One of the most commonly used accounting systems among small businesses is QuickBooks. This is due to its accessibility, affordability, and user-friendly interface. But is QuickBooks enough to meet the stringent requirements of DCAA compliance?

Let’s explore how QuickBooks can be used to achieve DCAA compliance, where it falls short, and why WrkPlan offers a more reliable and scalable alternative for government contractors.

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How QuickBooks Can Be Used to Comply with DCAA

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QuickBooks does not come “DCAA-compliant” out of the box. However, with significant customization, added spreadsheets, manual processes, and external controls, it can be configured to meet some of the key requirements.

Here are several ways to make QuickBooks more aligned with DCAA standards:

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1. Implement a Compliant Timekeeping System

DCAA places heavy emphasis on timekeeping procedures. You must track labor hours daily, include project codes, and ensure that employees certify their time entries. QuickBooks Time (formerly TSheets) can be integrated to handle some of these tasks.

However, you’ll still need to establish internal policies for:

• Supervisory approvals
• Audit trails showing changes to time entries
• Daily time entry requirements

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2. Chart of Accounts and Cost Pools

To meet DCAA expectations, your chart of accounts must segregate:

• Direct costs
• Indirect costs (e.g., overhead, G&A)
• Unallowable expenses under FAR (Federal Acquisition Regulation)

With proper structuring, QuickBooks can be modified to categorize costs into appropriate cost pools. But again, this requires extensive manual setup, ongoing maintenance, and a solid understanding of government cost principles.    (These on-going efforts are a significant source of revenue for “outside Accountants” and CPAs.)

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3. Job Costing

QuickBooks can be made to support job costing, which should allow you to assign labor and other costs to specific projects or contracts. This is a core requirement of DCAA compliance, as it ensures that each dollar is traceable to a contract or task order.

To do this effectively in QuickBooks, you’ll need to:

• Set up each government contract as a “Customer” or “Job”
• Assign class codes to costs
• Reconcile indirect rate calculations manually

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4. Policies, Procedures, and Internal Controls

QuickBooks software alone won’t ensure DCAA compliance. You must also create and enforce:

• Timekeeping policies
• Cost accounting standards
• Regular audits and supervisory checks

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Limitations of QuickBooks for DCAA Compliance

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Despite its popularity, QuickBooks has significant limitations when it comes to satisfying all DCAA requirements, particularly for growing government contractors or firms handling cost-reimbursable contracts.

Here are the major challenges:

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1. Lack of Built-In DCAA Compliance Features

QuickBooks is a general-purpose accounting tool. It doesn’t come with built-in features for:

• Enforcing daily time entry
• Managing indirect rates
• Flagging unallowable costs
• Audit-ready reporting required by DCAA

Most of these functions require manual intervention or third-party tools, which raises the risk of errors and non-compliance.

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2. Manual Indirect Rate Calculations

DCAA requires that you calculate, apply, and monitor your indirect cost rates (e.g., fringe, overhead, G&A) correctly. In QuickBooks, you must manage these calculations yourself, which is usually through external spreadsheets or custom reports. This is time-consuming and error-prone, especially as your contracts grow in number and complexity.

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3. Limited Audit Trails

While QuickBooks does have some audit trail capabilities, they don’t meet the full audit standards expected in a DCAA environment. Changes to entries are not always easily traceable, and the software does not provide the kind of detailed labor distribution reports needed for a pre-award or post-award audit.

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4. Not Equipped for Government Invoicing or Reporting

Generation of Government-style Time & Materials or Cost-Plus invoices is beyond the scope of QuickBooks’ capabilities. Likewise, there is no provision for tracking contract funding; invoiced or available.

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5. Inefficient for Growing Contractors

As your business grows and takes on more government contracts, the complexity of your compliance obligations multiplies. Using QuickBooks means layering more manual processes or add-ons, which slows down your operations and increases compliance risk.

In summary, while QuickBooks can be made to pass a DCAA audit under very specific conditions, it is not a sustainable or scalable solution for contractors serious about long-term federal work.

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Why WrkPlan Is a Better Alternative to QuickBooks for DCAA Compliance

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WrkPlan was purpose-built from the ground up with one goal: to support small and mid-sized government contractors in achieving full DCAA compliance, without the need for expensive customizations or third-party tools.

Here’s how WrkPlan outperforms QuickBooks in the DCAA compliance space:

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1. Integrated Timekeeping & Expense reporting, with Audit Trails

WrkPlan includes a DCAA-compliant timekeeping system with:

• Daily time entry enforcement
• Employee certifications
• Business Expense Reports
• Supervisor approvals
• System-generated audit trails for every time entry

No need to bolt on additional software like TSheets or chase down spreadsheets. WrkPlan manages it all in one place.

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2. Automated Indirect Rate Management

Unlike QuickBooks, WrkPlan calculates and applies indirect cost rates automatically based on your cost pool structures. This means:

• No manual spreadsheets
• Real-time rate tracking
• Accurate provisional and actual rates for billing and reporting

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3. Segregation of Costs and FAR Compliance

WrkPlan's chart of accounts is pre-structured to separate direct, indirect, and unallowable costs in line with FAR Part 31. The system flags unallowable expenses and ensures they aren’t included in reimbursable billing or rate calculations.

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4. Project-Based Job Costing and Billing

Every contract is treated as a distinct project in WrkPlan, with built-in job costing, billing, and reporting modules. You can easily:

• Track costs by task, CLIN, or funding source
• Generate invoice formats required by agencies like DoD, NASA, or NIH
• Track status of allocated funds and
• Maintain compliance with cost-plus, T&M, or fixed-price contract types

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5. Audit-Ready Reporting

WrkPlan includes pre-built reports to satisfy DCAA pre-award surveys (SF1408) and

Incurred Cost Submissions (ICS). This includes:

• Labor distribution reports
• Indirect cost rate summaries
• Job cost reports
• General ledger and transaction detail logs

When an auditor comes knocking, you're ready without scrambling to build custom reports from QuickBooks data.

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6. Designed for Government Contractors

WrkPlan isn’t just another accounting tool, it’s an ERP system designed specifically for government contractors. That means every module, workflow, and report was created with DCAA audits, FAR compliance, and contract requirements in mind.

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Conclusion: Don’t Let QuickBooks Hold You Back

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QuickBooks may serve as a short-term workaround for DCAA compliance if you’re just starting out, but its limitations quickly become liabilities as you scale. Government contracting success depends on systems that are transparent, compliant, and audit-ready.

WrkPlan offers an all-in-one solution that eliminates the complexity, reduces compliance risk, and positions your business for sustainable growth in the federal space.

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Ready to Get DCAA Compliant the Right Way?

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Schedule a personalized demo with WrkPlan today and see how our purpose-built government contractor ERP system can help you:

• Eliminate spreadsheets and manual workarounds
• Achieve and maintain DCAA compliance
• Get accurate invoices out on time
• Scale confidently as a federal contractor

Click here to learn more about WrkPlan and to book your free demo.