Spring Means ICS Season!

For Government contractors with a cost reimbursable contract, spring typically means that it’s time to prepare your Incurred Cost Submission (ICS.) The purpose of this submission is mainly for the purpose of trueing-up actual costs to amounts that have been billed. Sounds simple enough, but the ICS requires 15 complex schedules to meet this objective.

Who must file? Any company with a contract containing FAR the Allowable Cost and Payment Clause 52.216-7 is subject to the ICS filing requirements. These are “cost plus” or time and Material (T&M) contracts.

When is the ICS due? Per FAR 52.216-7(d)(2), the ICS is due to your cognizant agency 6 months after the end of the company's fiscal year. Delinquency may result in a decrement factor (FAR 42.703- 2(c)(2)).

What are the basic steps to prepare the ICS? The schedules are listed under FAR 52.216-7(d)(2)(iii).

• Actual direct costs incurred during the fiscal year are listed by contract and reconciled to the General Ledger.

• Actual T&M hours per Labor Category and billing rates are provided.

• Actual indirect costs are shown by pool and account.

• Indirect pool allocations are shown by element of the allocation base.

• The resulting actual indirect rates are applied to the direct costs by contract.

• The total actual contract costs are added to prior year contract-to-date costs to determine the cumulative actual costs as of the end of the current fiscal year.

• These costs are then compared to cumulative billings as of the fiscal year-end, resulting in the amount due to or from the Government.

There’s more?!? Yes, additional schedules required include:

• Reconciliation of claimed compensation costs to those reported on IRS 941 forms

• The company’s subcontractor information

• Information and status of contracts physically complete

• Cognitive agency agreements

• Accounting or organizational changes

• Officer’s certification that the costs are accurate and allowable.

Several additional schedules may be required at the time of audit and can be helpful with the ICS preparation.

These submissions can be time consuming and require many complex schedules. deClermont Consulting can save you time and avoid pitfalls with the preparation of your submission.