How to Record DCMA Level III CAR Remediation
Recording the costs to remediate a Level III Corrective Action Request (CAR) issued by DCMA for significant non-compliances in a contractor system.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable Costs - Remediation | Debit | 45,000.00 | - |
| Accrued Labor | Credit | - | 45,000.00 |
💡 Accountant's Note
While basic corrective action labor is often allowable, costs specifically associated with remediating systemic failures highlighted by a Level III CAR may be scrutinized and often classified as unallowable depending on the nature of the failure and DCAA interpretation.
Practitioner & Systems Framework
💻 ERP Architecture
Create a distinct sub-account for Level III remediation to ensure these costs are excluded from the final indirect rate proposal.
⚠️ Audit Flags
A Level III CAR usually triggers a follow-up audit from DCAA to ensure remediation costs are not billed to the government.
📄 Required Documentation
The official DCMA CAR notification, the remediation plan, and specific labor charge codes for the project.
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Expert Analysis by Qusai Ahmad
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