Engineering Inc - March/April 2018 - 51

"The biggest difference between FAR requirements
and industry standard practices is the need to have a
detailed accounting of indirect labor."
WAYNE OWENS
T. WAYNE OWENS & ASSOCIATES

report its costs in accordance with its disclosed cost accounting
practices. "This allows us to comply with all facets of cost and
pricing data requirements and the exclusion of unallowable
costs from estimating and billing data," Seymour says.
The FAR requirements are broad in nature and require disciplined approaches to minimize the risk of noncompliance,
Seymour says. This includes addressing both strategic and
tactical objectives to provide education to employees related
to pricing, compliance and profitability; support and address
client-related concerns; and tailor compliance strategies to
address individual circumstances.
"There is a common misconception that FAR compliance
is difficult," says Wayne Owens, a CPA with accounting firm
T. Wayne Owens & Associates, PC.
"Actually, industry standard financial management practices

are the basis of FAR compliance," Owens says. "The first step
is an accounting system setup that segregates direct from indirect costs while accumulating direct costs and revenue by contract. This does not have to be an expensive industry specific
software."
A firm needs to establish policies regarding the treatment of
certain costs such as the premium portion of overtime, vehicles
and other equipment used on contracts and field rate accounting, Owens says.
"The biggest difference between FAR requirements and
industry standard practices is the need to have a detailed
accounting of indirect labor," Owens says. "The labor accounting system must include a process where time spent on unallowable activities, such as entertainment or trade shows, is
segregated from allowable overhead costs."

Why Partnering With a CPA Firm is Vital

or engineering
firms, one key to
successful FAR compliance is finding the
right CPA firm with
which to partner to help with
the process.
"I think it's very important
to begin with qualified and
well-versed external CPAs
and a transparent relationship with your home state
auditors," says Anthony
Machi, vice president of global
business services at Michael
Baker International.
"We've found that transparency and doing the right
thing right the first time are
powerful enablers to getting

things done in our industry,"
Machi says. "By using our
established process, Michael
Baker continues to work
closely with both our external
and home state auditors to
establish an efficient audit
and reporting schedule."
The firm has also seen the
benefit of working with auditors that are engaged and
active in the industry. "Annually, a joint subcommittee of
the American Association
of State Highway and Transportation Officials and ACEC
gets together, and we've
found the collaboration of
the state agencies, external
CPAs and consultants very

valuable," Machi says.
HNTB also relies on help
from CPA firms.
"Due to evolving statutory and regulatory changes,
we leverage the expertise of
our CPAs to identify new and
emerging compliance risks
and objectives," says Roger
Seymour, audit and fiscal
compliance director at HNTB.
"This allows us to efficiently
and effectively manage our
risk while capitalizing on
their in-depth knowledge of
the statutory and regulatory
changes."
Accounting firm T. Wayne
Owens & Associates frequently works with engineer-

ing firms on compliance
efforts.
"These relationships range
from performing a FAR audit
to teaching and consulting,"
says Wayne Owens, firm
founder. "A FAR audit is a
consultative engagement for
our firm," he says. "We don't
just look at a consultant's systems and accounting records
to determine their compliance. We view this through
our experience working with
hundreds of firms and industry best practices assisting
engineering firms with their
policies and processes, so they
can enhance compliance and
maximize their firm revenue."
MARCH / APRIL 2018

ENGINEERING INC.

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