How to Record Unallowable Overtime Premium
Accounting for overtime premiums paid to employees that exceed the limits authorized in FAR 22.103 or the specific contract terms.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable Overhead - Labor Premium | Debit | 3,200.00 | - |
| Accrued Payroll | Credit | - | 3,200.00 |
💡 Accountant's Note
Overtime premiums are generally unallowable unless approved by the CO. Premiums paid without approval must be segregated into an unallowable overhead pool to prevent them from being allocated to government contracts.
Practitioner & Systems Framework
💻 ERP Architecture
Configure payroll labor categories to automatically split base pay (allowable) from unauthorized premium (unallowable).
⚠️ Audit Flags
Labor distribution audits; comparison of overtime hours to authorized contract ceilings.
📄 Required Documentation
Overtime authorization forms (or lack thereof), payroll registers, and FAR 22.103 compliance review.
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Discussion & Community Questions
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