A contractor’s Chart of Accounts (COA) must be set up to track unallowable costs separate from any indirect cost pool per FAR 31.205. For direct unallowable/unbillable costs, contractors need to develop a coding system to identify allowable direct costs separate from unallowable direct costs (ie travel costs in excess of JTR limits).
Unallowable costs should be excluded from any applicable indirect cost pool but must remain in the base of any indirect cost pool in order to receive its fair share of any indirect cost allocation it should have.
It is recommended that contractors:
· Develop a written policy regarding unallowable costs, the process by which all costs are to be measured against the FAR Part 31.205 Selected Cost clauses, the process by which they are to be identified, and what accounts they are to post against.
· A list of typical unallowable cost groupings may include but are not limited to: gifts, souvenirs, alcoholic beverages, entertainment, public relations/advertising costs, etc.
· These unallowable costs are very specific and may be based on facts and circumstances of a particular situation
FAR 31.205 1 Public Relations and Advertising Costs
FAR 31.205 2 Automatic Data Processing Equipment Leasing costs
FAR 31.205 3 Bad Debts
FAR 31.205 4 Bonding Costs
FAR 31.205 5 Civil Defense Costs
FAR 31.205 6 Compensation for Personal Services
FAR 31.205 7 Contingencies
FAR 31.205 8 Contributions or Donations
FAR 31.205 9 Reserved
FAR 31.205 10 Cost of Money (CAS 414/417) (also see 31.205 52)
FAR 31.205 11 Depreciation (CAS 404/409) (also see 31.205 16 and 31.205 52)
FAR 31.205 12 Economic Planning Costs (also see 31.205 27)
FAR 31.205 13 Employee morale, health, welfare, food service, and dormitory costs and credits
FAR 31.205 14 Entertainment costs
FAR 31.205 15 Fines, penalties and mischarging costs
FAR 31.205 16 Gains and losses on disposition or impairment of depreciable property or other capital assets (also see 31.205 11)
FAR 31.205 17 Idle facilities idle capacity costs
FAR 31.205 18 IR &D and B&P Costs (CAS 420)
FAR 31.205 19 Insurance and indemnification (CAS 416)
FAR 31.205 20 Interest and other financial costs
FAR 31.205 22 Lobbying and political activity costs
FAR 31.205 23 Losses on other contracts
FAR 31.205 24 Maintenance and repair costs
FAR 31.205 25 Manufacturing and production engineering costs
FAR 31.205 26 Material costs
FAR 31.205 27 Organization costs
FAR 31.205 28 Other business expenses
FAR 31.205 29 Plant protections costs (generally allowable)
FAR 31.205 30 Patent costs
FAR 31.205 31 Plant reconversion costs
FAR 31.205 32 Precontract costs
FAR 31.205 33 Professional and consultant service costs
FAR 31.205 34 Recruitment costs
FAR 31.205 35 Relocation costs
FAR 31.205 36 Rental costs
FAR 31.205 37 Royalties and other costs for use of patents
FAR 31.205 38 Selling costs
FAR 31.205 39 Service and warranty costs
FAR 31.205 40 Special tooling and special test equipment
FAR 31.205 41 Taxes
FAR 31.205 42 Termination costs
FAR 31.205 43 Trade, Business, Tech Professional costs
FAR 31.205 44 Training educational costs
FAR 31.205 46 Travel costs
FAR 31.205 47 Cost of Legal and other Proceedings
FAR 31.205 48 Deferred research and development costs
FAR 31.205 49 Goodwill
FAR 31.205 50 Executive lobbying costs
FAR 31.205 51 Costs of alcoholic beverages
FAR 31.205 52 Asset valuations resulting from business combinations
Please reference for more detailed information to each subpart;
http://www.dcaa-assist.com/dcaa-price-proposal-audits.htm
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