WiJiT Tip of the Month

By March 12, 2020 No Comments

How Compliant Incurred Cost Submissions Minimize Your DCAA Audit Risk

If “Audit” is a spine-chilling word for government contractors, “DCAA Audit” is even more cringe-worthy. Although DCAA reviews are an integral piece of the contracting process, no one wants to go through more DCAA audits than necessary. Adequate Incurred Cost Submissions go a long way toward minimizing audit risk.

What are Incurred Cost Submissions?

The Defense Contract Audit Agency (DCAA) uses Incurred Cost Submissions to evaluate the actual costs government contractors incur throughout the year. Based on the results and calculations, the report determines whether the government owes the contractor money or vice versa.

Incurred Cost Submissions must stand up to the DCAA’s  17-point Incurred Cost Submissions Adequacy Checklist to be found “adequate.” Although there are myriad possible errors, three of the most common yet avoidable reasons the DCAA finds incurred cost submissions “not adequate” are:

  1. Not including all 17 schedules with the submission
  2. Formula errors (for example, adding a row to a schedule, and failing to copy the formula row)
  3. Schedules that fail to tie to one another within the submission

Government contractors should perform detailed internal reviews to ensure each submission includes all Incurred Cost Submission (ICS) checklist items before sending it to the DCAA.

What Happens When an Incurred Cost Submission is “Not Adequate?”

The good news is that if most of your submissions and practices pass muster, a single incurred cost submission error is not likely to impact your business. In fact, in most cases, the DCAA allows you to resubmit.

However, if your Incurred Cost Submissions are repeatedly incorrect, or DCAA has you on their radar for other reasons, they are more likely to flag you for a complete audit. Additionally, if you’re already in the middle of an accounting system audit, your entire accounting system may be marked “not adequate,” which has potentially severe repercussions for your business and government contracts.

As a result, it is worth every government contractor’s time to perform a detailed check prior to sending in Incurred Cost Submissions.

How WiJiT Can Help

WiJiT frequently works with clients to ensure that Incurred Cost Submissions hit each of the DCAA checklist items. We typically provide three levels of support:

  1. Done-for-you Incurred Cost Submissions (we do all of the work)
  2. Incurred Cost Submissions Reviews (you put the reports together, and we review prior to submission)
  3. Support Services (you do everything, including review, and ask us if anything comes up)

The end result is that your Incurred Cost Submissions are compliant with the ICS checklist and your business is less likely to receive a DCAA audit, saving you considerable time and headache.

Ready for help with your Incurred Cost Submissions? We’d love to chat about the options!