How to Record DCAA Penalties on Unallowables
Recording the accrual for penalties assessed under FAR 42.709-1 for including expressly unallowable costs in an indirect cost rate proposal.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Regulatory Penalties (Unallowable) | Expense | 15,000.00 | - |
| Accrued Liabilities | Liability | - | 15,000.00 |
💡 Accountant's Note
If DCAA identifies expressly unallowable costs in a final indirect cost rate proposal, they may assess a penalty equal to the amount of the unallowable cost plus interest. This penalty itself is unallowable.
Practitioner & Systems Framework
💻 ERP Architecture
Record in an unallowable expense account that is excluded from the overhead and G&A rate calculations.
⚠️ Audit Flags
DCAA Form 1 or audit report identifying expressly unallowable costs in the Incurred Cost Submission.
📄 Required Documentation
DCAA Audit Report, FAR 42.709-1 penalty calculation, and contracting officer's final decision.
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