How to Record DCAA Questioned Costs
Accounting for a liability when the DCAA questions specific costs during an audit before a final decision is reached.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Provision for Disallowed Costs | Debit | 50,000.00 | - |
| Accrued Audit Liability | Credit | - | 50,000.00 |
💡 Accountant's Note
When an auditor questions a cost, the company should evaluate the probability of a refund or non-payment and accrue a liability if a loss is probable and estimable.
Practitioner & Systems Framework
💻 ERP Architecture
Record as a contra-revenue or expense adjustment depending on the nature of the cost.
⚠️ Audit Flags
DCAA Form 1 (Notice of Disallowance) or audit report draft.
📄 Required Documentation
DCAA audit report and internal memo documenting the probability of loss assessment.
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