Graduating from Phase I to Phase II is a completely different experience. Indirect rates, annual rate reporting, continued quarterly reporting, and considering the closeout of your award is your new normal. Having an adequate accounting system is the cornerstone of making your experience on the financial compliance side more efficient and less distracting…allowing more time for research.
Based on accounting raw survey data* provided by participating awardees, the gap between an adequate accounting system and reality is interesting. Below are some of the things that caught our attention:
- Your accounting system must be on the accrual basis. However, 57% of respondents are on the cash basis, therefore, the accounting system is inadequate.
- Your chart of accounts must have separation of direct, indirect and unallowable costs (only 32% of our respondents met this requirement).
- While there are benefits of limited liability companies (LLC’s), corporations (C or S) provide a cleaner audit trail related to labor. With that said, 44% of our respondents are LLC’s.
- Centralized accounting data is key to an adequate system, yet 51% have inadequate systems or no system at all.
- On a scale of 1 to 5, with 5 being a high level of understanding, our respondents were at 2.5 or lower in areas of understanding the chart of accounts, indirect rates, and audit requirements.
As you can see, there is a gap and we want to help.
Take a look at our services page to see how we can help, or better yet, schedule a call with us!
*Our survey is conducted as part of our marketing efforts and is not scientific.
For purposes of this survey, n=77.