What is the Incurred Cost Proposal?
The Incurred Cost Proposal (ICP) is an annual reconciliation of all costs (direct and indirect), for all contracts and contract types, which provides a final indirect cost rate to update provisional or interim invoices. ICPs are required when FAR 52.216-7 “Allowable Cost and Payment” is included in any of your contracts. This clause is required for cost-reimbursement and time-and-materials (T&M) contracts (other than a contract for a commercial item).
When is it due?
Within 6 months following the expiration of your fiscal year. With many companies using the calendar year as their fiscal year (12/31), this means your ICP is due June 30.
Often, government contractors wait until mid-year to calculate final rates as part of their ICP, discovering invoicing variances, inconsistencies, and other “sins” only after the fact.
How Left Brain Professionals can help!
Left Brain Professionals can review your contracts to determine if the requirement exists and work with your contracts and accounting personnel to gather the required data for submission.
As you closeout 2014, now is the time to review the ICP information requirements while preparing your year-end financial statements and tax packages. The information is fresh and ready right now, and discrepancies will be easier to resolve now than in 4 or 5 months. One common example we see, is companies struggling to capture the appropriate data for the Schedule L labor due to the design of their chart of accounts and cost pools.
Left Brain Professionals gives you access to over a decade of government contract accounting experience including:
- Designing a Chart of Accounts
- Defining cost pools
- Developing budgets
- Implementing review & reconciliation processes
- Preparing the Incurred Cost Proposal
For more information on how we can help you maintain and increase profit margins through improvement of your ICP process in 2015, contact us today!
How to Complete the Incurred Cost Proposal with Success!
Our presentation from NCMA’s World Congress 2014.
What resources are available?
- DCAA Policy and Procedure for Sampling Low-Risk Incurred Cost Proposals
- DCAA Incurred Cost Electronically (ICE) Model
- DCAA Incurred Cost Proposal Adequacy Checklist
- DCAA Incurred Cost Submissions (Help for Small Businesses)
- DCAA Post Year End Incurred Cost Audit
- DCAA Audit Guidance Memos (search for “Incurred Cost”)
- “Contractor Incurred Cost Proposals” by McKenna Long & Aldridge