How to Survive a DCAA Audit: The 7 “No-Mistakes” Systems That Protect Every Penny (and Your Reputation)
"Make Me Great!" and Ethical Persuasion apply in every environment as it's all about humanity first! It's all about the human brain and everyone has one (well, except politicians ...).
If you’re a consultant or accountant supporting government contractors, you already know this: a DCAA audit is not just a financial event. It’s a trust event. One weak process can turn into months of stress, delayed payments, and a client who starts questioning everything.
So here, I’m going to give you a simple, practical framework to help your clients stay audit-ready—without living in fear—and to ensure every single penny is correctly accounted for.
Because here’s the Make Me Great truth: your client doesn’t hire you for compliance. They hire you to feel safe, respected, and in control.
First, let’s reframe the real goal.
The goal is not “pass the audit.”
The goal is “build a system that makes passing inevitable.”
System #1: Build an audit-ready culture, not an audit-ready spreadsheet. Most failures happen because people treat compliance like a finance problem. It’s an operations problem. Timekeeping, approvals, job costing, expense coding—these are human behaviors.
So the first system is training + repetition:
clear rules
simple examples
short refreshers
consequences that are consistent
If the team doesn’t understand why accuracy matters, they’ll always “approximate.” And approximation is what audits punish.
System #2: Timekeeping must be boring, consistent, and provable. Timekeeping is one of the most sensitive areas. Your client needs:
daily entry (not end-of-week memory games)
supervisor approval with real review (not rubber stamps)
documented corrections with reasons
separation of direct vs indirect labor that’s consistent
The brain loves shortcuts. Under pressure, people will “just put it somewhere.” Your job is to remove ambiguity so the shortcut becomes the correct behavior.
System #3: Create a chart of accounts that matches how the business actually runs. A messy chart of accounts creates messy reporting. And messy reporting creates suspicion.
So align accounts with:
contract types
cost pools
indirect rates structure
reporting requirements
This is where you make your client great: you give them clarity that reduces errors before they happen.
System #4: Job costing must be real-time enough to catch problems early. If job costing is only reviewed after month-end close, you’re late.
You want a rhythm:
weekly review of high-risk contracts
variance checks (labor, materials, subs)
exception reports that flag unusual patterns
Audits don’t just look for mistakes. They look for whether the company can detect and correct mistakes.
System #5: Documentation is not paperwork. It’s memory. When people say “we don’t have time to document,” what they really mean is “we’re gambling that nobody will ask.” But an audit is literally someone asking.
So build a documentation habit:
purchase approvals
receipts and purpose
subcontractor agreements
rate calculations
policies and updates
If it isn’t documented, it didn’t happen—at least in the auditor’s world.
System #6: Internal controls must be visible, not assumed. A lot of clients say, “We have controls.” But can they prove them?
Controls need evidence:
who approved what
when it was reviewed
what exceptions were found
what corrective action was taken
The Make Me Great move here is simple: create a one-page “control evidence map.”
It tells the story of discipline.
System #7: Run mock audits to remove fear and build confidence. The brain performs better when it has rehearsed. So don’t wait for the real audit to discover gaps.
Run a quarterly mock audit:
sample timecards
sample expenses
sample labor distribution
sample indirect rate support
Then document the findings and fixes.
This transforms the audit from a threat into a routine.
Now, here’s the consultant advantage:
When you bring this framework, you’re not just “keeping books.” You’re protecting revenue, protecting reputation, and protecting leadership’s focus. That’s why clients renew. That’s why they trust you. That’s why you become unforgettable.
Because audit readiness is decision-making under pressure. If you want a simple set of brain-based exercises to improve clarity, focus, and better decisions (for you and your clients), grab it here:
