Incurred Cost Report time
At this time every year I start to think about Incurred Cost Reports. Just like I start to think about my personal income taxes at home right after the holidays. Most companies will have until the end of June to complete the incurred cost submission. That doesn't mean you shouldn't start early and not wait until the last minute. Many companies may enlist their CPA to complete this report to the government. This is the same CPA that is busy right now completing the tax return for the business. I have nothing against that if the CPA is well versed in government contracting and experienced with the format required for submitting the incurred cost proposal. The sad truth is that many of these preparers have not had a lot of experience with either the Federal Government contract requirements and/or with submitting an incurred cost report. Yes, all of this is public knowledge, all the requirements are known and public information but there are many fine points that are gained only through experience. Now, many times the DCAA will audit these incurred cost reports and go over them with a fine tooth comb. Your chances of getting your incurred cost report audited are probably higher than the odds of getting your personal tax return audited. For this reason alone, you want to make sure your incurred cost proposal is as good as possible. When you combine the audit risk with the fact that the DCAA is slightly behind schedule in auditing incurred cost proposals, you could not be audited for several years (some audits are as much as 6 to 7 years after submission). Again, it becomes imperative that the incurred cost report be done correctly. Another point is that if you have your CPA help you with the incurred cost report, they will probably not be able to begin work on the incurred cost proposal until after tax time which means after April 15th. While this is plenty of time usually to complete an incurred cost report for a small business, it could be done earlier and the worry could be eliminated.
To illustrate my point on doing it yourself or having a CPA that might not be experienced do the incurred cost submission, take a look at the government's diagram to explain the interaction of the various forms found in an electronic incurred cost submission (ICE):
I know, we don't have a lot of space here but this "plate of spaghetti" tends to make my eyes roll back in my head every time I look at it. It is obviously a complex format and not easy to explain. This is why it makes sense to employ an expert to help you with the ICE submission. Once you have closed the books on 2013 the incurred cost report could be started. At ReliAscent we end up doing a large number of incurred cost proposals every year but the closer we get to the deadline, the more of them seem to show up. I would recommend that you be proactive and start now, finish early and eliminate the worry and risk. Just a thought....