Fringe Benefit Cost Allocation: Why DCAA Rejects Your Health Insurance Method
A California-based engineering contractor faced $11.4 million in questioned costs after DCAA auditors rejected their health insurance allocation methodology during their fiscal year 2024 incurred cost audit. The contractor’s practice of allocating health insurance premiums using headcount rather than labor hours violated Cost Accounting Standard 405 requirements for allocating costs based on causal or beneficial…