You must know about the DCAA Unallowable Costs in the first place so that you can include them during unallowable cost accounting. According to the Federal government, there are few costs that you cannot include in cost reimbursements, prices or settlements under contracts. Though a company is not prohibited from incurring such costs these will not be reimbursed either directly or indirectly for any federal government contracts. You will have to keep a separate account for managing such unallowable costs as per DCAA compliance.
The Unallowable Costs Categories
Advertising Costs are usually unallowable but can be reimbursed if it is necessary for the contract. Similarly, Public Relations Costs are not allowed with the exception of its specific requirement for the government contracts or as a cost of communicating with the press and public for specific accomplishments. You can include these costs also if the costs are related to matters of public information and concern in the form of notices of awards and other financial matters. During DCAA Audit alcoholic beverage cost, automobile cost, bad debt cost, claim appeals, defense, and prosecution cost will not be accounted.
Some Other Exclusion
In DCAA accounting there are some other costs excluded as well. These costs include donations, entertainment, contributions and executive lobbying for influencing an officer for a contract. Exemptions include penalties due to the violation of laws, personal goods and services, living expenses and even insurance cost for defective material and workmanship. Apart from that Interest and Investment Management, a cost paid to external parties for assets, losses, club membership, pre-contract cost unless approved, and airfare above lowest available discount are unallowable.
