That is to say, a submission to the federal government to account for the costs you have incurred during a specific project.
These include both direct and indirect costs and are usually due within six (6) months of the end of the fiscal year that your project was completed in.
As these submissions are detailed and complicated, it is recommended that you have an accountant, who is an expert in dealing with Federal Contracts, complete the Incurred Cost Submission. An auditor will verify your Incurred Cost Submission for accuracy, usually within twenty-four (24) months, so make sure that the math and other figures have been double or triple checked so you can be sure that everything is entered as it should be.
An adequate Incurred Cost Submission will follow these guidelines:
- It will possess a summary of the claimed indirect expense rates; you will have already obtained this rate from the appropriate department.
- It will include Indirect expenses properly categorized: General and Administrative (G&A) Expenses, Overhead Expenses & Occupancy Expenses
- It should contain claimed allocation bases
- It will have the computations for facilities capital cost of money factors
In the Incurred Cost Submission, you will reconcile the books of account and the claimed direct costs.
- It should include a schedule of direct costs by contract or subcontract and indirect expense applied at claimed rates
- It should show the government participation in indirect expense pools
- It will have a schedule of cumulative direct and indirect costs claimed and billed
- It should show any subcontract information
On T&M/labor hour contracts, it will list a summary of hours and amounts
- It should reconcile the total payroll to the total labor distribution
- It should list all the decisions, agreements, approvals, and the description of accounting and /or organizational changes
- It should contain an adequately signed certificate of final indirect costs
- It should include contract closing information for any contracts that were completed in this fiscal year
If you are an accountant or business owner preparing an Incurred Cost Submission for the first time, there are many classes and seminars available to help you understand how to:
- Apply and establish an indirect rate structure
- Manage indirect rate
- Identify unallowable costs and understand part 31 of the Federal Acquisition Regulations
- Ensure consistent cost accounting
- Determine the purpose of the Incurred Cost Submission and when it is required
- Understand the Incurred Cost Submission schedule analysis and how to apply the Incurred Cost Submission
The Incurred Cost Submission process is a lengthy one that may take several years. The final negotiation of the final costs should take place within six (6) months of the audit completion.
– DCAA News
NOTE: You can find qualified experts in GOVPROP.com to help you establish and maintain a compliant government accounting process and system.