Contract cost accounting
Greywood CPA sets up and runs the accounting that government contracts require: job cost ledgers, timekeeping, separation of direct, indirect and unallowable costs, and monthly close. We are a licensed CPA firm (Virginia Board of Accountancy firm license #134961) working nationwide, at a fixed fee.
Before awarding a cost-type contract, the government often checks whether your accounting system is adequate, using a pre-award review based on Standard Form 1408. The system has to accumulate costs by contract, keep unallowable costs out of what you bill, and tie timesheets to labor charged. We build it so you pass that review and stay ready for later audits.
Last reviewed: November 2026
Agencies look at whether your system can do the following, based on the criteria in Standard Form 1408:
No one "certifies" an accounting system in advance. The government determines whether it is adequate when it reviews you, so the system has to work in practice, not just on paper.
Labor is usually the largest cost on a government contract, and timekeeping is where most problems start. Employees should record hours daily, by contract or charge code, including unbilled and indirect time. Corrections need an explanation and supervisor approval, and timesheets must reconcile to payroll every period.
The Federal Acquisition Regulation cost principles make certain costs unallowable on government contracts, even if they are normal business expenses. Examples include entertainment, alcoholic beverages, lobbying, bad debts, fines and penalties, and most interest. These costs have to be recorded in separate accounts so they never reach your indirect rates or invoices.
We review your chart of accounts, timekeeping and billing.
Setup and monthly scope, one fixed fee each.
Chart of accounts, charge codes, timekeeping rules and written policies.
Reconciled job costs and contract reports every month.
A pre-award review of whether a contractor's accounting system is adequate for a cost-type government contract, based on the criteria in Standard Form 1408, such as separating direct and indirect costs and excluding unallowable costs.
There is no advance approval or certification. The government determines whether a system is adequate when it reviews the contractor, so the system has to work in practice.
Many small contractors do, set up with job costing, separate unallowable accounts, class or project tracking and a compliant timekeeping system. What matters is how it is configured and used.
Under the FAR cost principles, examples include entertainment, alcoholic beverages, lobbying, bad debts, fines and penalties and most interest expense. They must be kept out of indirect rates and billings.
We quote one fixed fee in writing for setup and a fixed monthly fee for ongoing accounting, based on the number of contracts, employees and entities.
Tell us about your contracts and current system. A senior CPA will send a fixed-fee proposal within 1–3 business days.