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Government Contractors

The Auditor Strikes Back: Updated Cost Allowability Guidance Published by DCAA

During late summer, the Defense Contract Audit Agency (“DCAA”) published a “Selected Areas of Cost” guidebook to replace Chapter 7 of the DCAA Contract Audit Manual (“CAM”). The newly refreshed guidebook provides further direction for auditors and contractors on how to properly treat certain types of costs listed in Federal Acquisition Regulation (“FAR”) 31.2 regarding allowability. Specifically, an unlucky 13 areas of costs have been updated with additional guidance. Those costs include:

  • Bonus and Incentive Compensation
  • Joint Ventures and Teaming Arrangements
  • Depreciation
  • Insurance
  • IR&D/B&P
  • Idle Facilities and Idle Capacity
  • Legal
  • Patents
  • Royalties
  • Consultants
  • Pensions
  • Alcoholic Beverages
  • Manufacturing and Production Engineering

Over the course of the next few months, Cherry Bekaert’s Government Contractor Services Group will explain the new changes for the areas of costs listed above. Please stay tuned to learn more about how to properly treat each cost area and help defend each cost as reasonable, allocable and allowable. We will provide tricks and tips on how to review each cost to defend against the auditor!

Stay tuned!

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