When it comes to closing the year in your accounting system, it should go without saying that accuracy is everything. Although Government Contractors should target accuracy all year long, at any given time throughout the year, leadership may need a forecast to get a feel for trends and make business decisions, requiring estimates to be made for costs and revenue.
End of year reporting, however, is a different story. These numbers are used for everything from taxes and bonus payments to creating reports for board members and investors, so it’s imperative that they be accurate.
Preparation is Key
As with all things, preparation is paramount to accurate year end reporting. This means that you must be performing, reconciling, and— if necessary— auditing your monthly reports such as Balance Sheet reconciliations, payroll reconciliation, and reconciliations between your project ledger and general ledger. By ensuring your books are clean throughout the year, you’ll save time and money when it comes to creating accurate year end reports.
The Timekeeping Factor
Timekeeping is one of the most stringent requirements that government contractors must follow to be DCAA compliant. Therefore, accurate timekeeping plays a huge role in developing accurate end of year reports. The best way to achieve year-end accuracy is for government contractors and their teams to:
- Define and document clear and reasonable timekeeping policies and procedures
- Train employees and supervisors on their roles for managing timesheets
- Audit timekeeping reports throughout the year to ensure adherence to policies
- Reconcile labor costs at regular intervals
By maintaining strong control over timekeeping and labor costs throughout the year, government contractors can avoid surprises, better ensure the accuracy of year end reports, and require fewer forensics to understand any errors.
Best practices for timekeeping ultimately boil down to two things:
- Employees must accurately log all hours worked every day according to project and work performed to ensure that labor reports are accurate.
- Supervisors must approve and certify all timesheets within a reasonable timeframe.
Doing so gives your accounting team accurate records to justify incurred costs and create accurate year end reporting.
The Bottom Line
Year-end reporting must be accurate. By generating solid reports every month and maintaining control on timekeeping, you can be sure your end of year reports are both accurate and timely.
Your year-end reporting is coming up fast. Are you prepared? Contact our team today to find out how we can help you!