How to Record DFARS System Withholds
Records the reclassification of accounts receivable when the government withholds a percentage of payments due to business system deficiencies under DFARS 252.242-7005.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| AR - Deferred Payment Withholds | Asset | 50,000.00 | - |
| Accounts Receivable - Billed | Asset | - | 50,000.00 |
💡 Accountant's Note
If a contractor's business system (e.g., Accounting, EVMS, Estimating) is found deficient, the ACO may withhold up to 5% or 10% of progress payments. These funds are still owed but are not currently collectible.
Practitioner & Systems Framework
💻 ERP Architecture
Create a specific 'Withhold' aging bucket to distinguish from normal late payments.
⚠️ Audit Flags
Aging of receivables due to system disapproval letters from DCAA/DCMA.
📄 Required Documentation
Contracting Officer's final determination letter and payment office (DFAS) notifications.
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Expert Analysis by Qusai Ahmad
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