Incurred Cost Schedules E to O

Each year Defense Department contractors working on cost reimbursable contracts must submit an incurred cost submission to DCAA. The incurred cost submission lays out all the prior year’s expenses and contract activity to determine your fringe and overhead rates.

Schedule E — Claimed Allocation Bases by Element of Cost Used to Distribute Indirect Costs

Schedule E is called “Claimed Allocation Bases by Element of Cost Used to Distribute Indirect Costs”. A mouthful for a basic summary form. Schedule E summarizes the total pool amount and base amounts which make up the rates for overhead and G&A. This schedule pulls totals from other schedules to compute the rates.

Schedule F — Facilities Capital Cost of Money Factors Computation

Facilities Cost of Money (COM) is a computation intended to provide contractors with funds to offset the cost of large construction projects. Schedule F shows the computations for the incurred cost for cost of money. Most small contractors do not compute and charge cost of money but they should look at their contracts for those where it can be charged.

Schedule F-1 — Calculation of Average Net Book Values

Schedule F-1 is supplemental information for Schedule F and the Cost of Money calculation. This schedule lists the value of property subject to the cost of money, less the value already charged as part of overhead and general & administrative rates.

Schedule G — Reconciliation of Books of Account and Claimed Direct Costs

Schedule G is the Reconciliation of Books of Account and Claimed Direct Costs by major cost element. This schedule gathers values from Schedule H and puts them into the column labeled Amount Per General Ledger. Then you enter any adjustments to get the amount claimed. Major direct cost elements are direct labor, travel, materials, subcontracts and other direct costs. Adjustments are entered for unallowable costs and costs precluded by the contract (for example, cost overruns).

Schedule G-1 — Reconciliation of Claimed Direct Costs to Job Cost Ledger

Schedule G-1 goes along with schedule G. G-1 compares the direct costs from the general ledger (Schedule H) to the company’s job cost ledger. You enter the job cost ledger balances for each cost element and explain any differences. You will have differences for adjustments made on schedule G (unallowable costs and precluded contract costs).

Schedule H — Schedule of Direct Costs by Contract/Subcontract

The Schedule of Direct Costs by Contract/Subcontract and Indirect Expense Applied at Claimed Rates is Schedule H. Schedule H is an important schedule as it feeds a number of other schedules and details your direct projects and associated costs. On this schedule you list all your Federal contracts sorted by contract type. The first group is all cost reimbursable type contracts. Then list time & materials contracts followed by fixed price contracts. At the end list commercial work you have performed. You have to spread your overhead and general & administrative costs over all types of work including non-Federal government work.

Cost type contracts are listed individually in the first section and require the most focus of your efforts. These are the contracts which will be affected by the incurred cost submission and allow you to possible invoice for more money or owe money to the government. The following information is entered for cost reimbursable type contracts:

· Job or task order number

· Contract number

· Subcontract number, if any

· Labor cost

· Travel

· Materials and other direct costs

· Subcontractors and consultants

Total direct costs is then summed and multiplied by the overhead rate as computed and shown on Schedule A to obtain the actual cost reimbursable amount. General & administrative costs and cost of money are added to get the grand total. I also add a column showing any internal contract number used to track the project. This information is very useful during the incurred cost review and audit to track down exactly the invoices and cut-offs dates used. For other flexibly priced contracts list the same information as for cost reimbursable contracts.

Time & materials and fixed price contracts can be listed individually or grouped together depending on the size of the contracts and number of them. For these contracts you do not need to include the amounts invoiced or the difference between cost and invoiced amounts. Commercial work is also listed and can be totals.

A grand total of all columns is included and should match your records.

Schedule H-1 shows the percentage of total work for each contract type. This is used to show how much of your work is cost type work and to help DCAA focus their efforts. Summary of Schedule H tab pulls data from other schedules to present totals of the different direct cost types. The summary schedule is what feeds other schedules instead of Schedule H. This lets you modify Schedule H to fit your contracts and not break formulas on other schedules.

Schedule I — Schedule of Cumulative Direct and Indirect Costs Claimed by Contract/Subcontract

The Schedule of Cumulative Direct and Indirect Costs Claimed by Contract/Subcontract compares the amount invoiced as of the date of the incurred cost submission to the actual cost from Schedule H. I also add a column showing any internal contract number used to track the project and the invoice number and date. This helps track down the backup invoices during an audit. A column showing the difference between the Schedule H grand total and the invoiced grand total is shown to reflect the amount owed either to you or to the government. Ideally this should be close to zero.

Other information shown on Schedule I includes:

· Contract number

· Subcontract number

· Task or order number

· Subject to penalty clause — yes or no

· Prior years settled costs, if any

· Current year costs from Schedule H

· Less any contract limitations

· Date billed through

· Last invoice number

· Total billed through the last invoice number

· Over or under billing

· Physically complete — yes or no

Subject to penalty clause refers to the FAR 42.709 penalty clause if you purposely overbill the government on a project. Physically complete means the contract is fully completed and closed during the year.

Schedule I shows two contract types — cost reimbursable and time & materials. Time & materials is included when you charge a handling fee on materials which is cost based.

Schedule J — Schedule of Subcontract Information

Schedule J lists information regarding subcontracts issued for various contracts you have. The information is separated by contract type. Information shown is subcontract number, prime contract number, subcontractor name and address, subcontractor point of interest, value, period of performance and contract type.

Schedule K — Schedule of Hours and Amounts on Time & Material/Labor Hour Contracts

The Schedule of Hours and Amounts on Time & Material/Labor Hour Contracts tab is for when you have time & materials and/or labor hour contracts and charge a general & administrative rate on top of the labor charge. The additional G&A is normally applied to travel and other direct costs. The schedule’s rows list the various labor categories used on the applicable contracts. There are then three columns for each time & materials/labor hour contract. Each contract shows the rate for the labor category, hours billed and the total by labor category.

Schedule L — Reconciliation of Total Payroll per IRS Form 941 to Total Labor Costs Distribution

Schedule L compares the amounts you reported on your quarterly IRS form 941’s to the amounts from Schedules B, C and D for labor. The total amount of labor reported elsewhere in the incurred cost spreadsheet should match the total reported to the IRS. There may be amounts accrued in the current year but paid the following year which will be shown as adjustments. I recommend you keep a copy of all supporting documents (941’s, adjustment source documents) in your incurred cost submission file so they are handy during the audit.

Schedule M — Listing of Decisions/Agreements Affecting Direct/Indirect Costs

On tab M you list any accounting and organizational changes which impact the incurred cost submission. For example, if you change how you compute depreciation then the change is reported on this schedule.

Schedule N — Schedule of Final Indirect Costs

Schedule N, the Schedule of Final Indirect Costs, is where you signed the incurred cost submission and certify it contains only allowable costs and is substantially correct. This is a required statement that is to be included with each incurred cost submission.

Schedule O — Schedule of Contract Closing Information

Back on Schedule I you may have marked some contracts as physically complete. Each of the projects so marked are listed on Schedule O. Schedule O shows:

· Contract number

· Order or task number

· Period of performance

· Contract cost ceiling amount

· Contract fee amount

· Level of effort hours — required by the contract and actually incurred

· Any applicable notes

Cost type and time & materials contracts are separately grouped and listed individually.

Schedule Suppl A-1 — Comparative Analysis of Indirect Expense Pools — Overhead

This supplemental schedule is not required but useful as the DCAA auditors will look at these figures to determine costs that have changed drastically and focus their efforts on these costs. Schedule A-1 pulls information from Schedule C for the current year. The amounts for each account from the prior year are entered. A-1 computes the dollar and percentage change for each account between the two years. It also computes the ratio the expense is to total expenses. Schedule A-1 is for Overhead accounts.

Schedule Suppl A-2 — Comparative Analysis of Indirect Expense Pools — G&A

Schedule Suppl A-2 — Comparative Analysis of Indirect Expense Pools — G&A is similar to Supplement A-1 but lists the general & administrative accounts from Schedule B.

Schedule Suppl A-3 — Comparative Analysis of Indirect Expense Pools — Intermediate Cost Pools

Supplement A-3 is similar to Supplements A-1 and A-2 but shows the expense accounts for any additional cost pools such as material handling and occupancy.

Schedule Suppl A-4 — Comparative Analysis of Direct Expense Pools

Supplement A-4 is for the same reporting purpose as Supplements A-1, A-2 and A-3 but shows the direct cost accounts from Schedule H.

Schedule Suppl B — Executive Compensation

Supplement B may be required but is not required for many small companies. Supplement B lists the total compensation for the highest five paid employees.

Schedule Suppl C — Prime Contracts where you work as a subcontractor

Supplement C lists the prime contracts under which you have a subcontract. The information shown is:

· Subcontract number

· Subcontract type

· Prime contract number

· Date prime started contract

· Your (subcontract) period of performance

· Subcontract value

Schedule Suppl O — Contract Briefing

Contract briefings are not normally submitted with the incurred cost submission but they can be included.

The incurred cost submission is required each year you are working on a cost reimbursable contract or flexibly priced contract based on your actual costs. It is due six months after the close of your fiscal year and is submitted to DCAA. It needs to be drafted during the year to ensure your progress billings are close to actual and then complete a final version.