Newsroom
How to Ace the ICE
Government contractors have six months from the end of their fiscal year to submit an Incurred Cost Proposal, known as ICE (Incurred Costs Electronically). Understanding its 61 pages of instructions and 24 schedules is the key to approval.
Glen Burnie, Maryland (December 9, 2010) For government contractors whose fiscal year follows the calendar year, the clock is about to start ticking. The Defense Contract Audit Agency (DCAA), the agency which audits contracts for Department of Defense (DoD) and some other agencies, requires an Incurred Cost Proposal within six months of the end of the company’s fiscal year.
Preparing that proposal, also known as ICE (Incurred Cost Electronically), is a daunting task. “The instructions alone are 61 pages,” said Veronica Eyenga, president and CEO of VBP OutSourcing, Inc., an accounting and marketing firm which services DoD contractors. “ICE itself is 24 complex spreadsheets, called schedules. It’s easy to make a mistake, and mistakes mean audits and possible delayed or reduced payments, as well as an inability to bid on future contracts.”
The time to avoid mistakes is before the end of the year, Eyenga added, by ensuring a company’s accounting system is DCAA compliant. “If your accounting system doesn’t meet DCAA standards now, the information you try to pull out of it to complete your ICE won’t either.”
The mistake many companies make, she noted, is not setting up their accounting systems to properly segregate and allocate direct, indirect and unallowable costs. “The DCAA wants a chart of accounts that shows the cost pools that make up each expense, and how those expenses are calculated. Companies have to understand the difference between overhead and G&A (General and Administrative) expenses, how to reconcile payroll with labor distribution, the internal controls and documentation the DCAA requires for every class of expenses, and other factors which often don’t apply to non-DCAA accounting.”
Most importantly, said Eyenga, companies need to understand the huge difference between an audit triggered by ICE issues and an audit by the IRS. “The IRS will negotiate. The IRS will tell you where the issues are. A DCAA auditor only tells you one thing: you pass, or you fail.”
Eyenga recommends using an accounting firm or other experienced consultant to prepare an ICE, at least the first time. And she urges companies to review their accounting systems before the end of the fiscal year for DCAA compliance. “General accounting packages, such as QuickBooks and Peachtree, aren’t DCAA-compliant out of the box. But they can be modified to meet DCAA regulations and make preparing an ICE much easier. But without a properly designed accounting system, a company might need every day of those six months to figure out their ICE, and still not get it right.”
For more information on DCAA-compliant accounting, contact VBP OutSourcing at 410-590-5000, or online at http:///www.vbpoutsourcing.com.
About VBP OutSourcing
VBP OutSourcing is a Maryland-based, professional accounting and marketing firm servicing the growing needs of DoD federal contractors. Whether you have a need for DCAA government cost accounting solutions via QuickBooks and Peachtree software or you need to strengthen the links between your company's brand and the federal government with a strong capability statement, website or brochure, our professional team is ready to assist. We've been helping government contractors gain more federal business and also meet their DCAA compliance requirements for over 12 years. For more information call 410-590-5000, email info@vbpoutsourcing.com or visit http://www.vbpoutsourcing.com.
