THIS KIT HAS BEEN DESIGNED FOR A PHASE I AWARD WINNER AND IS NOT INTENDED FOR SALE TO A PHASE II RECIPIENT. THE ACCOUNTING SYSTEM REQUIRED FOR PHASE II IS MORE RIGOROUS!

Maintaining an Accounting System in Accordance with FAR Part 31

All SBIR/STTR Phase I contract and grant awardees are required to set up and maintain a FAR Part 31 compliant accounting system.

While the likelihood of a government audit during Phase 1 is extremely rare, demonstrating a properly functioning accounting system and being able to produce the two critical reports discussed below are typically required in order to obtain Phase II funding, and are essential to negotiate an indirect cost rate at Phase II.

This kit is intended for newer contractors and grantees interested in demonstrating to a contracting officer or grant specialist that they are taking their responsibility to safeguard their funding seriously.

The Jameson Phase 1 Survival DIY Kit contains the video training and templates that you'll need to meet these minimum requirements based on knowledge we've developed over the last four decades - where we've helped our clients procure, manage and survive audit on more than $6 billion in federal funding awards.

As you implement your accounting system, we urge you not to get lost in the weeds, which is very easy. Instead, focus on generating the two key reports that your accounting system needs to produce accurately, on a monthly basis:

1. A job cost report (aka a backlog report) - typically used to invoice the government, track project spending, and amounts remaining to spend
2. An indirect cost rate report - used to monitor your actual rate (vs. your provisional/billing rate).

Not all reasonable, valid business expenses are allowed to be charged to an SBIR/STTR contract or grant. Each major agency issues their own supplemental regulations with their nuances of what is an allowable or unallowable cost. As an example, DOD allows internal research and development (IR&D) costs where NIH does not. Salary caps, the allowability of patent costs, and IR&D expenses almost never become major issues in Phase I, so please don't be overly concerned about those regulations until you've landed your phase II award.

Instead, focus on being able to properly produce these 2 key reports that thousands of seminar and webinar attendees we've met over the past decade are failing to produce.

Years ago, we sold this Phase I Survival Kit as an in-person service to hundreds and hundreds of new Phase I awardees. We are hoping to help more entrepreneurs using government funding to grow their businesses to flourish by bringing is back in this digital DIY format.

The Importance of Indirect Cost Rates

1. As your project morphs into a business, the importance of your indirect cost rate becomes critical because if you propose an indirect cost rate that is too low (the number 1 mistake of newbies) you will have one of two choices to survive:
   1. Overbill the Government (a huge no-no), or
   2. Borrow funds, or dilute your equity position to cover the shortfall

Overbilling The Government

Standard NIH and DOE Phase I SBIR/STTR funding awards are cost-type grants and cooperative agreements (herein referred to as grants) which adds an extra layer of concern as they are required to submit an accurate SF-425, Federal Financial Report. Once you begin to implement this kit, if you are uncomfortable filling out this report, please give us a call.

Free Phase II Cost Proposal Review

We are so passionate about helping you getting your Phase II cost proposal right that we have a no-brainer free service:

First, download your indirect rate template from our website at https://www.jamesoncpa.com/learning-center/indirect-rate-templates

Once your done with your projection and draft cost proposal, call Kevin Lehan at 781-862-5170 x1, or email him at [email protected] to schedule your free 15-20 minute consultation with one of our Partners. It's our way of introducing our next-level services to you.

Good Luck!

Ed Jameson, CPA, Managing Partner

Disclaimer

Please note that as your relationship with the federal government grows, the rigor of your accounting system and the likelihood of audits grows exponentially. This kit is intended for use by smaller contractors and grantees with funding awards less than $750,000. Once funding awards exceed this amount, the government typically becomes much more demanding that your system be maintained in accordance with Generally Accepted Accounting Principles (GAAP) as well as the funding agency's supplemental regulations - see our Basic, Corporate and Enterprise outsourced solutions found at www.jamesoncpa.com.