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These costs are generally referred to as Unallowable Costs.
Also, the government will not knowingly negotiate a fixed price contract based on cost or pricing data including any unallowable costs. Unallowable costs are prohibited from any billing, proposal or claim. Also, penalties can be assessed for passing such costs onto the government. The governing regulation for unallowable costs, general accounting practices and other financial rules is FAR This regulation is invoked any time cost analysis by the government is required.
These regulations especially FAR I have 25 years direct and focused unallowable cost experience and a good resource for guidance on this subject. The majority of government contractors are subject to these regulations.
Failure to comply with FAR As important as this subject is, there are few resources available to small business contractors that explain the requirements in universally understandable terms.
Also, quick access to common questions is not always simple. Please contact me for questions regarding FAR I have written a handbook titled, FAR I provide this handbook to my clients free of charge it is not available for sale.
I classify unallowable costs in two distinct categories. One is Expressly Unallowable Costs. These are costs that are unallowable under any and all circumstances, no exceptions. This is a manageable list. This list includes the following items. Interest Expense FAR Some associated costs include related legal and professional fees incurred in connection with propectuses, the costs of preparing stock rights are generally unallowable with special rules.
However, interest assessed by certain state and local taxing authorities are allowable under certain conditions. Suggest the author be contacted on these special rules. It also includes costs associated with social activities including social, dining, country clubs and similar organizations are unallowable.
Bad Debts FAR Fines and Penalties FAR Specifically, the costs associated with the mischarging of costs to government contracts is unallowable. Losses on Contracts FAR However, the costs of executive bonuses, employee savings plans and employee stock ownership plans are not considered organization or re-organization costs and are not made unallowable by this principle.
Such costs are addressed by FAR Alcohol — Alcohol is expressly unallowable under all circumstances. Personal Use — Personal use of anything as compared to business purpose is unallowable.Welcome to eAuditNet.
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WQA November Committee Schedule *NOTICE* All of the WQA Committee meetings for the month of November have been cancelled. Administrative/Finance Committee, November 6, at 10am – CANCELLED Engineering Committee, November 6, at 11am – CANCELLED Legislative/Public Information Committee, November 7, at 11am – CANCELLED.