Government adhering with
regulations and laws is not going to reimburse the contractors for particular
kinds of costs that may be incurred by it. These costs are called unallowable
costs. Also, government will never deliberately negotiate contracts with fixed
prices based on the pricing data or inclusive of unallowable costs. These costs
are prohibited from claims, proposal and billing. Also, the penalties would be
assessed well for passing costs like these onto government. These costs have
been made unallowable mostly by regulation (Federal Acquisition of Regulation)
FAR that is Subpart 31.2m, by decision of the contracting officer or by the
statute.
Contacting professionals with regards
to FAR 31.2
Besides the DCAA Audit, professionals shall help you
understand the accounting of unallowable costs. As you may be aware by now that
governing regulation for the different financial rules, general practices of
accounting and unallowable cost has to be FAR 31.2. This regulation gets
invoked any given time by government whenever cost analysis is required. There
are some other similar applicable regulations as well for universities,
colleges and non-profit organizations.
Handbooks are provided
For better understanding of unallowable cost accounting or any questions you have pertaining to FAR 31.2. There
are handbooks that you are helped with. These books have all the questions
explained and this is provided to clients without charging them. However, it is
certainly not meant for sale.
Two
separate categories
The unallowable costs are divided
into distinct categories namely unallowable expressly costs and the unallowable
circumstantial costs. Majority of items related to cost that FAR 31.2
addresses, fall into the latter’s category.
