DFARS § 252.242-7006(c).
1. Does a general ledger system exist that:
a. Identifies and defines types of cost with unique codes? b. Identifies departments by unique codes?
c. Identifies contracts by unique codes?
d. Identifies contract line item numbers (“CLINs”) and/or work breakdown structure (“WBS”) numbers with unique codes, when necessary?
e. Identifies direct costs by unique codes?
f. Requires that all costs, at incurrence, be assigned a proper code based on type, contract and any other appropriate identifier?
g. Accumulates costs accurately based upon the assigned code in appropriate subsidiary ledgers, including a ledger for each contract and other significant cost objective identified as a collection point for direct costs? h. Requires all costs to be posted to subsidiary ledgers at
least monthly?
Compliance criteria:
(3) Identification and accumulation of direct costs by contract; . . . (5) Accumulation of costs under general ledger control; . . . (11) Interim (at least monthly) determination of costs charged to a
i. Accumulates costs accurately at the general ledger level through the accumulation of subsidiary ledger balances? 2. Does the general ledger system permit costs accumulated at the
subsidiary ledger level to be traced to source documentation? 3. Are the various components of the general ledger
system integrated:
a. Electronically, so that information is electronically transferred between components and from subsidiary ledgers to the general ledger?
b. Manually, so that information collected is routinely posted to subsidiary ledgers and then to the general ledger?
4. Are amounts accumulated at the general ledger level routinely reconciled to the subsidiary ledgers?
5. Do internal controls exist to ensure: a. Complete recording of all costs? b. Proper coding of all costs?
c. The accurate accumulation of all costs?
d. Appropriate approvals of costs prior to incurrence? e. Appropriate approvals of payments for incurred costs? f. Adequate retention of source documentation? B. Data Reliability — Labor Costs
Compliance criteria:
(3) Identification and accumulation of direct costs by contracts; . . . (9) A timekeeping system that identifies employees’ labor by
intermediate or final cost objectives;
DFARS § 252.242-7006(c).
1. Does a time reporting system exist that has policies, procedures and systems (electronic or otherwise) that are designed to record employee labor accurately and timely?
2. Are time recording policies and procedures distributed and explained to new employees?
3. Are employees trained periodically regarding time recording policies and procedures and system functions?
4. Are standard computerized systems used to record time? Are the automated systems used to record time secure, auditable and reviewed periodically? Is there a back-up of the time records in the event that the computerized system fails? 5. Do the written policies and procedures address charge code
management and require that:
a. The creation of a charge code be requested by an individual having responsibility for managing performance of a contract, any other project that requires the
accumulation of direct costs (e.g., an IR&D project) or a department performing efforts that are classified as indirect costs?
b. The assignment of a charge code, based upon an authorized request for a charge code, is made by a separate function with responsibility for accurate recording of costs?
c. The charge code assigned is appropriate for recording and accumulating costs in accordance with the segment’s accounting system policies and procedures and other relevant requirements (e.g., contract requirements)? d. Assigned charge codes are communicated timely to the
e. The individual having responsibility for managing a contract, a project or a department requests timely that the assigned charge code be closed when performance has been completed and all costs recorded and accumulated? 6. Do the written policies and procedures address the accurate
recording of time and require that:
a. Each employee (or each employee who charges any time directly) record his or her time daily using the relevant system?
b. Charge his or her time to a charge code appropriate for the effort being performed?
c. Time be charged in stated increments (e.g., half hour)? d. Describe how to charge training time and break time? e. If another employee may record time for an employee:
(i) Are the appropriate circumstances for such action described, such as the employee is offsite or ill? (ii) Is authority limited to the employee’s supervisor or
similarly situated employee?
(iii) Is appropriate justification and sufficient documentation required to support the judgment of the employee’s supervisor in charging the employee’s time? f. Is each employee’s time approved by an
appropriate supervisor?
7. Do the written policies and procedures address mistakes in recording time and require that:
a. The erroneous entry be retained?
b. The change be documented in a new entry?
c. The employee approve the change and provide a written explanation of the change?
d. If someone other than the employee may change a time entry, the employee concur in writing with the change? 8. Do the written policies and procedures require reviews to
ensure accuracy of recorded time, such as edit runs, review by supervisors or program managers and reconciliations between time entries and payroll records or time and attendance cards? 9. Do the written policies and procedures address cost transfers to
correct time recording errors and require, among other things, adequate documentation as to why the transfer was necessary and appropriate approvals?
10. Is the segment’s time recording system subject to internal review, such as floor checks, reconciliations and internal audits? C. Segregate Direct and Indirect Costs
DFARS § 252.242-7006(c)(2).
1. Does the accounting system accurately code costs as direct or indirect?
2. When direct and indirect costs are accumulated in a department, is there clear guidance regarding which costs are direct and which are indirect?
3. Are direct costs accumulated by final cost objective? 4. Does a “mapping system” exist that aligns departments or
indirect costs within a department to the appropriate indirect cost pool?
5. Are actual costs accurately accumulated in indirect cost pools in accordance with the “mapping” of department costs to indirect cost pools?
Compliance requirement: [p]roper segregation of direct costs from indirect costs; . . .”
6. Are actual costs “mapped” to indirect cost allocation bases? 7. Are actual costs accurately accumulated in indirect cost
allocation bases in accordance with the “mapping” of costs to indirect cost pools?