Avoid These Red Flags in Your Incurred Cost Submission

Submitting your Incurred Cost Submission (ICS) is a critical responsibility for government contractors working under cost-reimbursement contracts. Required annually by the Defense Contract Audit Agency (DCAA), the ICS shows how your actual costs compare to your provisional billing rates. But too often, contractors submit incomplete or non-compliant reports—raising red flags that can lead to audits, questioned costs, and payment delays.

Here are common red flags in your Incurred Cost Submission to avoid:

• Inaccurate or missing schedules (particularly Schedules A through N)
• Failure to reconcile billed costs to your general ledger and job cost reports
• Unsegregated unallowable costs, which must be clearly identified and excluded
• Unsupported indirect rate calculations without a clear basis for allocation
• Missing or incorrect subcontractor cost data
• Inconsistent treatment of costs across contracts and reporting periods

The DCAA looks for consistency, transparency, and documentation. Submitting a poorly prepared ICS can trigger additional scrutiny or even put future contracts at risk.

At N5 Specialized Accounting Services & Support, we specialize in preparing accurate, DCAA-compliant Incurred Cost Submissions that help government contractors stay in good standing. Our team ensures your submission is complete, well-documented, and defensible—so you can focus on running your business, not worrying about audits.