The Auditor Strikes Back: Always a Bonus of Contention
As we reported in October, the Defense Contract Audit Agency (“DCAA”) Contract Audit Manual (“CAM”) was recently updated. One of the 13 areas of cost updated related to bonus and incentive compensation costs. This topic is covered in Chapter 7 of both the previous version and new version of the CAM. Bonuses and incentive compensation can mean many things including cash, stock, stock options, stock appreciation rights, phantom stock plans, and/or a combination of the aforementioned forms. Bonus and incentive compensation can also be paid in the short/current term or in the future/long term. These plans can differ greatly between contractors and. Read More.
Topics: Allowability, Bonuses and Incentive Compensation, Contract Audit Manual "CAM", DCAA, DCAA Contract Audit Manual, Defense Contract Audit Agency "DCAA", Deferred Compensation Other Than Pensions, Federal Acquisition Regulation "FAR"
Auditor Strikes Back: Appreciating Depreciation
The Selected Areas of Cost guidebook replaces Chapter 7 of the Defense Contract Audit Agency (“DCAA”) Contract Audit Manual (“CAM”). One of the 13 sections that have been rewritten and updated covers depreciation. Below we will take a deep dive into some of the new updates. When a contractor typically owns tangible personal property which provides services for a number of years, that cost is recorded as an asset (rather than expense) in the year the asset is acquired. According to the matching principle, a portion of the asset should be reported as an expense during each period of the. Read More.
Required Documentation in Support of Consultant Costs
By: Curt Smith, Manager, Government Contractor Services Group The allowability of consultant costs is sometimes a point of contention between contractors and Defense Contract Audit Agency (“DCAA”) auditors, and often the issue is insufficient documentation. What evidence is required by the Federal Acquisition Regulation (“FAR”) to document consultant costs sufficiently and how do auditors determine allowability given this requirement? A quick review of FAR and guidance for DCAA auditors concerning consultant costs will greatly help answer these questions. The general parameters of allowability for consultant costs are described in FAR 31.205-33 — Professional and Consultant Service Costs. However, other cost. Read More.
Auditor Strikes Back: Never an Idle Moment for Idle Facilities
As we reported in October, the Defense Contract Audit Agency (“DCAA”) Contract Audit Manual (“CAM”) was recently updated . One of the 13 areas of cost updated related to idle facilities. This topic is covered in Chapter 32 of the new Selected Areas of Cost Guidebook. The guidance related to idle facilities is mostly unchanged with respect to Federal Acquisition Regulation 31.2015-17(a); however, a few points were called out in the DCAA guidance. Indicators of when facilities may be considered idle are: The facility is completely unused. No current need is foreseen or can be demonstrated for the completely unused facility. The facility and/or equipment have been excluded from regularly scheduled maintenance. Read More.
ASBCA Holds that Leases are not Necessarily Subject to CAS 404
In Exelis, Inc., ASBCA No. 60131 (29 Aug. 2016), the Armed Services Board of Contract Appeals (“ASBCA”) held that a concern whether a building lease was a capital lease or an operating lease is not subject to Cost Accounting Standards (“CAS”) 404. In 2007, the Defense Contract Audit Agency (“DCAA”) released its audit of Exelis’ 2004 final indirect cost rates. DCAA questioned Exelis’ lease costs, finding that the building lease was a capital lease instead of an operating lease as claimed by Exelis and that Exelis could only include building depreciation in its indirect cost pool rather than the entire. Read More.
Topics: Armed Services Board of Contract Appeals "ASBCA", Cost Accounting Standards "CAS", Defense Contract Audit Agency "DCAA", Defense Contract Management Agency "DCMA", Federal Acquisition Regulation "FAR", GAAP, Indirect Cost Rates, leases
GAO Denies Bid Protest
The Government Accountability Office (“GAO”) has denied a bid protest challenging the agency’s evaluation of the protester’s proposal as unacceptable because the protester did not demonstrate that it had an accounting system that had been approved by the Defense Contract Audit Agency (“DCAA”). The National Security Agency (“NSA”) issued a small business set aside Request for Proposal for business, engineering, information technology, operations, and training support services. One of the evaluation subfactors was that offerors have an accounting system “that has been deemed acceptable for award by a [Defense Contract Audit Agency (DCAA)] audit at the time of proposal submission. Read More.