and “unallowable” cost policies and procedures
  • Providing a check and balance on the accounting function by reconciling the checkbook
  • Reconciling the labor distributed through the general ledger to the outside payroll service reports
  • Periodically testing transactions to ensure that costs are properly recorded as direct, indirect or unallowable
  • Budgeting and tracking actual indirect expenses vs. amounts billed
  • Monitoring job cost reporting
  • Preparing contract and grant reporting requirements
  • Providing billing support via the Payment Management System (PMS) and ensuring that the SF-425 is properly filed
  • Preparing the annual incurred cost submission
  • Representing the Company during the incurred cost audits, negotiating the indirect cost rates, and Uniform Guidance Audits

As you can see, these tasks are not at all routine for most CPAs! Our firm provides outsourced accounting solutions specifically designed to meet the needs of smaller government grantees and contractors in a cost effective manner.

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Edward G. Jameson, CPA
www.jamesoncpa.com
SBIR Accounting – What Your CPA Should be Doing
www.jamesoncpa.com

Ed Jameson, CPA, Managing Partner

I’ve been in practice for over 40 years helping our small business clients procure, manage, and survive audits on more than $6 billion in federal government contract and grant funding. We’ve been featured presenters and panel moderators at Tech Connect’s National SBIR/STTR conferences since 2010, and I’ve presented at the DOD’s Mentor Protégé Summit and present regularly for several state and local organizations.