How to Record Audit Reserve Release
Records the reversal of a liability reserve previously established for potential DCAA audit findings once the audit is closed or the statute of limitations expires.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Audit Liability Reserve | Liability | 50,000.00 | - |
| Indirect Cost Expense - Adjustment | Expenses | - | 50,000.00 |
💡 Accountant's Note
When an audit concludes with fewer questioned costs than anticipated, the over-accrued liability is reversed, effectively reducing the current period indirect expenses.
Practitioner & Systems Framework
💻 ERP Architecture
This entry should be made in the period the audit is finalized to ensure the indirect rate true-up is accurate.
⚠️ Audit Flags
Issuance of the DCAA Final Audit Report or execution of the Form 4549 (audit settlement).
📄 Required Documentation
DCAA Final Audit Report, settlement agreement, and original accrual calculation workpapers.
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