Accounting System

Report
Small Business Conference
San Diego Regional Innovation
Cluster
February 25, 2014
The views expressed in this presentation are DCAA's views and not
necessarily the views of other DoD organizations
Agenda
8:00-8:05
8:05-8:45
8:45-9:45
9:45-10:00
10:00-11:00
11:00-11:55
11:55-12:00
Introductions - Lou Kelly, Chairman, SDRIC
Meet the DCAA Managers - Ron Reichel, DCAA
Senior Financial Liaison Advisor, Camp Pendleton
DCAA Pre-award Accounting System Audits - Chiho Ly,
Senior Auditor, San Diego Branch Office
Break
DCAA Provisional Billing Rates/Public Vouchers
Crystal Arnote, Auditor, San Diego Branch Office
Coral Schuster, Senior Auditor, San Diego Branch Office
DCAA Incurred Cost Submissions - John Doherty,
Regional Audit Manager, Western Region Office
Wrap Up - Lou Kelly, Chairman, SDRIC
Overview
DCAA Organization
Meet the Managers
DCAA Initiatives/Changes Affecting Small
Business
DCAA Internet Resources/Tools
Elevating Concerns
Subject Matter Presentations
Department of Defense (DoD) Organization
Secretary of
Defense
Deputy Sec of
Defense
Department
of Army
Department
of Navy
Department
of Air Force
Under Secretary
(A T & L)
Under Secretary
(Comptroller)
Procurement
Procurement
Procurement
DCMA
DCAA
Inspector General
Defense Contract Audit Agency
Approximately 5,000 employees located at over
300 offices throughout the United States and
overseas
Responsibilities and Duties:
Perform all needed contract audits for DoD
Provide accounting and financial advisory services
to DoD (and civilian when requested) acquisition
and contract administration components during all
contract phases:
Pre-award
Contract execution
Settlement (contract closing)
DCAA Organization
Director
Patrick Fitzgerald
Deputy Director
Anita Bales
Internal Review
Angela Janysek
Assistant Director,
Operations
Tom Peters
Executive Officer
Joe Garcia
Assistant Director,
Policy & Plans
Don McKenzie
General Counsel
Defense Legal Service
Susan Chadick
Assistant Director,
Resources
Philip Anderson
Assistant Director,
Integrity &
Quality Assurance
Gary Spjut
Headquarters
Regions
Central
Region
Vacant
Martha McKune
Eastern
Region
David Johnson
Vacant
Northeastern
Region
Ron Meldonian
William Adie
Mid-Atlantic
Region
Ken Saccoccia
Chris Andrezze
Western
Region
Donald Mullinax
Steve Hernandez
Field
Detachment
Karen Cash
Terry Schneider
Financial Liaison Advisor
DCAA's FLAs are auditing professionals
assigned to buying commands and are
DCAA's principal point of contact at the
commands. The FLA's duties range from
expediting advisory audit reports to on-thespot consultation on complex financial and
accounting matter related to contract costs.
San Diego Audit Management
Trish Lee - Regional Audit Manager (RAM)
Western Region Office
Linda Jung - Branch Manager
San Diego Branch Office
Terry Allen – Supervisory Auditor
San Diego Branch Office
San Diego Audit Management
John Doherty – Regional Audit Manager
Western Region Office – Incurred Cost
Dave Hazlett – Branch Manager
San Diego North Incurred Cost Branch
Elizabeth Reynaga – Branch Manager
San Diego South Incurred Cost Branch
David Ortiz – Supervisory Auditor
San Diego South Incurred Cost Branch
DCAA Initiatives/Changes Affecting
Small Business
DFARS threshold changes for proposal
audits (DFARS PGI 215.404-2(c))
Pre-award financial condition & forward
pricing rates transferred to DCMA
Incurred cost backlog initiative
Dedicated audit teams
Low risk sampling
SF1408 Checklist implementation
DCAA Initiatives/Changes Affecting
Small Business
Small Business Outreach Initiative
Website presentations for small business
Website tools (Checklists, ICE, Etc.)
Coordination w/ small business contacts at
major buying commands (FLAs)
Participation in seminars/workshops
NDIA/SBTC joint DCAA/DCMA committee
meetings quarterly to discuss small business
issues
DCAA Initiatives/Changes Affecting
Small Business
Small Business Outreach Initiative (cont.)
Mandatory auditor small business audit
training to Include:
Background on importance of small business
General guidance when beginning audit of small
business
Communicating with small business
Auditing small business – focus on differences
between large and small business
Small Business Focal Point
The small business focal point advises the Agency Director
on policy issues related to small business concerns, serves
as the primary point of contact and source of information, and
collects and monitors relevant data regarding the Agency's
conduct of audits. The small business focal point's duties are
segregated from ongoing audits in the field or any activities
that could compromise the independence of the Agency or
undermine compliance with applicable audit standards.
Headquarters, Defense Contract Audit Agency
Attn: Operations, Small Business Focal Point
8725 John J. Kingman Road, Suite 2135
Fort Belvoir, VA 22060-6219
Chief, Operations Audit Liaison (937) 255-7789 or [email protected]
DCAA Internet Resources
www.dcaa.mil
Audit Process Overview – Information for
Contractors Manual
DCAA Pre-award Accounting System Checklist
DCAA Contract Proposal Adequacy Checklist
DCAA Forward Pricing Rate Adequacy Checklist
DCAA Incurred Cost Adequacy Checklist
Incurred Cost Electronically (ICE) Model
EZ-Quant - Suite of three statistical applications
Links to Acquisition Regulations
Additional DCAA Internet Resources
Small Business Presentations:
Accounting System Requirements
Real-time Labor Evaluations
Incurred Cost Submissions
Contract Briefs
Provisional Billing Rates
Public Vouchers
Monitoring Subcontracts
Elevating Concerns
If you cannot resolve disagreement or
misunderstanding of auditor findings with the
auditor and wish to elevate your concerns,
we strongly encourage that you do so
through the DCAA chain of command.
First, the supervisor
Branch Manager
Regional Audit Manager
Regional Director
Elevating Concerns
SB focal point cannot change results or
direct the audit offices to do anything. Focal
point will refer the issue to the Regions for
resolution with contractor.
Director will not change results - Regional
Directors have oversight of the Regions.
So resolve concerns at lowest level possible
Then the ACO is the deciding official.
DCAA Audits Through Various Phases of a
Contract
Pre-Award
Throughout
Contract Life
Accounting
System
Annual Incurred
Cost Reviews
Estimating System
Real Time Labor
Proposal Review
Provisional Billing
Rates
- Labor Rates
- Indirect Rates
- Materials
- ODC
Progress Payments
Vouchers
Accounting System
Contract
Completed
Contract Closing
Contact Information
DoD Office of Small Business Programs
www.acq.osd.mil/OSBP
DCAA
[email protected]
Preaward
Accounting System
Audits
SDRIC Conference February 25, 2014
The views expressed in this presentation are DCAA's views and not
necessarily the views of other DoD organizations
20
Overview
Purpose of the Preaward Accounting System
Audit
Preaudit Activity
SF 1408 Step-by-Step
Exit Conference
Common Deficiencies
DCAA Tools for Contractor Use
Questions and Answers
Purpose of the Preaward
Accounting System Audit
Prior to the award of a Government
contract, FAR Part 9.104 requires
prospective contractors to have:
adequate financial resources
adequate accounting system
Purpose of the Preaward
Accounting System Audit (cont.)
An examination before contract award
requested by the Procuring Contracting
Officer (PCO) or cognizant Administrative
Contracting Officer (ACO)
Gain an understanding of the design of the
prospective accounting system
DCAA will complete a SF 1408
Purpose of the Preaward
Accounting System Audit (cont.)
Based on our audit, DCAA will opine as to
whether or not the design of the
accounting system is suitable for the
award of a prospective contract in
accordance with FAR 53.209-1(f),
Standard Form 1408 (SF 1408), Preaward
Survey of Prospective Contractor
Accounting System
Preaudit Activity
DCAA or Buying Command will request
contractor complete Accounting System
Checklist
Preaudit Activity (cont.)
Important because:
 You will become aware of the
requirements of an acceptable
accounting system
 You are prepared for the audit
 Faster turn around
 Less rework by contractor and auditor
 Quicker contract award
Preaudit Activity (cont.)
Contractor should be prepared to
demonstrate how accounting system
satisfies SF 1408 criteria at the
walkthrough
Preaudit Activity (cont.)
DCAA will request contractor Policies and
Procedures
DCAA will request information to complete
an Internal Control Questionnaire (ICQ)
SF 1408 Step-by-Step
1. Generally Accepted Accounting Principles
Accrual basis accounting system?
General ledger (G/L) to post costs to?
Ability to generate financial reports?
2.a. Proper Segregation of Direct
Costs from Indirect Costs
Policies and Procedures
Chart of Accounts
Demonstrate entering a direct cost and an
indirect cost into accounting system
2.b. Identification and Accumulation
of Direct Costs by Contract
Will request:
Profit & Loss (P&L) by Job, Contract, Delivery
Order or Contract Line Item Number (CLIN)
Chart of Accounts
Contractor’s proposal
2.c. Allocation of Indirect Costs
Contractor proposal
Indirect rate sheets
Documented bases and pools
Written Policies and Procedures
2.d. Accumulation of Costs
under G/L Control
Can the P&L by Job reconcile to the G/L
control accounts?
How often are costs posted to the G/L?
Policies and Procedures
2.e. Timekeeping System
Policies and Procedures
Timekeeping document (paper or electronic
timecards)
Timecards completed and certified by the
employees
Timecards approved by the employees’ supervisors.
When are timesheets filled out
Reconcilable labor cost distribution records
Who monitors the timekeeping system and how
often
2.f. Labor Distribution System
Policies and Procedures
Labor Distribution  Payroll Register
Labor Distribution  P&L by Job
Who Monitors and How Often
2.g. Interim Determination of Costs
What is the process for posting costs?
Responsible personnel
Frequency
2.h. Unallowable Costs
Policies and Procedures
What is an unallowable cost – FAR Part 31.205
How will unallowable costs be identified AND
excluded
Who and how often will unallowable costs be
monitored
Chart of Accounts which identifies unallowable
accounts
2.i. Costs by Contract Line Item
Contractor’s proposal
Who creates new jobs in the system
How is the level of contract information
communicated to the person creating the
new job in the system
2.j. Segregation of Preproduction
Costs from Production Costs
Policies and Procedures
Chart of Accounts with unique
preproduction project numbers
Can costs be accumulated for a specific
timespan
3.a. Limitation of Costs
Policies and Procedures
Proposal’s rate calculation sheet
Procedure for contract briefs
Billing template
Who and how often are total contract
expenditures monitored against contract
limitations
3.b. Billings
Policies and Procedures
Invoice example with current and
cumulative amounts
How will invoice reconcile to the P&L by
Job or G/L by cost elements
Timing of vendor and subcontractor
payments
Exit Conference
Results of Audit
Yes
Yes, with a recommendation that a follow on
accounting review be performed after contract
award
No
Common Deficiencies
Narrative on the Accounting System Checklist
– Incomplete or uses simple definitions
without the how (who, what, when)
No written pool and base descriptions
Excel ‘timecards’ which are changeable,
unsigned, and uncertified
Common Deficiencies (cont.)
Not routinely posting to books of account
(at least monthly)
Lack of process to monitor
Lack of understanding of what is
unallowable FAR Part 31.205
Common Deficiencies (cont.)
Billing the Government for cost when
payment to subcontractor or vendor will
NOT be made in accordance with terms
and conditions of the subcontract or
invoice and ordinarily within 30 days of the
contractor’s payment request to the
Government.
No process to brief contracts
Common Deficiencies (cont.)
Chart of Accounts with numbers only and
no account description
Invoices do not show both current and
cumulative amounts
Unable to create P&L at level of detail
required by RFP
DCAA Tools for Contractors
SF 1408
Preaward Checklist
Information for Contractors
FAR Part 31.205 – Unallowables
Preaward Accounting Audit Program
Contract Audit Manual (CAM)
DCAA Public Website
http://www.dcaa.mil/
What NOT to Do!
http://dcaa.mil/
DCAA Public Website
http://www.dcaa.mil/
DCAA Public Website
http://www.dcaa.mil/
DCAA Public Website
http://www.dcaa.mil/
Participant Questions
How to schedule a preaward audit? What
is the cost of a preaward audit?
How long does the preaward audit last?
My company did not receive a pre-audit
verification even though we paid an
accounting firm a great deal of money.
Participant Questions
If a small business has not been tasked
does the audit expire?
Is providing payroll data to DCAA related
to a proposal count as an audit?
We just won our Seaport-e IDIQ contract.
Does DCAA plan on auditing our
accounting system?
Participant Questions
The current pre-award accounting system
audit covers 12 of the 18 criteria for a
business system audit as required by
DFARS 252.242.7006(c). When can a
covered contractor expect to have a DCAA
audit the remaining 6 criteria?
With all the new auditors, will DCAA
enhance its training?
Provisional Billing Rates and
Public Vouchers
SDRIC Conference February 25, 2014
The views expressed in this presentation are DCAA's views and not
necessarily the views of other DoD organizations
Overview
Provisional Billing Rates (PBRs)
Procedures for Establishing PBRs
When & What to Submit
DCAA Review
Monitoring
Public Vouchers
Contractor Responsibilities
Wide Area Workflow (WAWF)
Common Deficiencies
Frequently Asked Questions
58
Provisional Billing Rates
59
Establishing Billing Rates
FAR 42.704(b)
The contracting officer (or cognizant Federal agency official) or auditor shall
establish billing rates on the basis of information resulting from recent review,
previous rate audits or experience, or similar reliable data or experience of other
contracting activities. In establishing billing rates, the contracting officer (or
cognizant Federal agency official) or auditor should ensure that the billing rates are
as close as possible to the final indirect cost rates anticipated for the contractor’s
fiscal period, as adjusted for any unallowable costs. When the contracting officer (or
cognizant Federal agency official) or auditor determines that the dollar value of
contracts requiring use of billing rates does not warrant submission of a detailed
billing rate proposal, the billing rates may be established by making appropriate
adjustments from the prior year’s indirect cost experience to eliminate unallowable
and nonrecurring costs and to reflect new or changed conditions.
60
Purpose of PBRs
Used for interim billing during the contractor’s fiscal year
Established to approximate the contractor’s final yearend rates
Billings should be reconcilable to the cost accounts for
both current and cumulative amounts claimed and comply
with contract terms
Note: PBRs are ONLY for use in provisional billing. They
are NOT for use in bidding/forward pricing or final indirect
rates.
61
Reasons for Contractor Submission
Contractors are STRONGLY encouraged to submit a
billing rate proposal to assist the responsible official in
establishing rates
Opportunity to present and explain expected changes
Note: Vouchers and progress payments may be REJECTED
if submitted without using properly established billing rates
62
When to Submit?
PBRs should be submitted at least annually
PRIOR to the BEGINNING of contractor fiscal year
AND
When established billing rates no longer represent
expected final year end rates due to unforeseen
events/circumstances
Note: The PBR submissions should represent the
contractor’s entire fiscal year
63
What Should Be Provided?
Letter stating the proposed rates and period covered
Proposed billing rate calculations (Pool and Base) with
brief rationale
Prior fiscal year (FY) pool and base
Current FY to date pool and base
Pool and base projection for remainder of current FY
Upcoming FY budget pool and base, if available
Comparative analysis with explanation of any significant
differences
64
DCAA Review
DCAA may perform the following procedures:
Compare proposed pool and base to prior year and
year-to-date pool and bases
Compare proposed pool/base/rates to those
submitted on incurred cost submission
Review trend of questioned costs in relevant incurred
cost audits and consider an adjustment for
unallowable expenses in calculating current year
provisional billing rates
65
Contractor Self-Monitoring
Periodically throughout the year
Throughout the year
Immediately after year-end
Upon submission of the final indirect rate proposal
PBRs may be adjusted by either party at any time
to prevent substantial under or over payment –
FAR 42.704(c).
If PBRs are adjusted, the contractor should
submit adjustment vouchers accordingly
66
Adjustment
Submit a letter with new rates, an explanation as
to what caused the change, and with supporting
data
If DCAA/DCMA has NOT issued a memo:
Begin using the new rates immediately
If DCAA/DCMA HAS issued a memo:
Continue using the rates as listed on the memo
unless you receive a new memo from DCAA/DCMA
Please contact your cognizant office if you have concerns
NOTE: If PBRs are adjusted, use the new rate on
the current year cumulative expenses
67
Common Deficiencies
Waiting until completion of the final indirect rate
proposal to submit proposed PBR
Unable to support proposed significant rate
changes
Delayed response to DCAA information requests
68
Common Deficiencies
Consistent over/under estimations
Using PBR as proposal rates for potential
contracts
Not using correct PBRs on vouchers
If a contract outlines a set of maximum indirect
rates a PBR MUST still be established
69
Common Deficiencies
Failure to remove unallowable costs from the
billing rate projections
Failure to adjust provisional billing rates based
on actual experience:
Before year end, if there are known or reasonably
anticipated significant variances
After year end once actual rates, net of unallowable
expenses, are calculated
70
Public Vouchers
71
Overview
Cost type contracts provide for interim payments
for costs on a cost voucher. DCAA will perform
voucher reviews based on risk.
Fixed price contracts are subject to FAR Part 32
financing methods (progress payments).
72
Contractor Responsibilities
Contact cognizant DCAA office after contract award
Ensure DCAA has the necessary information to
process contract billings
current provisional billing rates
copy of contract brief (include special contract provisions)
Maintain adequate billing system internal controls
Maintain adequate support for amounts billed
Submit timely incurred cost proposals and final
vouchers in accordance with FAR 52.216-7
73
Adequate Billing System
Adequate accounting system
Established billing rates with timely adjustments to
reflect year end allowable costs
Vouchers must be based on established billing
rates
Contracts are briefed by contractor to ensure
vouchers accurately reflect special cost limitations
and other contract restrictions
74
Adequate Billing System
Interim vouchers prepared directly from cost
accounting records
Adequate incurred cost proposals are submitted
timely
Maintains a Cumulative Allowable Costs by
Contract worksheet
Final vouchers submitted in accordance with FAR
52.216-7
75
Preparation of Vouchers
Contractor is responsible for preparing and
submitting claims for reimbursement according
to the terms of the contract
Vouchers should not be submitted more than
once every two weeks
Public voucher claims for reimbursement must
be submitted via Wide Area Workflow (WAWF):
First voucher on a contract is an interim voucher, as
are all subsequent vouchers prior to the final voucher
Final voucher will not be submitted until all contract
work is completed
76
Wide Area Workflow (WAWF)
DFARS 252.232-7003 REQUIRES the use of
WAWF as the primary system for submission
and processing of payment requests.
77
Wide Area Workflow (WAWF)
Includes a voucher sampling approach that
replaces the direct bill program
DFARS 242.803 gives DCAA authority to:
Approve interim vouchers selected using sampling
methodology for provisional payment and forward to
the disbursing office
ALL provisionally approved interim vouchers are subject to a
later audit of actual costs incurred
Review final vouchers and send to the Administrative
Contracting Officer (ACO)
78
Submission of Interim Vouchers
Vouchers must be prepared and submitted in
accordance with the terms of the contract, including
any special billing/payment instructions
All vouchers should be submitted in WAWF unless
contract terms require submission of hard copy vouchers
Guidance/training for completing cost vouchers can be
found on the WAWF website: https://wawf.eb.mil
In WAWF, the “Cost Voucher” is the equivalent of
the SF 1034
Data equivalent to the SF 1035 must be included in an
electronic file and uploaded to WAWF
79
Submission of Interim Vouchers
Required information and examples can be found in
DCAA Manual 7641.90, Information for Contractors,
pages 46 – 49 at:
http://www.dcaa.mil/DCAAM_7641.90.pdf
Required information includes:
Contract Number and Delivery/Task Order
Contract Costs and Fixed Fee
Identify Fee Withholding Threshold
80
Submission of Interim Vouchers
Required information includes (cont.):
Current and Cumulative Costs Billed
Breakdown by Major Cost Element (i.e., Labor, Materials,
Overhead)
Fee Earned And Due
Total Claimed Amount
Adjustments (i.e., Withheld Fee, Excess Costs Incurred)
Total Voucher Amount
81
Submission of Adjusting Vouchers
Adjusting voucher:
Addresses changes to billing rates during or after
year-end
Can be on a separate voucher or combined with
interim voucher
82
Submission of Final Vouchers
Last voucher to be submitted on a contract
A separate completion voucher will be submitted
for each individual project or task order for which
a separate series of public vouchers has been
submitted
In accordance with FAR 52.216-7(d)(5).
83
Common Deficiencies
Billing to incorrect DODAAC
Math errors
Billed costs not allowed per the contract terms
(e.g., overtime)
Not billing in accordance with contract terms:
Fixed-fee
Funding & Cost Ceilings
84
Common Deficiencies
Incorrect provisional billing rates (indirect costs)
Billing rates not adjusted to year-end actual
rates
Inability to provide sufficient supporting
documents in a timely manner
85
Frequently Asked Questions
Question: How do I know what DCAA office is my
cognizant office?
Response: Visit www.dcaa.mil/office_locator.html,
search by CAGE Code, DUNS Code, or ZIP Code.
86
Frequently Asked Questions
Question: Do I submit the Provisional Billing Rate
Proposal to the ACO or DCAA Office?
Response: FAR 42.704 states the office
responsible for final indirect cost rates also
establishes provisional billing rates
87
Frequently Asked Questions
Question: Can I just use the most recent FY end
rates for provisional billing purposes?
Response: No
88
Frequently Asked Questions
Question: Once provisional billing rates are
established with DCAA or the ACO, do I need to
submit proposed changes based on new
information?
Response: Yes
89
Frequently Asked Questions
Question: Is there any general guidance for how a
contractor should be inputting information into
WAWF?
Response: Yes
https://wawftraining.eb.mil/xhtml/unauth/web/wbt/
wawfra/vendor/DocumentCreate.xhtml
90
Frequently Asked Questions
Question: When information is incorrect on a
voucher, can the contractor recall/correct the voucher
or does a new voucher have to be submitted?
Response: Contractors cannot correct the following
fields on submitted vouchers: contract number,
delivery order number, Cage Code, document type,
shipment number/date, and voucher number/date.
Recalling or Resubmitting Invoices Quick Reference guide:
http://www.dtra.mil/documents/business/wawf/RecallorResub
mit.pdf
91
Participant Questions
What is the process a new contractor
should follow to obtain DCAA approved
PBRs?
What marketing/business development
activities are allowed in the rate
computation?
92
Participant Questions
How does the progress invoice type work
in WAWF?
How does the MOCAS information sharing
work?
How do I submit the portion of the invoice
that was not accommodated for in the
original submission?
93
Resources
Information regarding WAWF is available on the
Internet at https://wawf.eb.mil/.
Additional Information and Links:
WAWF Training & Practice: https://wawftraining.eb.mil
Help guides:
http://www.dfas.mil/ecommerce/wawf/info.html
DFAS (To check invoice payment status):
myInvoice: https://myinvoice.csd.disa.mil//index.html
Information for Contractors Manual (Enclosure 5):
http://www.dcaa.mil
94
Incurred Cost Submissions
SDRIC Conference February 25, 2014
The views expressed in this presentation are DCAA's views
and not necessarily the views of other DoD organizations
Incurred Cost Submissions
Due Dates of Submissions
Delinquent Submissions
Adequacy Review
Audit Requirements
Required Submission Schedules
ICE Model
Penalties
Frequently Asked Questions
96
Due Dates of Submissions
Incurred cost claims are due six months
after completion of the contractor’s
fiscal year end.
Per the Allowable Cost and Payment Clause
(FAR 52.216-7(d)(2))
Allowable cost and payment clause applies to
cost-reimbursement type contracts (FAR 16.307)
97
Delinquent Submissions
If submissions are six months
delinquent, DCAA will recommend a
decrement factor and for the CO to
make a unilateral determination. (FAR
42.703-2(c)(2))
98
Incurred Cost Adequacy Review
We check for the schedules listed FAR 52.2167(d)(2)(iii)
Any missing or unreconcilable schedule could
cause us to report the submission as
inadequate.
Recommend self-assessment
http://www.dcaa.mil/incurred_cost_checklist.html
99
Audit Requirements
FAR 31.201-2 (d) Requires contractors to
maintain records and supporting
documentation to demonstrate allowability
and allocability of costs.
FAR 31.205 also requires specific
documentation to demonstrate the
allowability of certain cost elements
100
Examples of Specific Documentation
Under FAR 31.205
FAR 31.205-33, Professional and Consultant Service
Costs, requires the following evidential matter:
Details of all agreements (e.g., work requirements, rate of
compensation, and nature and amount of other expenses, if any)
with the individuals or organizations providing the services and
details of actual services performed;
Invoices or billings submitted by consultants, including sufficient
detail as to the time expended and nature of the actual services
provided; and
Consultants’ work products and related documents, such as trip
reports indicating persons visited and subjects discussed,
minutes of meetings, and collateral memoranda and reports.
101
Examples of Specific Documentation
Under FAR 31.205
FAR 31.205-46, Travel Costs indicates
costs shall be allowable only if the
following information is documented:
Date and place (city, town, or other similar
designation) of the expenses;
Purpose of the trip; and
Name of person on trip and that person’s title
or relationship to the contractor
102
ICE MODEL
ICE is an EXCEL spreadsheet that provides
contractors with a standard user-friendly
electronic package to assist in preparing
timely and adequate incurred cost
submissions.
It should result in less time being spent in:
Submission preparation.
Supporting the audit.
103
ICE BENEFITS
•
User Friendly
•
It includes all schedules required for an adequate submission per
FAR 52.216-7
•
Updates are performed electronically and the linking feature
updates all impacted schedules.
•
ICE creates an inventory of electronic files that can be used in
subsequent years to compare costs and facilitate submission
preparation.
•
The submission of an adequate proposal may expedite contract
closings.
104
Required Information in Incurred Cost Submission FAR 52.2167(d)(2)(iii) (referenced to ICE model)
Schedule A Summary of Indirect Expense Rates
Schedule B, C, D Indirect Cost Pools
Schedule E Claimed Allocation Bases
Schedule F Cost of Money
Schedule G Booked and Claimed Direct Costs
Schedule H Direct Costs by Contract at Claimed Rates
Schedule H-1 Government Participation by Pool
Schedule I
Cumulative Allowable Cost Worksheet
Schedule J
Subcontract Information
Schedule K Hours and Amounts on T&M Contracts
Schedule L Payroll Reconciliation
Schedule M Accounting/Organization Changes
Schedule N Certificate of Indirect Costs
Schedule O Contract Closing Information
105
Schedule A
Summary of Indirect Expense Rates
1
0
6
Schedule B, C, D—Indirect Cost Pools
Schedule E—Claimed Allocation Bases
Overhead
Overhead Pool
PER G/L, F/S
PER G/L
& TRIAL BAL/FSADJUSTMENTS
$
543,522
$
(32,912)
$
CLAIMED
510,610
Overhead Base:
Total Contract Labor
IR&D Labor
B&P Labor
Total Overhead Base
Overhead Rate
$
$
633,012
14,287
9,525
656,824
$
$
-
$
82.75%
633,012
14,287
9,525
656,824
77.74%
Overhead Base* - Straight time
direct labor dollars of all
contracts and projects including
labor costs of IR&D/B&P
projects.
G&A Pool
PER G/L, F/S
PER G/L
& TRIAL BAL/FSADJUSTMENTS
$
280,502
$
(9,479)
G & A Base:
Contract Labor
Contract Travel
Contract Material
Other Direct Costs
Subcontracts
Subtotal = DIRECT COSTS
$
$
$
General Ledger Overhead (before adjustments)
Less: IR&D/B&P O/H transferred to G & A pool.
IR &D O/H (at G/L rate)
B&P O/H (at G/L rate)
Other Misc Adjustments to G&A Base (provide detailed support)
G&A Base - Total Cost Input (exludes IR&D/B&P and COM)
G&A Rate
CLAIMED
271,023
633,012
34,563
842,981
172,105
944,841
2,627,502
543,522
$
(11,822)
(7,882)
3,151,320
8.60%
108
Schedule F—Facilities Cost of Money
Computing COM Rate:
Treasury
Rate
Apr - Jun 08
4.750%
Jul - Dec 08
5.125%
Jan - Mar 09
5.625%
Mos.
3.00
6.00
3.00
COM Rate
1.188%
2.563%
1.406%
5.157%
Months percentage added for demonstration
purposes - adjust as needed
Company 1
Cost Accounting Period 20xx
Recorded
Business
Leased Property
Unit
Corporate/Group
Facilities
Total
Capital
Undistributed
Distributed
Overhead
Pools
NBV
1. Applicable
2. Accumulation
3. Allocation of
4. Total Net 5. COM for Cost
Cost of Money
& Distribution of
Undistributed
Book Value
Accounting
Rate
NBV
Period
5.16%
69,761 (Basis Of Allocation) (Column 2+3) (Column 1*4)
162,290
Cost of Money Overhead
Unused
Unused
Unused
Unused
Unused
LESS: COM on IR&D/B&P Labor:
Cost of Money Overhead
Unused
Unused
Unused
Unused
Unused
Subtotal
G&A
G&A
Expense Pools ADD: COM on IR&D/B&P Labor
Subtotal:
TOTAL
BASES
6. Allocation
Base For
Period
In units
of measure
(Note 1)
7. Facilities
Capital COM
Factors
(Column 5/6)
232,051
193,290
38,761
30,345
-
168,162
-
198,507
-
8,416
25,128
33,544
38,761
193,290
232,051
10,237
-
656,824
-
0.01559
0.00000
0.00000
0.00000
0.00000
0.00000
(371)
9,866
1,730
371
2,101
11,967
(23,812)
-
0.01559
0.00000
0.00000
0.00000
0.00000
0.00000
Note 1 Allocation Bases
(Refer to Schedule E for details)
Overhead COM: Straight time direct labor dollars of all contracts and projects including labor costs of IR&D/B&P projects.
G&A COM: Total cost input (excluding G&A, B&P, and Cost of Money)
109
3,151,320
0.00067
Schedule G—Booked and Claimed Direct Costs
110
Schedule H—Direct Costs by Contract at
Claimed Rates
JOB
Prime
ORDER
CONTRACT NUMBER
A. COST TYPE(no entry on title line)
1201 N00039-90-C-0873
Claimed
Not Claimed (note 1)
1203 N00040-90-C-0874
1204
A. TOTAL COST TYPE:
SUBCONTRACT
NUMBER
Labor
Total
O/H
Labor
122,113
Subcontract-Clark Inc.
16,387
8,973
147,473
B. OTHER FLEXIBLY PRICED (Note 3)
1205 N000060-90-C-0913
210,312
B. TOTAL OTHER FLEXIBLY PRICED
210,312
C.. VAR. TIME & MAT'L
1301 N00022-96-D-0111
Task Order No. 1
Task Order No. 2
1305 F66777-97-D-0112
Task Order No. 1
C.. TOTAL VAR. TIME & MAT'L
5,300
2,882
2,911
11,093
122,113
16,387
8,973
147,473
Total
Direct
Costs
SubTravel
Material
ODC
Contracts
O/H
Direct
Costs Plus
O/H
G&A
Base
(TCI)
Claimed
G &A
Applied
G&A
COM
Applied
O/H
Total
Costs
COM
Applied
Total
COM
Grand
Total
94,931
12,739
6,976
114,646
468,885
4,870
46,827
34,243
554,825
468,885
4,870
46,827
34,243
554,825
40,324
419
4,027
2,945
47,715
509,209
1,904
314
5,289
3
50,854
255
31
37,188 (Note 2)
(Note 2)
602,540
2,159
348
2,218
3
286
2,507
511,427
5,292
51,140
37,188
605,047
89,732
407,232
407,232
163,497
163,497
570,729
570,729
570,729
570,729
49,083
49,083
619,812
619,812
3,279
3,279
382
382
3,661
3,661
623,473
623,473
-
-
6,682
3,803
3,832
14,317
4,120
2,240
2,263
8,623
10,802
6,043
6,095
22,940
10,802
6,043
6,095
22,940
929
520
524
1,973
11,731
6,563
6,619
24,913
83
45
45
173
7
4
4
15
90
49
49
188
11,821
6,612
6,668
25,101
16,724
12,914
147,318
5,338
16,724
12,914
147,318
282,113
282,113
77,599
77,599
359,712
359,712
359,712
359,712
30,935
30,935
390,647
390,647
1,556
1,556
241
241
1,797
1,797
392,444
392,444
11,478
660,297
50,921
596,650
50,921
596,650
1,611,399
1,611,399
1,611,399
1,611,399
138,580
138,580
1,749,979
1,749,979
-
660,297
127,738
127,738
-
11,478
1,483,661
1,483,661
-
-
-
1,749,979
1,749,979
3,119,605
268,286
3,387,891
7,167
986
8,153
3,396,044
312
9,687
125,067
15,341
7,888
111,141
8,932
38,643
59,613
89,732
8,932
38,643
59,613
382
421
1,000
500
171
974
750
2,250
99,819
99,819
5,338
5,300
2,882
2,911
11,093
O/H
373,954
4,870
34,088
27,267
440,179
43,630
3,183
1,212
632
48,657
210,312
210,312
Claimed
5,231
1,687
836
87
7,841
115,068
87,912
D. VAR-FIXED PRICE
99,819
D. TOTAL VAR-FIXED PRICE
99,819
E. VARIOUS COMMERCIAL WORK
164,315
E. TOTAL VARIOUS COMMERCIAL WORK
164,315
164,315
164,315
TOTAL CONTRACT COSTS
633,012
633,012
34,563
842,981
172,105
944,841
2,627,502
492,103
3,119,605
14,287
9,525
23,812
14,287
9,525
23,812
366
244
610
126
85
211
9,232
6,156
15,388
-
24,011
16,010
40,021
11,107
7,405
18,512
35,118
23,415
58,533
656,824
656,824
35,173
843,192
187,493
944,841
2,667,523
510,615
IR & D
B& P
TOTAL IR & D/B & P
GRAND TOTAL
111
Schedule H-1—Government Participation
Contract Type
Cost-Type
Flexibly Priced
T&M
Fixed Price
Commercial
IR&D/B&P
Total
Overhead
Overhead
Base Amount
%
147,473
22.5%
210,312
32.0%
11,093
1.7%
99,819
15.2%
164,315
25.0%
23,812
3.6%
656,824
100.0%
G&A
Base Amount
554,825
570,729
22,940
359,712
1,611,399
3,119,605
%
17.8%
18.3%
0.7%
11.5%
51.7%
0.0%
100.0%
Note: The purpose of this schedule is to present a general overview of the extent that cost-type
and flexibly priced contracts participate in the absorption of indirect expenses
112
Schedule I—CACWS
Contract No.
SCHED H
Cost Type & Flexibly Priced:
(note 1)
N00039-90-C-0873
N00040-90-C-0874
Order
No.
Subcontract No.
Subject
To
Penalty
Clause
Note (2)
1201 Yes
1203 Yes
1204
1205 Yes
Subcontract-Clark Inc.
N000060-90-C-0913
Unsettled/Claimed Direct
Prior And Indirect Costs Using
Years
Claimed
Settled
Prior Year
Current Year
Total
Costs
Costs
Costs
FYE
FYE
Note (3)
Note (4)
Note (4)
SCHED H
382,595
359,626
591,362
126,821
2,867,500
555,311
443,916
511,427
51,140
37,188
623,473
Subtotal-Cost & Flexibly
Priced Contracts
SCHED K
Time & Material
N00022-96-D-0111
N00022-96-D-0111
F66777-97-D-0112
Total
Less
Net
Cumulative
Contract
Cumulative
Settled or Limitations
Settled or
Claimed Rebates/Credits Claimed
Note (5)
Note (6)
638,248
3,301,235
952,125
1,658,751
638,248
3,301,235
952,125
1,658,751
6,550,359
6,550,359
10,601
5,950
6,000
-
10,601
5,950
6,000
-
22,551
6,572,910
PV No.
Cumulative Billed (Manual Entry)
Date Cost
Billed
Through
Amount
Over
(Under)
Billing
Physically
Complete
(Note 7)
18
30
24
33
2/28/2009
3/31/2009
1/31/2009
3/31/2009
640,110
3,295,110
960,100
1,640,426
1,862
(6,125)
7,975
(18,325)
6,535,746
(14,613)
10,848
5,000
5,750
247
(950)
(250)
-
22,551
21,598
(953)
6,572,910
6,557,344
(15,566)
Yes
Yes
SCHED K
001
002
001
10,601
5,950
6,000
-
Subtotal-Time & Material
Contracts
Total- Cost/Flexibly Priced and Time & Material Contracts
113
6
6
2
12/31/2008
12/31/2008
12/31/2008
Yes
Schedule J—Subcontract Information
Cost-type subcontracts issued under flexibly priced prime contracts – Yes _X__ No ___
SUBCO NTRACT NO .
PRIME CO NTRACT NO .
SUBCO NTRACTO R'S
PO INT O F CO NTACT
NAME & ADDRESS
AND PHO NE NO .
SUBCO NTRACT Performance Period
VALUE
From
To
INCURRED
AWARD
IN FY 2009
TYPE
Subcontracts Issued:
P.O . #XYZ0998R
P.O . #XYZ0776R
P.O . #XYZ01032R
P.O . #XYZ1213R
P.O . #XYZ0822R
N00039-05-C-0873
N00040-05-C-0874
Small Company
Ms. Donna Charleston
1445 Southpark Blvd.
Marketing Manager
Buffalo, NY 14206
(716) 883-8700 X317
Tanza Enterprises
Mr. Mike Tanza
87B Executive Park
President
Fairfax, VA 22033
(703) 983-5640
Subcontract to Clark Inc. Argonautics, Inc.
Mr. Ted Kessel
Prime N00039-05-C-0875 555 O cean Parkway
Marketing Manager
N00060-05-C-0913
N00060-05-C-0913
Anaheim, CA 92803
(714) 998-2000 X12
DSK Corporation
Ms. Jane Matthews
3559 Vaulting Road
Marketing
York, PA 17405
(717) 992-7800
Aristeo Associates
Mr.Vince Aristeo
546 Arroyo Drive
President
Carlsbad, NM 87112
(504) 535-1600
$110,500 3/16/2006
6/30/2009
$87,912
CPFF
$895,000 4/20/2006
12/2//2010
$15,341
CPFF
$152,500 7/25/2008 10/16/2011
$7,888
CPFF
$236,135 10/12/2008 3/15/2009
$49,732
CPFF
5/14/2008
$40,000
CPFF
$100,000 5/14/2007
Schedule K—Hours and Amounts on Time and Material (T&M)
Contracts
This Schedule is linked to schedule A for the G&A rate.
SCHEDULE K
Any changes in data will affect Schedule I.
ICE (version 2.0.1c)
Other than G&A rate, only manual or externally imported entries
Schedule A - Applied Overhead, G&A, & COM Rates
XYZ Corporation
NOTE: Hidden rows have been inserted that will allow for automatic adjustment of the column totals when additional rows are inserted
Contract Labor
Category (1)
LABOR
Program Manager
Senior Engineer
Engineer
Analyst
Technical Typist
TOTAL
Contract N00022-96-D-0111
No.
Task: 001
Rate (2)
Hrs
$
25.00
100
$
20.00
100
$
15.00
200
$
12.50
100
$
7.00
50
550
OTHER COSTS
Material Costs (3)
Amount
2,500
2,000
3,000
1,250
350
9,100
Contract No.
N00022-96-D-0111
Task: 002
Rate (2)
Hrs
$25.00
50
$17.50
100
$12.50
100
$12.50
$7.00
100
350
Amount
1,250
1,750
1,250
700
4,950
Contract No.
F66777-97-D-0112
Task: 001
Rate (2)
Hrs
$22.50
100
$17.50
100
$16.00
50
$10.00
20
$0.00
270
Amount
2,250
1,750
800
200
5,000
Contract No.
Task:
Rate (2)
Hrs
-
Amount
-
Contract No.
Task:
Rate (2)
Hrs
-
Amount
-
1,000
500
750
-
-
382
421
171
-
-
119
1,501
79
1,000
79
1,000
-
-
TOTAL
10,601
5,950
6,000
-
-
Task Ceilings
25,000
12,500
7,500
Travel Costs (3)
Sched A
G&A @:
Subtotal
8.60% (4)
Explanatory Notes
(1)
(2)
(3)
(4)
Represents effort performed by the company. Any subcontract effort should be identified separately.
Represents rates specified in the contract which may be higher or lower than actual rates incurred.
Represents actual costs recorded in the cost records.
G&A applied at the claimed rate to Material (if not Value-added base) and Travel Costs.
11
5
Schedule L—Payroll Reconciliation
Reconciliation of Total Payroll per IRS form 941
to Total Labor Costs Distribution
Fiscal Year End - 3/31/2009
NOTE: Hidden rows have been inserted that will allow for automatic adjustment of the column totals when additional rows are inserted
NOTE: Links not established for indirect costs because they have to be linked to account numbers inserted by contractor.
General
Description
Ledger
Reference
Direct Labor
General & Administrative:
656,824
Summary SCHED H
SCHED B
S alaries
Holiday Wages
Vacation Wages
S ick Leave
Personal Absence
90,007
2,321
5,812
987
1,082
Overhead Pools:
SCHED C (x)
Wages
Holiday Wages
Vacation
S ick Leave
S everance Pay (in full)
33,060
20,181
25,440
14,318
32,419
Intermediate Pools:
Occupancy Wages
Overtime Premium (in ODCs)
Overtime Premium
23,280
270
-
Other Adjustment to arrive at Total Payroll Distributed (Provide detailed
support)
TOTAL LABOR DIS TRIBUTION
906,001
11
6
SCHED D (x)
Schedule M—Accounting/Organization
Changes, etc.
This schedule provides information to the
auditor related to the following:
Significant decisions, agreements or
approvals (e.g. pension plan, billing rates or
contract ceilings)
Significant accounting or organization
changes (e.g. changes to indirect pool
structure or mergers and acquisitions)
11
7
Schedule N—Certificate of Indirect Costs
Certificate of Final Indirect Costs
Fiscal Year End - 3/31/2009
This is to certify that I have reviewed this proposal to establish final indirect cost rates
and to the best of my knowledge and belief:
1. All costs included in the proposal __(identify proposal and date]
____________________________________ to establish final indirect
cost rates for ______(identify period covered by rate)
are allowable in accordance with the cost principles of the Federal
Acquisition Regulation (FAR) and its supplements applicable to the
contracts to which the final indirect cost rates will apply; and
2. This proposal does not include any costs which are expressly
unallowable under applicable cost principles of the FAR or its
supplements.
Firm:_____________________________________________________________
Signature:________________________________________________________
Name of Certifying Official:_________________________________________
Title:_____________________________________________________________
Date of Execution:_________________________________________________
FAR Part 52.242-4-- Certification of Final Indirect Costs.
As prescribed in 42.703-2(f), insert the following clause:
Certification of Final Indirect Costs (Jan 1997)
(a) The Contractor shall -(1) Certify any proposal to establish or modify final indirect cost rates;
(2) Use the format in paragraph (c) of this clause to certify; and
(3) Have the certificate signed by an individual of the Contractor's organization
at a level no lower than a vice president or chief financial officer of the business
segment of the Contractor that submits the proposal.
(b) Failure by the Contractor to submit a signed certificate, as described in this
clause, may result in final indirect costs at rates unilaterally established by the
Contracting Officer.
(c) The certificate of final indirect costs shall read as follows: (see above)
118
Schedule O—Contract Closing Info
Contract No.
Performance Period
To
Order No. From
Cost Type:
Subcontract-Clark Inc.
N00060-95-C-0913
Time & Material
N00022-96-D-0111
001
Ready
To Contract Ceiling
Fee(3)
Close(1)Amount (2)
2/16/05
10/16/06
2/28/09 Yes
12/28/08 Yes
1,000,000
1,750,000
7/1/06
12/31/08 Yes
25,000
60,000
112,000
Level of Effort
Cumulative Hours
Required Actual Notes
15,000
27,500
Preparation Notes:
(1) Indicate whether the contract is ready to close based on all information available. If the contract is not
ready to close (e.g., a contract modification is being pursued), the reasons why should be stated in a footnote:
(2) Provide the overall contract ceiling amount before fee, for the type of contract.
(3) Provide fee amount as provided by the contract. Include details of the fee computation for all flexibly
priced incentive fee and level of effort type contracts, along with the contract modification used, in a footnote.
11
9
14,588
28,950
DCAA website
120
EXPLORING ICE MODEL
ICE MANUAL.DOC
Complete Instructions for Using the ICE
Model
121
EXPLORING ICE MODEL
Includes Two Excel Files :
ICE_Model(2.0.1c).xls - Template for Use
in Preparing Incurred Cost Proposal
ICE_Demo(2.0.1c).xls – Sample File with
Data
122
Other Schedules Provided by ICE
The ICE program provides the following
additional Schedules:
Computation of Allowable IR&D/B&P costs (usually
only applicable to major contractors)
Comparative Analysis by pool and account
Reconciliation of claim to corporate income tax return
Contract Brief
Executive Compensation form
12
3
Penalties (FAR 42.709):
Penalties will be assessed if a contractor
claims an expressly unallowable indirect
costs (as noted in FAR 31.2) in an incurred
cost submission
Two levels of penalties
12
4
Common Deficiencies:
Signed certification not included or not signed by at least
a Vice President or CFO (schedule N)
Lack of subcontractor information (schedule J)
Not all intermediate allocations disclosed (sch. D)
Unallowable costs not included in G&A base (sch. E)
IR&D/B&P not fully burdened (sch. B)
Physically complete contracts not shown on sch. I & O
Government participation not calculated for all final
indirect rates (schedule H-1)
12
5
Frequently Asked Questions:
Do I have to use the ICE model?
No, contractor may use any format; However, the ICE
model does provide all the schedules required per
FAR 52.216-7
12
6
Frequently Asked Questions:
Can DCAA grant an extension for
submitting my final incurred cost rate
proposal?
No. Extensions for submitting final rate proposals can
only be granted by the administrative contracting
officer per FAR 42.302 and FAR 42.705-1(b)(1)(ii). To
locate your responsible administrative contracting
officer, please contact the Defense Contract
Management Agency (DCMA).
12
7
Frequently Asked Questions:
When will DCAA determine adequacy of my
incurred cost submission and perform the
incurred cost audit?
Auditors should evaluate a contractor’s incurred cost
proposal upon receipt and immediately notify the
contracting officer of significant deficiencies.
It is DCAA policy that indirect submissions will be
audited as promptly as possible after receipt.
12
8
Frequently Asked Questions:
I’m preparing my submission(s) (e.g. contract pricing proposal,
forward pricing rates, incurred cost, etc.) and would like to ask
the DCAA auditor some specific questions on my submission
to make sure I’m on the right track. Will the DCAA auditor give
me some specific advice on how to prepare my submission?
Answer: A DCAA auditor can answer general questions related to the acquisition
regulations. For example, if a contractor asked advice on what the FAR requires
in certain situations, a DCAA auditor would be able to provide that information.
Auditors may also provide general advice on what constitutes an adequate
submission. However, auditors are precluded from assisting contractors in
preparing and developing the contractor’s submission because doing so would
create a significant threat to the auditor’s independence. Contractors should look
under the “Guidance” and “Checklist and Tools” tabs on DCAA’s website for
guidance about the adequacy of their specific submission.
12
9
Questions?
130

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