Government contractors subject to the Allowable Cost and Payment contract clause (FAR 52.216-7) must submit an adequate incurred cost proposal (ICP) within six months after the end of the fiscal year. A completed ICP provides the contractor with their claimed rates which, when approved, become final indirect rates for the period in question. In order to provide an adequate submission to the government, contractors must be knowledgeable of all the components of the incurred cost proposal and have an understanding of the proper treatment of costs to accurately calculate indirect rates. During our two-part webinar we will provide step-by-step guidance of each schedule and the required and recommended supporting documentation. We'll make sure you know how to properly present adjustments to general ledger amounts and how to document your working papers in preparation for an audit. Part I focused on general and job cost ledger related schedules. Part II of this two-part series will be focusing on other schedules, special issues and templates.

1. Detailed Preparation of the
Incurred Cost Proposal Part II:
Other Schedules, Special Issues &
Templates

2. We Know Government
Contract Accounting

3. Who we are
Left Brain Professionals is a boutique accounting firm that serves
government contractors. We specialize in accounting system design
& implementation, audit support, training, and cybersecurity
compliance.

4. Our Services
ACCOUNTING
• Accounting
Systems
• Monthly Support
Services
• CFO & Controller
Services
• Software
AUDIT SUPPORT
• DCAA Audit
Support
• DCMA Audit
Support
CYBERSECURITY
• CMMC
Compliance
TRAINING/TOOLS
• GovCon Training
• FCCM Calculator
• Indirect Rate
Calculator
• Proposal
Adequacy
Checklist

5. Our Team
Robert E. Jones
Government Contracts &
Accounting Expert
CPA, CPCM, NCMA Fellow
Melissa Metzger
Government Accounting &
Finance Advisor
MAFM, CPA Candidate
Steven Bressler
Government Contract
Associate
steve@LeftBrainPro.com
melissa@LeftBrainPro.com
robert@LeftBrainPro.com

6. Learning
Objectives
• Explain the importance of
comparative analysis.
• List three common issues with
labor reconciliation.
• Describe the proper treatment of
adjustments to the GL.
• List the four best practices when
working with templates.

7. Poll
Do you hire someone to help with your incurred cost proposal?
A. We do it all in-house.
B. We prepare it, but have an external review.
C. We prepare it in conjunction with an external party.
D. Someone else prepares it and we review it.

8. Other Schedules

9. Other Schedules
Cont…
Schedule J | Subcontract Information
You need a tool to track the subcontracts you
issue.

10. Other Schedules, Continued…
Schedule J | Subcontract Information, Continued…
Cont…

11. Other Schedules, Continued…
Cont…
Schedule K | T&M Hours & Dollars
• Data comes from timekeeping and/or
invoicing.
• Need hours and dollars by labor
category by contract.

12. Other Schedules, Continued…
Schedule K | T&M Hours & Dollars, Continued…
Cont…

13. Poll
On Schedule K, data comes from timekeeping and-
A. Employer Taxes
B. Invoicing
C. Healthcare
D. Retirement

14. Other Schedules, Continued…
Cont…
Schedule L | Labor Reconciliation
Should be easy, but often one of the most
difficult schedules to reconcile:
• W-2 labor accounts not easily identified
• W-2 labor comingled with other labor
• W-2 labor comingled with other expenses
• Adjusting journal entries instead of fixing
timesheets or labor distribution
• Significant payroll adjustments not reflected
in GL
• Incorrect payroll tax forms

15. Other Schedules, Continued…
Schedule L | Labor Reconciliation, Continued…
Cont…

16. Other Schedules, Continued…
Schedule M | Decisions, Agreements & Changes
Report significant changes in-
• Leadership
• Organizational Structure
• Policy or Procedure
• Accounting Software or Apps
• Treatment of Costs
Cont…

17. Other Schedules, Continued…
Schedule M | Decision, Agreements & Changes
Cont…

18. Other Schedules, Continued…
Schedule N | Certification
Signed by an owner or C-level executive.
Cont…

19. Other Schedules, Continued…
Schedule N | Certification, Continued…
Cont…

20. Poll
Which is one of the most difficult schedules to reconcile?
A. Schedule J |Subcontract Information
B. Schedule K | T&M, Hours & Dollars
C. Schedule L | Labor Reconciliation
D. Schedule M | Decisions, Agreements & Changes

21. Other Schedules, Continued…
Schedule O | Contract Closing Info
Cont…

22. Other Schedules, Continued…
Supplemental A-1 | Comparative Analysis of
Overhead (Optional)
Government is looking for trends and changes
from previous year(s). I include a comparative
analysis of fringe.
Cont…

23. Other Schedules, Continued…
Supplemental A-1 | Comparative Analysis of Overhead
(Optional), Continued…
Cont…

24. Other Schedules, Continued…
Supplemental A-2 | Comparative Analysis of
G&A (Optional)
Remember that G&A includes B&P and IRAD.
Cont…

25. Other Schedules, Continued…
Supplemental A-2 | Comparative Analysis of G&A (Optional),
Continued…
Cont…

26. Other Schedules, Continued…
Supplemental A-2 | Comparative Analysis of G&A (Optional),
Continued…
Cont…

27. Poll
What does G&A include?
A. B&P
B. IRAD
C. B&P and IRAD
D. None of the above

28. Other Schedules, Continued…
Supplemental A-3 | Comparative Analysis of
FCCOM (Optional)
Most small businesses do not utilize FCCOM so we
do not have it in our template.
Cont…

29. Other Schedules, Continued…
Supplemental A-4 | Comparative Analysis of Direct Costs (Optional),
Continued…
Cont…

30. Other Schedules, Continued…
Supplemental B | Contractor General Info
Compensation data is for five highest
compensated employees (whether or not an
executive or manager).
Cont…

31. Other Schedules, Continued…
Supplemental B| Contractor General Info, Continued…
Cont…

32. Other Schedules, Continued…
Supplemental C | ID of Prime Contracts
Data from well-organized contract management
tool.
Cont…

33. Other Schedules, Continued…
Supplemental C| ID of Prime Contracts, Continued…
Cont…

34. Other Schedules, Continued…
Supplemental O | Contract Briefs
Data from well-organized contract management
tool.
Cont…

35. Other Schedules, Continued…
Supplemental O| Contract Briefs, Continued…
Cont…

36. Poll
Compensation data is for the two highest compensated
employees.
A. True
B. False

37. ICP Supporting
Documents

38. ICP Supporting Documents
• Contract and subcontract details
including mods
• Timekeeping and invoicing details to
support Schedule K
• 941, 940 and W-3
• Year-End payroll summary
• Payroll journal entries
• List of documents supporting changes
• Prior year ICPs

39. Special Issues

40. Special Issues
• Unallowable costs
• COVID-19 Relief
• PPP loan forgiveness
• Section 3610 funds
• Employee retention credit
• Emergency paid sick leave

41. Using Templates

42. Using Templates
• Modify for your business
• Check formulas
• Use named ranges and tables
• Watch for hidden rows & columns

43. Poll
Which is considered an ICP Supporting Document?
A. Year-end payroll summary
B. Payroll journal entries
C. Prior years ICPs
D. All the above

44. Tips for the ICP

45. Tips for the ICP
• Add tab(s) for the trial balance and other
table-formatted data.
• Insert screenshots & documents (but
watch the file size).
• Clearly mark & identify reference
material, especially that submitted as a
separate file.
Cont…

46. Tips for the ICP, Continued…
• Keep a separate set of notes & working
papers documenting assumptions &
decisions.
• Some schedules are “optional”, but will be
required during an audit. Best to complete
them now.

47. Tools for the ICP

48. Tools for the ICP
Contract Lifecycle Management
• Software designed to track contracts,
subcontracts, modifications, clauses,
milestones, reports, etc.
• Generate contract briefs
Cont…

49. Tools for the ICP, Continued…
ICAT for QuickBooks
• Indirect Rates
• Job Costing
• Budgeting
• Incurred Cost Reports
Cont…

50. Tools for the ICP, Continued…
Other GovCon Accounting Software
• Unanet
• PROCAS
• SYMPAQ
• GovCon365

51. Poll
Why would you hire someone to help prepare your Incurred Cost
Proposal?
A. We don’t have the time.
B. We don’t have the time OR bandwidth.
C. It’s complicated & we don’t have the expertise.
D. All the above.

53. Save the Date! July 20-22, 2021
Join us for up to three days of educational sessions and earn up to 20 CPE credits
during our first annual GovCon Accounting Summit, a virtual learning experience for
government contract accounting professionals. Learn from industry leading accountants,
attorneys, and consultants on a variety of government contract accounting topics and see
some of the latest software tools in action during live demonstrations.
Visit www.GovConAcct.com for details.

54. Connect
with us
Download the presentation
Left Brain
Professionals Inc.
@LeftBrainPro
Email us
Support@LeftBrainPro.com
@LeftBrainPro
Left Brain Pro
LeftBrainPro
www.LeftBrainPro.com/presentations

55. For information on our upcoming webinars, visit us at
LeftBrainPro.com/events for more details.