A visitor to our website posted an interesting question this morning on one of our "Ask A Question" / "Can't Find What You're Looking For?" forms (found throughout our website), and we wanted to share it (and the response from our own Dave Donley), with everyone:Read More
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Posted by Tyler Link on Mon, Aug 29, 2016 @ 11:14 AM
We would like to remind all Federal Government Contractors that if you had a cost reimbursable type contract in 2015, and your FY ends on December 31st, you are facing a critical deadline in less than 4 weeks: Your Incurred Cost Proposal/Submission (ICE) is Due No Later Than June 30th (per FAR 52.216-7).Read More
The Defense Contract Audit Agency (DCAA) has just released an updated version of the Incurred Cost Electronically Model (the standard ICE submission) for contractors preparing adequate incurred cost proposals in accordance with FAR 52.216-7.Read More
There has been a trend in the last 5 years that the DCAA is auditing fewer of the annual Incurred Cost Proposals (ICP's). This is based on the shear backlog as well as the risk factor to the government. Small firms are less risk and therefore fewer of their ICP's are being audited. As we all learned in physics class, for every action there is an equal and opposite reaction. In this case it looks like the reaction means there will be much more scrutiny on invoices and vouchers. We have learned that there has been a recent DCAA wide training relative to how to monitor vouchers and scrutinize them more closely. We have noticed that this is translating into more requests from auditors relative to the vouchers than ever before. Good advice to contractors at this point is to scrutinize the invoice thoroughly prior to submitting it. Math errors will raise a red flag and draw attention. This attention could then uncover other issues. Not only are math errors red flag warnings, but wrong attachments or incomplete attachments can cause a flag to go up. Also, carefully check calculations to make sure they are correct and have the proper basis.Read More
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.
Posted by Mike Anderson on Wed, Jun 27, 2012 @ 03:47 PM
Now that we are reaching the end of the "incurred cost proposal" season for most contractors (contractors whose fiscal year ends December 31st), most accountants are breathing a sigh of relief. This is much like the sigh we hear after April 15th in many CPA offices. The important thing to remember, however, is that you can actually help reduce your pain next year by monitoring your rates through the year.