How Costpoint Supports the Submission
The process starts with fiscal-year accounting data and project records. Costpoint can provide reports supporting indirect cost pools, allocation bases, direct contract costs, cumulative costs and billings, and other information used in the submission. The resulting schedules should be reviewed and reconciled before submission.
- Cost pool data: Identify indirect expense pools and the associated allocation bases used to calculate final rates.
- Project costs: Capture direct costs by project or contract and connect them with the appropriate accounting dimensions.
- Billing information: Compare cumulative costs with amounts billed during the fiscal year.
- Supporting schedules: Assemble required and applicable supplemental information for review and audit support.
Costpoint documentation notes that incurred cost submission reports assume accurate incurred cost submission codes and proper pool setup. The specific schedules required depend on the contractor and applicable requirements.
Key Schedules and Cost Data
An incurred cost submission generally presents indirect cost pools and bases, direct costs by contract, cumulative costs and billings, and supporting information. Costpoint reporting can help accounting teams organize this information from the underlying system records.
The chart of accounts is particularly important because final indirect cost schedules identify expenses by elements of cost recorded in the accounting system. Accurate GL coding helps connect transactions to the correct cost pools, indirect classifications, approvals, and reporting outputs.
Procurement records also contribute to the quality of project and cost data. Effective procurement controls connect requisitions, purchase orders, sourcing, approvals, spend visibility, and procure-to-pay activity with the accounting information used in the submission.
Indirect Rate Calculation
Final indirect cost rates are calculated from actual fiscal-year cost experience. A basic rate can be expressed as:
Indirect Cost Rate = Indirect Cost Pool ÷ Allocation Base × 100
For example, assume a contractor has $1,500,000 in a G&A pool and an allocation base of $7,500,000. The resulting rate is:
$1,500,000 ÷ $7,500,000 × 100 = 20%
The final rate can then be applied to the applicable base when determining indirect costs for contracts, subject to the contractor's established methodology and applicable contract requirements.
Costpoint also supports burden and indirect-cost structures through cost pools and burden templates, allowing organizations to apply pool rates and bases to project budgets and related accounting processes.
Deadline, Reconciliation, and Review
Under FAR 52.216-7, an adequate final indirect cost rate proposal is generally due within six months after the end of each fiscal year, with written extensions available for exceptional circumstances. The proposal must be supported by adequate data and based on the contractor's actual cost experience for the covered period.
Before submission, finance teams should reconcile the schedules to the general ledger and investigate differences between direct costs, indirect pools, allocation bases, and amounts previously billed. The review should also confirm that required supporting records are available for the claimed amounts.
After final indirect cost rates are settled, FAR 52.216-7 requires applicable contract billings and cumulative direct and indirect costs claimed and billed to be updated within 60 days.
Expense, Payment, and Validation Controls
Expense classification affects the accuracy of the final pools and bases. A Business Expense Incurred represents a business-related expense recognized as incurred and may become part of the accounting population reviewed for direct or indirect treatment.
An Employee Expense Incurred similarly captures employee-related business spending that must be recorded, classified, and supported consistently before it flows into applicable project or indirect-cost reporting.
Payment records should also remain connected to the accounting evidence supporting claimed costs. Controls over supplier approvals, payment methods, payment timing, discounts, and cash outflow help maintain a traceable vendor payment history.
Submission Validation provides a useful control concept for checking whether required data, schedules, classifications, calculations, and supporting records are complete and internally consistent before the incurred cost submission is finalized.
Automation and Operational Best Practices
Automation can connect transaction processing with the data-quality activities that support annual submission preparation. AR Automation Software can automate manual collection followups and matching of payments with invoices to reduce DSO by 40% and reconciliation cost by 80%.
For purchasing controls, Duplicaton Check checks for duplicate purchase requests using current inventory and existing PR data across cost centers. Early Payments Recommendations reviews early payment discounts, vendor terms, and cost of capital to recommend when to pay, while supporting payment approvals and processing to optimize timing for savings and vendor relationships.
Unlimited Access provides unlimited, cost-effective access for users with automated onboarding, role-based configurations, and 24/7 availability, supporting finance teams that need consistent access to workflow and accounting information throughout the submission cycle.
Summary
Costpoint Incurred Cost Submission combines fiscal-year accounting, project, indirect-cost, billing, and supporting data to prepare an accurate final indirect cost rate proposal. A disciplined process includes correct Costpoint setup, reliable cost pools and bases, schedule preparation, general-ledger reconciliation, validation, and timely submission. These practices help government contractors maintain clear financial records and support accurate final indirect cost settlement.