If you’re a government contractor with a cost-reimbursement contract, then you’re probably familiar with the Incurred Cost Submission (ICS) or at least you’ve heard the term.
But despite its importance, many contractors treat ICS filing as an afterthought. The result? Rejected submissions, increased audit risk, and in some cases, withheld payments. At PWCPA PC, we’ve helped numerous clients avoid these pitfalls and turn their ICS process into a consistent, reliable part of their compliance strategy.
Let’s talk about what typically goes wrong and what you can do to get it right.
What Is an Incurred Cost Submission?
An Incurred Cost Submission is an annual report required by the DCAA (Defense Contract Audit Agency) for contractors working under cost-type contracts. It’s how you reconcile your actual indirect costs against provisional billing rates and justify your final rates and expenses for a given fiscal year.
In short: It’s how you prove to the government that the costs you billed were legitimate, allowable, and properly allocated.
Common ICS Mistakes We See
Even experienced contractors make errors in their incurred cost submissions. Some of the most common include:
- Missing or incomplete schedules (Schedule H and Schedule I are frequently mishandled)
- Mismatched data between general ledger and billed costs
- Incorrect indirect rate calculations
- Failure to properly allocate direct and indirect costs
- Late submissions or failure to file altogether
These mistakes can raise red flags during audits, delay final payments, or even trigger withheld funds under the contract.
What DCAA Wants to See
The DCAA isn’t just checking for math errors they’re reviewing the submission for:
- Accuracy: Do your reported costs match your financial records?
- Completeness: Have you included all required schedules and supporting docs?
- Consistency: Are your cost allocation methods consistent with FAR and CAS?
- Transparency: Can you clearly explain your rates, costs, and adjustments?
Getting your ICS right is about more than compliance; it’s about showing the government that you can be trusted to manage federal dollars responsibly.
How PWCPA PC Helps You Submit With Confidence
At PWCPA PC, we provide hands-on support throughout the entire ICS process. We help you:
- Prepare a complete and compliant ICS package
- Calculate accurate indirect rates and cost allocations
- Review general ledger and contract records for consistency
- Compile supporting documentation for each schedule
- Address auditor questions before they’re even asked
Our goal is to remove the guesswork and make sure your ICS isn’t just accepted, it’s airtight.
Don’t Wait Until the Deadline
ICS is due six months after the end of your fiscal year, but waiting until then to start the process is risky. Early preparation gives you more time to gather documentation, review your numbers, and reduce the risk of errors.
Need Help With Your Incurred Cost Submission?
Whether it’s your first time submitting or you’re refining your internal process, PWCPA PC is here to help you get it right and avoid the stress, risk, and delays that come with doing it alone.
Contact us today to schedule a consultation and take control of your ICS process.