[Code of Federal Regulations]

[Title 48, Volume 7]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR9904.405-50]



[Page 369]

 

            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.