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Path: Consulting Services arrow Report & Digest arrow GCA Report Articles arrow GCA Report 2000 arrow DCAA Audit Manual Updates - Selected Areas of Cost

DCAA Audit Manual Updates - Selected Areas of Cost

1.  Chapter 1705 acknowledges the 1999 class deviation allowing indirect costs associated with stepped up assets to not be disallowed.  Normally, asset values determined in accordance with either cost accounting standards and/or generally accepted accounting principles are included in the bases that usually include such costs (e.g. total cost input base, three factor formula used to allocate home office costs). FAR 31.203 requires the full amount of such costs to be included in the bases so as to cause the unallowable portion of the costs to absorb a portion of the overhead or G&A expenses.  Under the 1999 class exemption issued by DOD for contracts and subcontracts, the indirect costs allocable to the step-up asset value will not be disallowed.

2.  Chapter 7-1906.2(f) provides that bonus costs or other payments in excess of an employee’s salary that are part of restructuring costs associated with a business combination are unallowable under DOD contracts funded in FY 1996 or later.  The DFARS 231.205-6(f)(1) change does not apply to severance and early retirement incentive payments.

3.  Section 7-2110 clarifies that administrative fees resulting from use of bank and purchase card transactions are not interest on borrowings in spite of the fact they are commonly expressed as a percentage of the transaction cost.

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