SBIR Accounting - What Your CPA Should Be Doing

In general, the cost of staffing your Small Business Innovation Research (SBIR) Company´s accounting department is driven by the following three elements:

1. Number of employees

2. Annual revenue and volume of transactions

3. Reporting requirements and other terms and conditions imposed by contract or grant or your Board.

The administration of government contracts and grants requires an experienced accountant with a strong cost accounting background and an understanding of the Federal Acquisition Regulation (FARs).

According to salary.com an experienced CPA with this specialized knowledge would command an average salary exceeding $180,000 per year plus benefits…..and most small SBIR Companies couldn´t keep that person busy on a full time basis until they generate > $5MM per year in revenue.

As a result, smaller SBIR companies are forced to be as creative staffing their accounting department as they are developing their technology.

In smaller SBIR companies the day-to-day accounting should be handled by a degreed accountant with a working understanding of Generally Accepted Accounting Principles (GAAP). At a minimum, this person will need at least a bachelor’s degree in accountancy from an accredited school.  Cost accounting experience or coursework is extremely helpful and a working knowledge of QuickBooks and Excel is essential.

If you can find someone to do this work on an hourly basis, you’ve hit the jackpot!  These days $60-$100/hour is a fair range to pay.  In today’s labor market most degreed accountants will command $120,000 – $180,000 per year plus benefits.

The key functions that your CPA needs to assist with on top of the day-to-day bill pay, and payroll:

• Structuring the accounting system required by FAR Part 31 including the chart of accounts, timekeeping, and job cost reporting systems
• Creating “allowable” and “unallowable” cost policies and procedures
• Reconciling the labor distributed through the general ledger to the outside payroll service reports
• Periodically testing transactions to ensure that costs are properly recorded as direct, indirect or unallowable
• Budgeting and tracking actual indirect expenses vs. amounts billed
• Monitoring job cost reporting
• Preparing contract and grant reporting requirements
• Providing billing support via the Payment Management System (PMS) and ensuring that the SF-425 is properly filed
• Preparing the annual incurred cost submission
• Representing the Company during the incurred cost audits, negotiating the indirect cost rates, and Uniform Guidance Audits

As you can see, these tasks are not at all routine for most CPAs! Our firm provides outsourced accounting solutions specifically designed to meet the needs of smaller government grantees and contractors in a cost effective manner.

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Edward G. Jameson, CPA
www.jamesoncpa.com
SBIR Accounting – What Your CPA Should be Doing
www.jamesoncpa.com