Avoiding the Five Accounting Mistakes Made by Government Contractors

With complex demands and oft-changing contract and accounting regulations, government contracting work can be a headache.  And with today’s heightened awareness about how taxpayers’ money is spent, the regulations and requirements are likely to become even more binding.  But your organization can avoid the common accounting mistakes of government contracting—and, in so doing, comply with federal regulations.

Following are the five accounting mistakes made by government contractors.

1. Not fully understanding the rules.  Working with the government comes with an entirely different set of accounting rules.  Before bidding on contracts, many small to mid-sized companies fail to do the required research about the requirements established by the Financial Accounting Standards Board.
2. Not staying current.  Governmental mandates change rapidly and your staff and your organization’s financial software must be prepared to meet current regulatory compliances.
3. Not fully training staff.  Any business is only as strong as its weakest employee.  If your weakest link enters compensation incorrectly or processes invoices and allocations improperly, your organization, and its future relationship with the federal government, can be compromised.
4. Not being prepared for an audit.  It can happen at any time—and your organization’s historical data should be accessible, accurate, and in compliance at all times.  No exceptions.
5. Not investing in the right software solution.  When it comes to accounting for the government contractor, accounting software is a worthwhile investment.  Choosing the right solution (and support) for your business can equip your organization with what it needs to avoid the countless accounting mistakes government contractors make.

Karen Riordan, SSi Consulting, a Maryland Microsoft Dynamics Partner that works with government contractors.