I’m frequently asked by CFO’s at goverment contractors which accounting software systems are “DCAA Certified.”

The answer: None.  Zero.  Zip.

Contrary to an urban myth, the Defense Contract Audit Agency, or ‘DCAA,” does not certify accounting software.  The DCAA does, however, require considerable detail about the direct, indirect, and overhead expenses associated with every item billed to the government on contract awards. 

In order to pass DCAA audits, government contractors must be able to provide effective reports and be able to show internal controls so auditors can rely on those reports.

Microsoft has just released an excellent whitepaper on this topic.  Several industry experts from CPA firms and government contractors weigh in on the topic.  If you are curious, follow this link to read the PDF document.