Accounting Systems – GAAP Compliance | PNWC’s Government Contracting Update

Defense contractors are required by DFARS (DoD FAR Supplement) 252.242-7006, Accounting System Administration, to establish and maintain an acceptable accounting system. The clause defines “acceptable” by listing eighteen criteria. (By the way, these eighteen criteria closely mirror the requirements of the SF Form 1408, Preaward Survey of Prospective Contractor Accounting System which most contractors are aware of). The eighteenth criteria states that the accounting system must provide for accounting practices in accordance with standards promulgated by the Cost Accounting Standards Board, if applicable, otherwise, Generally Accepted Accounting Principles (GAAP). The SF 1408 phrases the requirement a bit differently but with the same intent. It asks the question; Is the accounting system in accord with Generally Accepted Accounting Principles applicable in the circumstances?

Source: PNWC’s Government Contracting Update: Accounting Systems – GAAP Compliance