For government contractors, DCAA compliance is non-negotiable.
Adhering to the Defense Contract Audit Agency (DCAA) standards ensures your
business remains eligible for federal contracts while avoiding costly
penalties. Two critical aspects of compliance are SF 1408 pre-award audits and
Incurred Cost Submissions (ICS)—both crucial for maintaining a strong financial
standing.
What is SF 1408 and Why Does It Matter?
The SF 1408 (Pre-Award Accounting System
Survey) is a fundamental audit requirement for contractors seeking
cost-reimbursement contracts. This evaluation determines whether your
accounting system can properly track direct and indirect costs, segregate unallowable
costs, and maintain adequate timekeeping records. Failing the SF 1408 audit can result in
disqualification from bidding on government contracts.
To pass the SF 1408 audit, businesses
must:
Implement an approved accounting system
that aligns with FAR and DCAA guidelines.
Maintain accurate timekeeping and labor
distribution records.
Properly segregate direct and indirect
costs to ensure compliance.
Incurred Cost Submissions: Key to
Compliance
The Incurred Cost Submission (ICS), or ICE
Model, is required for cost-reimbursement contracts. The DCAA mandates that
contractors submit an annual Incurred Cost Electronically (ICE) submission to
justify direct and indirect costs. This submission includes:
Schedule of Direct Costs by Contract
Indirect Rate Computation
General and Administrative (G&A)
Expense Allocation
Adjusted Trial Balance
Submitting an accurate and DCAA-compliant
ICS helps businesses avoid penalties, costly audits, and contract disputes.
How DCAA Consulting Can Help
Navigating SF 1408 and Incurred Cost Submissions can be
overwhelming. DCAA Consulting provides expert guidance, helping businesses
implement compliant accounting systems, prepare for audits, and submit accurate
cost reports. Our team ensures that your accounting practices meet government
regulations, giving you confidence in your compliance efforts.
