How to Record DCAA Interest Penalties
Accounting for interest penalties assessed by the DCAA for unallowable costs claimed on a final indirect cost rate proposal.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable Interest Penalty Expense | Debit | 12,000.00 | - |
| Accrued Liabilities | Credit | - | 12,000.00 |
💡 Accountant's Note
Penalties and interest on disallowed costs are strictly unallowable per FAR 31.205-20 and must be segregated in the general ledger to avoid inclusion in overhead pools.
Practitioner & Systems Framework
💻 ERP Architecture
Use a unique 'Unallowable' account code suffix (e.g., -999) to automate exclusion from the cost pool.
⚠️ Audit Flags
High-risk item for DCAA Form 1 audits; ensure the account is excluded from the indirect rate base.
📄 Required Documentation
DCAA audit report, contracting officer's final decision, and payment schedule.
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