This page is the pillar. The engagement sits on fractional CFO for defense contractors. I am not going to paste an 18-row criteria table and call it thought leadership. The clause is public. The failure modes are not.

Does DCAA certify accounting systems?

No. DCAA’s own small-business materials are blunt: there is no such thing as a DCAA-approved government accounting system. Contractors cannot request the audit. DCAA performs these audits when a federal entity responsible for determining acceptability asks. QuickBooks is not certified. Costpoint is not certified. A consultant cannot “get you DCAA certified.” Anyone selling that phrase is selling you a label the agency does not issue.

What exists instead: a pre-award survey of the design of the system (SF 1408), and after award, an accounting system that has to stay acceptable under the DFARS clause. Software is one piece. Methods, procedures, and controls are the system. That is DCAA’s definition, not mine — DFARS 252.242-7006(a), Accounting System Administration (JAN 2025), on Acquisition.gov.

What is SF 1408?

Standard Form 1408 is the Preaward Survey of Prospective Contractor Accounting System. FAR 53.209-1(f) points at it. DCAA’s Contract Audit Manual describes the pre-award work as obtaining an understanding of the design of the prospective system so the form can be completed — not an in-depth test of operational effectiveness. In English: can this system accumulate costs under a government contract, or is it a commercial P&L with hope attached?

DCAA publishes a contractor-facing Pre-award Accounting System Adequacy Checklist for shops new to government contracting, cost-reimbursement work, or progress payments. Fill it in as a narrative of how the system actually works. Do not check “yes” because the software box was expensive.

FAR 16.301-3(a)(3) is why this form exists: a cost-reimbursement contract may be used only when “the contractor’s accounting system is adequate for determining costs applicable to the contract or order” (FAR 16.301-3). If you are bidding cost-type and you cannot walk an auditor from a timesheet to a cost objective to a billing, you do not have a system. You have a story.

What is DFARS 252.242-7006, and how is it different from SF 1408?

SF 1408 is the gate. DFARS 252.242-7006 is the operating rule after you are in the contract. The clause (JAN 2025) defines an acceptable accounting system as one that complies with the criteria in paragraph (c) and gives reasonable assurance that laws are followed, cost data are reliable, mischarges are minimized, and allocations match billing procedures.

Paragraph (c) lists 18 criteria. I am not cloning them into a marketing grid. The ones small contractors actually fail are downstream of three habits. The clause still matters in full — segregation of direct and indirect (c)(2), accumulation by contract (c)(3), logical indirect allocation (c)(4), general ledger control and reconciliation (c)(5)–(c)(6), timekeeping and labor distribution (c)(9)–(c)(10), exclusion of unallowables under FAR part 31 (c)(12), CLIN-level identification when required (c)(13), billings reconcilable to cost accounts (c)(16). Read the clause. Then look at your file.

Failure is not a blog post. The clause says failure to maintain an acceptable system shall result in payment withholds if DFARS 252.242-7005 (Contractor Business Systems) is on the contract, and may result in disapproval of the system. That is the government, not me, raising the temperature.

	SF 1408 pre-award survey	DFARS 252.242-7006	Incurred cost / rates
When	Before a cost-type (or similar) award. Design.	After award, ongoing. Operation.	Year-end true-up of provisional billing rates against actuals.
Who asks	Contracting office / DCMA. DCAA may evaluate the design.	The clause is on the contract. Audits follow government request.	DCAA / contracting officer as required by the contract.
What “good” looks like	The system can accumulate and segregate costs. Checklist + walkthrough.	The 18 criteria are being lived, not laminated.	Rates calculated from the books of account — 252.242-7006(c)(15)(ii).
What I do	Gap the chart, timekeeping, and pools against the checklist before someone else does.	Keep the monthly rhythm so the clause does not become a finding letter.	Make the rate model a report from the GL, not a sidecar spreadsheet.

What do small contractors fail first?

Three things. I have watched shops with decent software fail all three, and shops on QuickBooks pass a survey because the procedures were real. Operator commentary, not a fourth copy of the 18-row grid.

1. Labor that does not hit a cost objective

DFARS 252.242-7006(c)(9) and (c)(10) require a timekeeping system that identifies labor by intermediate or final cost objective, and a labor distribution that charges direct and indirect labor to the right place. What I see: people fill timesheets on the last Friday from memory, or the owner’s hours sit in a lump called “management” that is really a mix of bid and contract work. If the hours are a reconstruction, the rate is a reconstruction, and the billing is a reconstruction. An auditor does not need a clever finding. They just walk one employee through one week.

2. Unallowables living in G&A

The clause at (c)(12) requires exclusion from costs charged to government contracts of amounts not allowable under FAR part 31 and the contract. FAR 31.201-6 is the accounting-for-unallowables rule. Interest, entertainment, excess owner comp, the “business development” lunch, legal for a bid protest you lost — they have to be identifiable. If they sit in overhead and get allocated to cost-type work, you are not being aggressive. You are being wrong. Small contractors fail this because nobody wanted to open a second bucket in QuickBooks. Open the bucket.

3. Indirect rates that do not come from the books

Paragraph (c)(4) wants a logical, consistent method for accumulating and allocating indirect costs. Paragraph (c)(15)(ii) wants you able to calculate indirect rates from the books of account. Paragraph (c)(16) wants billings reconcilable to cost accounts, current and cumulative. What I see: a rate model in Excel that was right in March, a general ledger that drifted in June, and invoices that use the March rate because “that’s what we bid.” Provisional billing rates are supposed to be a forecast you can defend. Year-end incurred cost is supposed to true them up. If the model cannot be reproduced from the GL, you do not have rates. You have a hope.

How does a fractional CFO fit, and what does it cost?

I do not replace your CPA. I do not “certify” anything. I sit in the executive finance seat: chart of accounts, pools, timekeeping design, rate model that ties, cash versus cost-type billing, the walkthrough before the survey. 10 hours / $5,000 or 20 hours / $7,500 a month. Project work — a chart rebuild, an SF 1408 prep file — is quoted after a 30-minute call. I will not invent a dollar range for a system I have not seen. Pricing. The GovCon seat: defense contractors.

Proof I am not a tourist: E-1 to squadron commander. 341st Comptroller Squadron, nuclear-wing CFO, $720M, 140 people, command in June 2020. DoD FM / APDP / DAWIA, CDFM. Veteran-owned. Cape Coral. US Central and Eastern. I am not claiming DCAA certified me either. That is the point of this page.

Questions I get

Does DCAA certify or approve accounting systems?

No. DCAA does not certify or approve accounting systems. DCAA audits them, and only when a federal entity requests the audit — not when a contractor asks. There is no DCAA-approved QuickBooks and no DCAA-approved Costpoint.

What is SF 1408?

Standard Form 1408 is the Preaward Survey of Prospective Contractor Accounting System (see FAR 53.209-1(f)). It is a design review: can this system accumulate costs under a government contract? DCAA’s Pre-award Accounting System Adequacy Checklist is the contractor-facing tool that maps to those criteria.

What is DFARS 252.242-7006?

The Accounting System Administration clause (JAN 2025). It defines an acceptable accounting system and lists 18 system criteria, from segregating direct and indirect costs to billings that reconcile to cost accounts. Failure can mean payment withholds under DFARS 252.242-7005.

What do small contractors fail first?

Three things, in my experience: timesheets reconstructed at month-end instead of a labor distribution that hits cost objectives; unallowable costs (FAR 31) dumped into G&A; and indirect rates that live in a spreadsheet and do not tie to the general ledger.

If a cost-type bid is on the calendar, look at the system before the government does.

Book 30 min. Bring the chart of accounts and how you currently calculate overhead. We will know if this is a retainer, a project, or homework for you and your CPA.

Book 30 min or call (616) 881-6777

Gabriel Denny — E-1 to squadron commander, nuclear-wing CFO, PE-backed operator.

Gabriel Denny Financial Services, LLC · 1718 NW 14th Terrace, Cape Coral, FL 33993 · (616) 881-6777 · gabe@gabrieldenny.com