Professional Documents
Culture Documents
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.