What DCAA compliance actually means

Plain-language explainer for small contractors.

DCAA compliance means your accounting system meets the standards the Defense Contract Audit Agency uses when it reviews government contractors. There's no official certification and no "DCAA-approved software" list. What exists is an evaluation of capabilities: can your system track costs the way the government requires?

The checklist auditors work from is the SF-1408, the pre-award accounting system survey. In practice, it comes down to a few capabilities:

• Cost segregation: direct costs separated by contract, and indirect costs grouped into pools (fringe, overhead, G&A). In WiseCost, contracts come from your QuickBooks classes and projects, and accounts are assigned to cost pools.
• Compliant timekeeping: every employee records their own hours, daily, by contract and cost category, with supervisor approval. This is WiseCost's Time Tracker and approval workflow.
• Labor distribution: recorded hours translated into labor costs allocated to each contract, posted to your general ledger. This is WiseCost's labor distribution engine, posting directly to QuickBooks.
• Audit trail: every action logged, nothing deleted, corrections through reversals. This is WiseCost's immutable Audit Trail.

The important mindset shift: compliance is not a document you get once, it's how your system operates every day. An auditor doesn't ask "which software do you use?"; they ask "show me how an hour worked becomes a cost on this contract, and prove nobody could quietly change it along the way."

For the full picture, including what happens in an audit and how to prepare for a pre-award survey, read our Complete Guide to DCAA-Compliant Accounting Systems or join a DCAA Ready webinar.