Your company calculated fringe benefit rates by dividing total fringe costs by total payroll including both direct and indirect labor, then applied those rates to direct labor only when charging contracts—effectively allocating indirect employee fringe costs to direct contracts while excluding them from overhead calculations. During your incurred cost audit, DCAA discovered this inconsistency and…
Your company operated with a single overhead rate pooling all indirect costs—engineering support, facilities, administrative staff, and executive management—and allocating them to contracts using total direct labor as the base. During your DCAA audit, investigators discovered that your manufacturing operations consumed substantially more facility and equipment resources than your professional services work, yet both received…
Every year, thousands of small businesses win their first government contract and immediately make the same critical mistake: they assume their existing accounting system will work fine. After all, accounting is accounting, right? They’ve been tracking revenue, expenses, and profits for years. How different could government work be? The answer: dramatically different. Government contract accounting…
A major aerospace contractor faced $47.2 million in questioned costs after DCAA auditors discovered systematic violations of Cost Accounting Standard 420 regarding Independent Research and Development (IR&D) cost accounting. The contractor’s failure to properly segregate IR&D costs above the statutory ceiling resulted in contract termination, suspension from federal contracting, and civil penalties under the False…
