[Code of Federal Regulations]
[Title 48, Volume 7]
[Revised as of October 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR9904.405-50]

[Page 385]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
     CHAPTER 99--COST ACCOUNTING STANDARDS BOARD, OFFICE OF FEDERAL 
           PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET
 
PART 9904--COST ACCOUNTING STANDARDS--Table of Contents
 
Sec. 9904.405-50  Techniques for application.

    (a) The detail and depth of records required as backup support for 
proposals, billings, or claims shall be that which is adequate to 
establish and maintain visibility of identified unallowable costs 
(including directly associated costs), their accounting status in terms 
of their allocability to contract cost objectives, and the cost 
accounting treatment which has been accorded such costs. Adherence to 
this cost accounting principle does not require that allocation of 
unallowable costs to final cost objectives be made in the detailed cost 
accounting records. It does require that unallowable costs be given 
appropriate consideration in any cost accounting determinations 
governing the content of allocation bases used for distributing indirect 
costs to cost objectives. Unallowable costs involved in the 
determination of rates used for standard costs, or for the indirect-cost 
bidding or billing, need be identified only at the time rates are 
proposed, established, revised or adjusted.
    (b)(1) The visibility requirement of paragraph (a) of this 
subsection, may be satisfied by any form of cost identification which is 
adequate for purposes of contract cost determination and verification. 
The Standard does not require such cost identification for purposes 
which are not relevant to the determination of Government contract cost. 
Thus, to provide visibility for incurred costs, acceptable alternative 
practices would include:
    (i) The segregation of unallowable costs in separate accounts 
maintained for this purpose in the regular books of account,
    (ii) The development and maintenance of separate accounting records 
or workpapers, or
    (iii) The use of any less formal cost accounting techniques which 
establishes and maintains adequate cost identification to permit audit 
verification of the accounting recognition given unallowable costs.
    (2) Contractors may satisfy the visibility requirements for 
estimated costs either:
    (i) By designation and description (in backup data, workpapers, 
etc.) of the amounts and types of any unallowable costs which have 
specifically been identified and recognized in making the estimates, or
    (ii) By description of any other estimating technique employed to 
provide appropriate recognition of any unallowable costs pertinent to 
the estimates.
    (c) Specific identification of unallowable cost is not required in 
circumstances where, based upon considerations of materiality, the 
Government and the contractor reach agreement on an alternate method 
that satisfies the purpose of the Standard.