How to Record DCAA Pass-through Disallowances
Records the reclassification of subcontractor pass-through charges deemed excessive or unallowable by DCAA under DFARS 252.215-7004.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable Costs - Excessive Pass-through | Expense | 15,000.00 | - |
| Direct Subcontractor Expense | Expense | - | 15,000.00 |
💡 Accountant's Note
If a contractor adds no significant value to a subcontract, DCAA may disallow the associated overhead or profit (pass-through). This entry moves those costs to an unallowable account.
Practitioner & Systems Framework
💻 ERP Architecture
Use a specific 'Unallowable' cost element in the project accounting module to prevent billing to the government.
⚠️ Audit Flags
DCAA audit findings related to 'value-added' assessments on large subcontracts.
📄 Required Documentation
DCAA Audit Report (DAR) or Form 1 Disallowance notice.
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