Contractor Business Systems and Internal Controls

We help contractors develop policies, processes, and documentation around their systems of internal controls to demonstrate their compliance with contractual business system requirements.

Professionals in Baker Tilly’s Government Contractor Advisory Services practice have significant experience in helping contractors design, document, analyze, and improve contractor business systems and related internal controls. Our approach has withstood the scrutiny of the Department of Justice (in connection with contractor responsibility assessments), Federal compliance monitors, and a variety of Department of Defense (DoD) and civilian agency contracting officers. Government auditors have consistently appreciated our approach’s comprehensiveness and clarity.

    Accounting System

    We understand that contractors need compliant cost accounting systems that provide meaningful and timely financial information. Our broad business acumen, coupled with our cost accounting, financial accounting, business information system, and government contracting expertise, enables us to design cost accounting systems and business processes that meet each individual contractor’s compliance and business information needs. We help our clients solve myriad government cost accounting challenges by providing the following types of services:

    Accounting System Assessments

    • Accounting system adequacy reviews - SF1408
    • Mock accounting system audits DFARS 252.242-7006

    Policy, Procedure, Internal Control, and Documentation Evaluation & Design

    • Billing System
    • Labor Accounting
    • Indirect Cost Accounting
    • Other Direct Costs
    • Control Environment
    • Compensation System

    Audit Finding Response & Corrective Action Plan Support

    • Rebut asserted deficiencies
    • Support responses to contracting officer determinations
    • Design corrective action plans
    • Facilitate demonstration of corrective action implementations

    Indirect Cost Rate Support

    • Indirect cost structure evaluation, design, & reengineering
    • Forward pricing & billing rate proposal preparation
    • Final indirect cost rate proposal preparation (incurred cost proposal)
    • Strategic indirect cost rate administration and negotiation support

    Strategic & Tactical Cost Accounting Compliance

    • FAR 31 cost principles
    • Cost Accounting Standards
    • Cost Accounting Standards Board (CASB) Disclosure Statements
    • Cost impact proposal preparation

    Purchasing System

    Our professionals have decades of experience assisting contractors with their purchasing system compliance needs. We have not only examined procurement compliance from our client’s perspectives, but we have also examined the issues from DoD’s perspective through our contributions to the Section 809 Panel’s recommendations on supply chain management. We know not only what the procurement regulations say, but why they exist and how the Government reviews contractor systems for compliance with them. We frequently help our clients solve their most complex procurement compliance challenges by providing the following types of services:

    Strategic Procurement Compliance Support

    • Defining “procurement system” scope, both organizationally and transactionally
    • Policy & procedure reviews and development
    • Procurement process analysis & streamlining support
    • Cost and price analysis assistance
    • Subcontract negotiation and documentation support
    • Subcontract administration and procurement compliance training

    Purchasing System Review & CPSR Readiness Assessments

    • Mock CPSRs
    • Policy & procedure gap assessments
    • Procurement file documentation reviews
    • Supply chain management process compliance assessments
    • CPSR training

    CPSR Audit Support

    • Interpretation of CPSR team questions and findings
    • Support communication with CPSR team
    • Strategic guidance on responding to audit requests

    Audit Finding Response & Corrective Action Plan Support

    • Rebut asserted deficiencies
    • Support responses to contracting officer determinations
    • Design corrective action plans
    • Provide training on revised processes
    • Facilitate demonstration of corrective action implementations

    Estimating System

    Government contractor cost estimates and proposals face a painful amount of scrutiny and, if done poorly, can result in a variety of unsavory outcomes.  Our professionals understand the complexities in government contract pricing and help our clients develop cost estimating systems that produce consistent, compliant, well supported estimates.  We help contractors comply with the Government’s challenging and extensive cost estimating requirements by providing the following types of services:

    Estimating System Assessments

    • Mock estimating system audits DFARS 252.215-7002
    • Budgeting & planning system evaluation
    • Process and internal control evaluation
    • Policy, procedure, and documentation development

    Proposal Pricing Support

    • Truthful cost or pricing data compliance (Truth in Negotiations Act – TINA)
    • Pricing volume development, review, & support
    • Basis of estimate development
    • Proposal adequacy reviews DFARS 252.215-7009
    • Subcontractor cost or price analysis support
    • Subcontractor commercial item determination assistance
    • Small business subcontracting plan development FAR 52.219-9
    • Contract claims, change order, & request for equitable adjustment pricing support

    Audit Finding Response & Corrective Action Plan Support

    • Rebut asserted deficiencies
    • Support responses to contracting officer determinations
    • Design corrective action plans
    • Facilitate demonstration of corrective action implementations
    • Evaluate and Rebut of defective pricing allegations

    Property System

    The Government Property Management System requirements are included in more contracts than most contractors may realize. In addition to its own unique requirements, the Government Property Management System has a natural interface with other systems such as purchasing, estimating, accounting, and MMAS. Compliance with property system requirements is critical as the Department of Defense has shown recent, increased focus on managing its property.  Our experts help contractors comply with these requirements by providing the following types of services:

    Property System Review & Audit Readiness Assessments

    • Mock property system audits
    • Policy & procedure gap assessments
    • Process and internal control evaluation
    • Property records review & compliance evaluation

    Compliance Documentation Development

    • Policy & procedure development
    • Process flows
    • Internal control documentation

    Audit Finding Response & Corrective Action Plan Support

    • Rebut asserted deficiencies
    • Support responses to contracting officer determinations
    • Design corrective action plans
    • Facilitate demonstration of corrective action implementations

    Material Management and Accounting System

    The material management and accounting system (MMAS) is a government Contractor's system for planning, controlling, and accounting for the acquisition, safeguarding, issuing, and incorporating materials in production .  MMAS have long faced scrutiny from government auditors seeking perfection in contractors’ manufacturing planning and production. The Government’s MMAS criteria require many disciplines to function together smoothly for success, including estimating, purchasing, accounting, and property management. We help government contractors design processes that pull these disciplines together seamlessly to comply with MMAS requirements and navigate government audit scrutiny by providing the following services:

    Material Management and Accounting System Review & Audit Readiness Assessments

    • Mock MMAS audits
    • Policy & procedure gap assessments
    • Process and internal control evaluation
    • Inventory costing/accounting review
    • Material charging and transfer practices review

    Process Design and Implementation

    • Bill of Material and Master Production Schedule accuracy review and process development
    • Inventory process and internal control design
    • Material charging and transfer accounting design
    • Policy and procedure development
    • Scrap accounting
    • Physical inventory safeguarding and accuracy

    Audit Finding Response & Corrective Action Plan Support

    • Evaluate and rebut asserted deficiencies
    • Support responses to contracting officer determinations
    • Design corrective action plans
    • Facilitate demonstration of corrective action implementations