Chart of Accounts

The general ledger accounts are the foundation of your accounting system. All transactions, reports, and policies and procedures revolve around their final location in your books. While no regulatory or codified chart of accounts exists for government contractors, many practitioners and auditors utilize the following structure. In fact, you’ll find this structure ingrained in accounting software designed for government contractors.

  • 1xxx Assets
  • 2xxx Liabilities
  • 3xxx Capital/Equity
  • 4xxx Revenue
  • 5xxx Direct / Cost of Goods Sold (COGS)
  • 6xxx Fringe
  • 7xxx Overhead
  • 8xxx G&A
  • 9xxx Unallowable & Other

Individual accounts and each cost pool (grouping of accounts) must be homogenous (containing only one kind of expense). [CAS 418] The proper segregation and grouping of expenses aid in the efficient and accurate calculation of indirect rates.

The chart of accounts should be further organized in order of liquidity and with subgroups to aid in data entry and financial reporting. For example, we recommend an intelligent numbering system whereby the same or similar types of expenses in multiple cost pools have the same account numbering structure.

  • 5300 Direct Travel
  • 8300 G&A Travel
  • 9300 Unallowable Travel

Grouping accounts in a series can aid in report writing when you reference a series instead of individual accounts. You can avoid report or calculation errors when new accounts are inserted in the series and automatically added to the report.

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