Federal Acquisition Regulation (FAR) Compliance

For many companies, federal contracts are a significant source of revenue. When contracting with the U.S Government, however, there are strict compliance regulations that all businesses – no matter what their operations – must follow.

To secure and maintain such contracts, most companies are required to calculate an overhead rate in accordance with Federal Acquisition Regulation (FAR) requirements. These overhead rates are also subject to examination by the awarding agency. BPM professionals are well-versed in the unique requirements of such agencies, as well as the requirements of Yellow Book audits.

BPM can provide indirect cost rate audits under the provisions of Part 31 of FAR. We have knowledge that spans across several industries with a specialization in working with clients in the engineering, architectural, project management and other consulting firm sectors. We can assist in implementing the accounting procedures and internal controls necessary to accurately calculate the overhead rates in accordance with the FAR standards.

Our experience with diverse clients allows us to serve your business in a capacity most suited to fit your needs. Whether you have a single contract or multiple contracts with complex overhead rate calculations, we can help your company comply with the FAR requirements. In addition, we have in-depth experience providing services to clients that receive funding from various federal executive agencies including the Department of Energy, Department of Transportation, and Department of Health and Human Services.

Services include the following:

• Accounting systems review and internal controls gap analysis.
• Overhead Schedule and Yellow Book Audits, in accordance with GAAP and Government Auditing Standards, respectively. Guidance for best practices for management to strengthen control environment.
• Consulting services for implementation of internal controls, IT consulting on system design, implementation and security.
• Assistance with the preparation of Statement of Direct Labor Fringe Benefits and Overhead (Overhead Schedule).

Accounting systems review and internal controls gap analysis

Consultation on developing internal controls, processes and compliance with FAR includes:

• Gaining an understanding of current written/verbal policies in place, using a top-down methodology to assist management and employees in documenting the existing key processes and controls as it relates to general accounting policies and policies specific to FAR compliance.
• Reviewing process documentation and providing a control design GAP analysis that includes mapping and suggestions for implementation of the relevant parts of the FAR.
• Assisting management and employees in completing the internal control documentation by providing template policies and procedures manuals and mapping of policies to the financial statements, financial statement assertions, and the ICR schedule.
• Answering technical questions and provide training as needed.

Overhead Schedule and Yellow Book Audits, in accordance with GAAP and Government Auditing Standards, respectively. Guidance for best practices for management to strengthen control environment.

Overhead Schedule audit services include:

• Auditor’s opinion on the Overhead Schedule in accordance with FAR Part 31 and GAAP (or any other require basis of accounting).
• Auditor’s report on internal control over financial reporting and compliance with laws, regulations, contracts, and grant agreements.
• Letter to management identifying control deficiencies (if any) and suggestions and recommendations to strengthen the control environment.
• Timely communications of the audit plan before fieldwork and audit results prior to issuance of the report.
• Advisory support during agency audits, such as providing relevant work papers and guidance on responding to inquiries.
• Year-round technical updates and industry best practices.

Consulting services for implementation of internal controls, IT consulting of system design, implementation, and security.

Consultation on developing internal controls, processes, and compliance with FAR includes:

• Gaining an understanding of current written/verbal policies in place, using a top-down methodology to assist management and employees in documenting the existing key processes and controls as it relates to general accounting policies and policies specific to FAR compliance.
• Reviewing process documentation and providing a control design GAP analysis that will include mapping and suggestions for implementation of the relevant parts of the FAR.
• Assisting management and employees in completing the internal control documentation by providing template policies and procedures manuals and mapping of policies to the financial statements, financial statement assertions, and the ICR schedule.

Assistance with the preparation of Statement of Direct Labor Fringe Benefits and Overhead (Overhead Schedule)

Consultation on the computation of an Indirect Cost Rate in accordance with FAR includes:

• Gaining an understanding of contracts, business operations, Chart of Accounts, and key expenses such as personnel costs, rent, advertising, travel expenses, and sub-contractor expenses.
• Providing examples and limited guidance on ICR schedules to assist in the setup and design of the ICR schedule.
• Assisting in preparing an ICR schedule and ICR computation by identifying direct, indirect, and unallowable costs.
• Assisting in creating footnotes to the ICR schedule explaining the basis of presentation, key accounting policies, and required additional disclosures.

FAR resources

1. Electronic Code of Federal Regulations
2. AASHTO Website
3. DCAA Contract Audit Manual
4. U.S. General Services Administration, Per Diem Rates