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Governmental accounting basics

There must be a written bonus policy. Also note that the calculation of under or over billing is handled in contract to date terms. What are Incurred
Cost Submissions? This is something that is negotiated with the prime contractor. Bonuses to the owners of the company are allowable costs. A
pre-award audit accounting system review is engaged when the contractor has no previous cost reimburseable contracts and this is the first
accounting system review. The estimates and actual rates rarely end up being exactly the same. The more cost plus contract, the higher the
importance in having an adequate accounting system. In addition to documented costs, there are schedule used to document administrative data of
contracts. Or, the contractor may have billed rates to the government that were higher than the rates documented in the contract. What should be
the basis for the indirect rate component of cost proposal submitted to the government? However, an auditor from the government must review
your accounting system and issue a report that approves your system as adequate. The cost proposal may be the driving factor in determining the
contract value; however, it does not determine the actual amount billed from month to month. It is a checklist of criteria that an accounting system
must meet in order to be considered adequate. After we submit our incurred cost submissions will the government be coming back to us to ask for
money back? When does a contractor need to prepare incurred cost submissions? A provisional rate agreement is an agreement between a
contractor and the government of the indirect rates that will be utilized for billing on cost plus contracts in the period year covered. Sometimes,
government agencies will accept the report from an independent CPA firm in lieu of a report from a government auditor. If the actual indirect rates
are lower, the process still takes time; probably years. When are Incurred Cost Submissions due? However, if the contractor changes the
accounting software, the government will not consider the prior report acceptable. How do I determine my cognizant agency? If it does, the
government is expecting a submission. Many times the government will accept provisional indirect rates in lieu of a FPRA. Also, in auditing a
contractors indirect costs, unallowable costs may be discovered as included in the indirect costs pools. The SF contains the list of criteria that must
be met for an accounting system to be considered adequate. What is an adequate accounting system? On cost plus contracts, the contractor bills
only those costs that are incurred for the period. Or the contractor may have billed less than qualified or experienced employees as compared to
the requirements for labor categories in the contract 3. Hierarchy going from a definite yes to a maybe: Thus, they share only the necessary
information and consider all else proprietary. Utilizing the per diem rates from the JTR is much simpler than tracking and billing actual travel costs
incurred. Most contractors are aware that your teammates this week will be your competitors next week. Or that the bonus practice if follow so
consistently that policy is suggested. Are there any approved accounting systems? You have a cost plus contract prime or sub with other agencies.
The government may discover that the contractor inflated cost elements during the pricing and negotiation phase of the contract award. I see very
few contractors that do. The amount of the bonus must be reasonable. Bonuses should not be based on profit of the company as distribution of
profit to owners is an unallowable cost. Get the answers to your most frequently asked questions about government contractor accounting here.
Should employees on travel use the per diem amount or actual charges on their expense reports? This page will provide a brief overview of the
basics of governmental accounting. What are some examples of instances where contractors would have to pay money back to the government?
When bidding as a subcontract, what cost information is appropriate to share with the prime contractor? The bonus must be based on successful
performance. If I am a subcontractor to a prime, do I have to have the same contract type as the prime contractor? Or the contractor may have
billed less than qualified or experienced employees as compared to the requirements for labor categories in the contract. Guided by a review
program that is based on the SF, an auditor will collect and review evidence that your accounting system is adequate. Actual costs entail
documenting and retaining the documented costs in support of the travel costs billed.

Back to Basics: An Overview of Governmental Accounting and Financial Reporting


This keeps you in contract compliance. We will never spam you or share your email address. This page will provide a brief overview of the basics
of governmental accounting. The cognizant agency is the agency where the contractor has billed the most revenue. When are Incurred Cost
Submissions due? On cost plus contracts, the contractor bills only those costs that are incurred for the period. The SF contains the list of criteria
that must be met for an accounting system to be considered adequate. The policy must be in place prior to the beginning of the year. What should
be the basis for the indirect rate component of cost proposal submitted to the government? The cost proposal may be the driving factor in
determining the contract value; however, it does not determine the actual amount billed from month to month. A provisional rate agreement is an
agreement between a contractor and the government of the indirect rates that will be utilized for billing on cost plus contracts in the period year
covered. When does a contractor need to prepare incurred cost submissions? However, an auditor from the government must review your
accounting system and issue a report that approves your system as adequate. Removal of claimed unallowable costs will cause a lowering of the
indirect rates. Or the contractor may have billed less than qualified or experienced employees as compared to the requirements for labor categories
in the contract. Usually these are caused by the contractor using estimated provisional indirect rates, rather than actual indirect rates. The more cost
plus contract, the higher the importance in having an adequate accounting system. This is something that is negotiated with the prime contractor. A
forward pricing rate agreement is an agreement between a contractor and the government of the indirect rates that will be utilized for pricing in the
period year covered. Conversely, a post-award accounting system review is engaged when the contractor already has cost reimburseable
contracts or that this is not the first accounting system review. Note that there is much more oversight and administrative costs related to cost plus
contracts. If I am a subcontractor to a prime, do I have to have the same contract type as the prime contractor? I see very few contractors that do.
Should employees on travel use the per diem amount or actual charges on their expense reports? This is the process of an incurred costs audit. If
the actual indirect rates are lower, the process still takes time; probably years. Thus, if the contractor is under billed in year one and over billed in
year two, the billings and costs for both years will be added and netted. Also note that the calculation of under or over billing is handled in contract
to date terms. Are there any approved accounting systems? Also, in auditing a contractors indirect costs, unallowable costs may be discovered as
included in the indirect costs pools. The government may discover that the contractor inflated cost elements during the pricing and negotiation
phase of the contract award. If it does, the government is expecting a submission. When bidding as a subcontract, what cost information is
appropriate to share with the prime contractor? The incurred cost submission is used by the government to assess the degree to which a contractor
may have under-billed or over-billed cost reimbursable contracts. The basis for the indirect rates proposed should be either a forward pricing rate
agreement, a provisional rate agreement, or you indirect costs budget for the period of performance of the contract proposed. The estimates and
actual rates rarely end up being exactly the same. No, at least not immediately. Or that the bonus practice if follow so consistently that policy is
suggested. Many times the government will accept provisional indirect rates in lieu of a FPRA. In addition to documented costs, there are schedule
used to document administrative data of contracts. After we submit our incurred cost submissions will the government be coming back to us to ask
for money back? Hierarchy going from a definite yes to a maybe: How do I determine my cognizant audit office? A pre-award audit accounting
system review is engaged when the contractor has no previous cost reimburseable contracts and this is the first accounting system review. Bonuses
should not be based on profit of the company as distribution of profit to owners is an unallowable cost. Bonuses to the owners of the company are
allowable costs. The bonus must be based on successful performance. Can Other Direct Cost be loaded? Typically, the pre-award accounting
system review is: What is an accounting system review? How do I determine my cognizant agency? This keeps then in compliance with the
contract. What is the difference between a pre-award review and a post-award review? DCAA has an office locator function on their website:
What are some examples of instances where contractors would have to pay money back to the government? Written performance evaluations are
critical to this.

Governmental Accounting Basics | KDuncan & Company


Are there any approved accounting systems? If I propose a certain amount of costs on a government contract and my actual costs come in lower,
will I have to pay the difference back to the government? A provisional rate gofernmental is an agreement between a contractor and the
government of the indirect rates that will be utilized for billing on cost plus contracts in the period year covered. Sign Up For Our Newsletter! This
keeps you in contract compliance. Governmental accounting basics cognizant agency is the agency where the contractor has billed the most
revenue. Or the contractor may have billed less than qualified or experienced employees as compared to the requirements for labor categories in
governmental accounting basics contract 3. This is the process of an incurred costs audit. In addition to documented costs, govdrnmental are
schedule used to document administrative data of contracts. Sometimes, governmental accounting basics agencies will accept the report from
an independent CPA firm in lieu of a report from a government auditor. What are Incurred Cost Submissions? Get the answers to your most
frequently asked questions about government contractor accounting here. Thus, if the contractor is under billed in year one and over billed in year
two, the billings and costs for both years will be added and netted. Typically, an accounting system review report is good for 5 years or more;
depending on the resources and focus of DCAA and the type of contracts the contractor possesses. What is the SF? Hierarchy going from a
definite yes to a maybe: The Govegnmental In Negotiations Act gives the government the ability to recover the excess. What should be the basis
for direct costs proposed? No, at least not immediately. When bidding governmental accounting basics a subcontract, what cost information is
appropriate to share with the prime contractor? The amount governmental accounting basics the governmental accounting basics must be
reasonable. Typically, the pre-award accounting system review is: How do I determine my cognizant agency? Or that the bonus governmental
accounting basics if follow so consistently that policy is suggested. Most contractors are aware that governmental accounting basics
teammates this week will be your competitors next week. Guided by a review program that is based governmental accounting basics the SF,
an auditor will collect and review evidence that your accounting system is adequate. The governmental accounting basics must be in place prior
to the beginning of the year. Usually these are governmental accounting basics by the contractor using estimated provisional indirect rates, rather
than actual indirect rates. Conversely, a post-award accounting system review is engaged when governmental accounting basics contractor
already has cost reimburseable contracts or that this is not the first accounting system review. Should employees on travel use the per diem amount
or actual charges on their expense reports? If you think that you should not have to provide the annual incurred costs submission, request a waiver
from the ACO and ask to have your contract modified to have the clause removed. If I am a subcontractor to a prime, do I have to have the same
contract type as the prime governmental accounting basics Can Other Direct Cost be loaded? What should be the basis for the indirect rate
component of cost proposal submitted to the government? These schedules document your costs direct and indirect costs incurred for the prior
year ended. Or, the contractor governmental accounting basics have billed rates to the government that were higher than the accounting
documented in the contract. Utilizing the per diem rates from the JTR is much simpler than tracking and billing actual travel costs incurred.
Typically, this in the arena of large or major contractors. The government may discover that the contractor inflated cost elements during the pricing
and negotiation phase of the contract award. There must be a written bonus policy. Removal of claimed unallowable costs will cause a lowering
ogvernmental the indirect rates. Thus, they share only the necessary information and consider all else proprietary. You have a cost plus contract
prime or sub with other agencies. If the actual indirect rates are lower, the process still takes time; probably years. A forward pricing rate
agreement is an agreement between a contractor and the government of governmental accounting basics indirect rates that will be utilized for
pricing in the period year covered. The incurred cost submission is used by the government to assess the degree to acdounting a contractor may
have under-billed or over-billed governmrntal reimbursable contracts. Also note that the calculation of under or over billing is handled in contract to
date terms. What are some examples of instances where contractors would have to pay money back to the government? Many times the
government will accept provisional indirect rates in lieu of a FPRA. The subcontractor would share loaded costs or loaded rates, the fee rate or
amount, and the escalation. It is a checklist of criteria that an accounting system must meet in order to be considered adequate. Basicx keeps then
in compliance with the contract.

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