From the Editor's Desk
Federal Strategies Group Newsletter
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May 2007
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Executive Compensation - Keeping Up With the
Jones'
Year after year, executives of closely-held government
contractors have been facing increased scrutiny over
the amounts and types of compensation they are
being paid. DCAA's utilization of a specialized audit
team dedicated to determining the reasonableness of
executive compensation has made it increasingly
difficult for contractors to fight compensation
challenges.
For FY 2007, the Office of Management and Budget
has set the benchmark for executive compensation at
$597,912. Does this mean that this is the amount you
are able to pay executives without receiving a
challenge from DCAA? The answer is a resounding
no! This amount represents the highest
compensation that the government will allow for
reimbursement purposes, assuming your company
meets certain characteristics and/or criteria. If you
don't meet these characteristics, then a lower amount
would be deemed reasonable.
This edition of Federal Strategic Insights will analyze
the issue of executive compensation. First, an
analysis of the issues and regulations surrounding
executive compensation is discussed, including
specialized issues relating to Subchapter S-
Corporations and 8(a) companies. Then, various
strategies to fight compensation challenges are
discussed.
I hope you find these articles to be beneficial to your
organization. As always, we are available to discuss
in more detail these or other issues your company
may currently be facing.
Michael A. Smigocki, CPA/ABV, CVA
Executive Editor
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Issue Analysis
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Executive Compensation - A Primer
What are the elements of executive compensation?
What are the criteria for allowability? Why is executive
compensation even an issue for closely held
contractors? This article will analyze the various
aspects of executive compensation from both the
contractor's and government's standpoint. When
coupled with the usage of more sophisticated means
of compensation (i.e. stock options, phantom stock,
stock appreciation rights, etc.), executive
compensation will continue to receive a high amount
of scrutiny for the foreseeable future. For a text of the
entire article, click here
www.fedstrat.com/article
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Strategic Formulation
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How to Handle Compensation Audit Challenges
DCAA has become increasingly sophisticated in their
audit challenges of executive compensation. In
addition, armed with wins in high profile cases
involving executive compensation, it has become
increasingly difficult for contractors to defend
compensation challenges. This article will provide
some of the strategies that we have successfully
utilized with our clients. For a text of the entire article,
click here www.fedstrat.com/article
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Firm News
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Upcoming Speaking Engagements
Members of the Firm will be speaking at the
following
events:
SECAF Panel Discussion - Small Business
Recertification
Michael Smigocki will be a panel member along with a
representative from SBA and the legal community
analyzing the very controversial issue of small
business recertification. Sponsored by SECAF (Small
and Emerging Contractor Advisory Forum), the event
will be held on May 23, 2007 in Tysons Corner, VA.
See www.secaf.org
for more details.
Deltek Insight 07 Users Conference
Michael Smigocki and Donald Acker will be speaking
at the Deltek Users Conference on"Shareholder Value
Maximization Strategies". The conference is being
held in Las Vegas, NV the week of May 14, 2007. See
www.deltek.com
for more details.
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Employment Opportunities
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Due to the strong demand for our services we
are
looking to add several new hires to our rapidly
growing team.
Sr. Manager - CFO, Outsourcing
Group
- Former CFO of a government contractor that is
either currently consulting or looking to become a
consultant.
- Strong financial and accounting systems
expertise, Deltek GCS and/or Costpoint preferred.
- Experience with mergers & acquisitions
preferred.
- Experience with DCAA and other government
audits.
- Ability to provide strategic advisory services.
Manager - CFO Outsourcing
Group
- Former Controller of a government contractor.
- Ability to work simultaneously with multiple
outsourced engagements.
- Strong financial and accounting systems
expertise, Deltek GCS and/or Costpoint preferred.
- Strong background with incurred cost
submissions, indirect rate development, DCAA
audits.
- Must be very personable.
Manager - Forensics Group
- Must have experience in government contracting
either as a consultant, forensics expert, or an auditor
seeking to perform forensics work.
- Working knowledge of the FAR.
- Ability to work on multiple assignments and meet
strict deadlines.
If you are interested in joining our team, or
know of someone that might be interested, please
send your resume or inquiries to
pattys@fedstrat.com
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Federal Strategies Group is a specialized consulting
Firm providing management consulting, forensic
accounting and expert testimony to the government
contracting industry. Our mission is to guide our
clients to building business value through the creative,
innovative, and strategic use of our industry
knowledge, experience, and expertise.
For more information about these articles or how
Federal Strategies Group can assist your company,
please call or email
Mike Smigocki at
MikeS@fedstrat.com
Michael A. Smigocki, CPA, CVA, ABV
Sr. Managing Director
Federal Strategies Group, LLC
Phone:
(301) 770-5850
Fax:
(301) 770-5922
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