Overview of Accounting Requirements in Government

Transcript:Overview of Accounting Requirements in Government:
Overview of Accounting Requirements in Government Contracting Warren Stoker Vice President, Government Liaison & Business Process Controls, Textron Inc. University of Texas at Arlington CPA Day – August 20, 2015 Learning Objectives Identify how certain U.S. Government (USG) acquisition policies drive associated accounting practices Identify specific USG Contract types requiring unique accounting practices Identify reasons supporting the requirement for these accounting practices Review examples of the required accounting practices Provide sources for additional information 2 Applicable Regulations Federal Acquisition Regulation (FAR) FAR is codified in Title 48 of the United States Code of Federal Regulations FAR and its agency supplements have “the force and effect of law,” see Davies Precision Machining, Inc. v U.S., 35 Fed. Cl. 651 (1995). Nearly all government agencies are required to comply with the FAR. 3 Significant FAR Parts FAR part 12 describes policies and procedures unique to the acquisition of commercial items. It implements the Federal Government’s preference for the acquisition of commercial items contained in Title VIII of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355) by establishing acquisition policies more closely resembling those of the commercial marketplace and encouraging the acquisition of commercial items and components. 4 Significant FAR Parts FAR Part 15 describes policies and procedures governing competitive and noncompetitive negotiated acquisitions. Part 16 – Types of Contracts – describes type of contracts that may be used in acquisitions and when the various types should be used. Common contract types used by DOD are Fixed Price, Cost Reimbursement, Cost + award fee, and Cost + incentive fee among others. 5 Significant FAR Parts Part 30 – Cost Accounting Standards (CAS) Administration - describes policies and procedures for applying CASB rules and regulations to negotiated contracts. Part 31 – Cost Principles and Procedures – for the pricing of contracts, subcontracts and modifications to contracts and subcontracts when ever cost analysis is performed, and the determination, negotiation, or allowance of costs when required by a contract clause. 6 DoD FAR Part 15 vs. Commercial Acquisition Process The primary driver relative to DoD vs. Commercial acquisition process is based on the consumer and market relationship. In commercial markets, consumers typically have many similar products from which to choose (i.e., Ford, GM, Honda, Toyota, etc.). The consumer makes their choice based on need and available data, including price. Generally, Price is the primary consideration. 7 DoD FAR 15 vs. Commercial Acquisition Process DoD