How to Record Exec Comp Above Benchmarks
Reclassifies executive compensation that exceeds the statutory FAR 31.205-6(p) benchmarks to an unallowable account.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable G&A - Excess Compensation | Debit | 75,000.00 | - |
| Allowable G&A - Executive Salaries | Credit | - | 75,000.00 |
💡 Accountant's Note
Government contractors are limited in the amount of executive compensation that can be charged to federal contracts. This entry moves the portion of salary exceeding the annual cap to a non-reimbursable (unallowable) cost center.
Practitioner & Systems Framework
💻 ERP Architecture
Requires manual journal entry or a specific payroll mapping code for 'Unallowable' labor types.
⚠️ Audit Flags
Executive salaries exceeding the OFPP benchmark without proper downward adjustment in the Indirect Cost Rate Proposal.
📄 Required Documentation
Current year OFPP compensation cap notice and executive payroll records.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
Related Journal Entries
Defense, Aerospace & Government Contracting
Cost-Plus-Fixed-Fee (CPFF) Contract — Revenue Recognition as Costs Are Incurred
Defense, Aerospace & Government Contracting
Firm Fixed-Price (FFP) Contract — Cost-to-Cost Percentage of Completion Revenue
Defense, Aerospace & Government Contracting
Time & Materials (T&M) Contract — Revenue at Contractual Labor Rates Plus Material Cost
Discussion & Community Questions
Loading comments...