Getting Prepared for Your Incurred Cost Submissions
Posted by dcaaconsultant on June 14th, 2017
DCAA uses incurred cost submissions to assist in determining the audit oversight of contractors. It does not matter if your company is a Prime contractor or a Subcontractor. It does not matter how small the Contracts/Tasks are. This is an annual requirement. It should be part of your annual Accounting Close process. No matter how much you try to streamline and automate the incurred cost submission preparation process, it's a hard-and-cold fact that it always presents unique challenges for contractors. It is rare for contractors to be able to take the Defence Contract Audit Agency (DCAA) Incurred Cost Electronically (ICE) model, enter their setup information, import their general ledger data and poof, the submission is complete. And, if you’re new to government contracting, the process of preparing an Incurred Cost Submission may seem daunting. However, with a little knowledge and planning, the preparation for the submission can easily become part of your everyday accounting processes.
When it comes to getting your ICE ready, you can never be too prepared. To get all your ICE ducks in a row, you can follower certain tips:
• Ensure that your accounting system is set up to properly accumulate costs and reflect all data required on the ICE. If you need to improve your current accounting system or implement a new accounting system, DCAA consulting agencies are there to help you.
DCAA will only audit an “adequate” incurred cost submission. Therefore, to close out cost-reimbursable contracts an adequate submission is necessary. The audit determines the final indirect rates for the contractor’s fiscal year or years in the case of multi-year audits. A contractor’s accounting system should be set up and maintained in the right way in order to capture all of the necessary data. An accounting system should have the ability to track billings and job costs in accordance with indirect rates. Costs have to be assigned to the right buckets—typical pools might be direct lab or, fringe benefits, and overhead costs. If all the information comes directly out of your accounting system, you are going to be in great shape.
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