Preparing an account for government review is often the moment when financial systems and business practices are tested most visibly. The process has little room for improvisation, and organizations that arrive with incomplete or inconsistent records quickly learn the consequences.
Federal rules provide the structure, auditors apply the standards, and contractors must be ready to meet those expectations. For many, the challenge is less about individual transactions and more about presenting a submission that reflects accuracy, consistency, and credibility from the first page onward.
Start With Scope and Timelines
Cost-reimbursement and several other contract types contain the Allowable Cost and Payment clause, FAR 52.216-7, which drives the requirement to submit a final indirect cost rate proposal. The rule generally gives six months after the fiscal year end to provide the incurred cost submission. FAR 42.705-1 details how government representatives review adequacy, initiate audits, and settle rates. When the package is assembled carefully, the adequacy check is faster, audit cycles are shorter, and unnecessary rounds of clarification are avoided.
Configure Pools and Bases to Match Disclosed Practices
The DCAA ICE Model provides the standard framework for preparing incurred cost submissions, and the ICE Manual explains how the setup tab determines which schedules appear. Contractors must configure indirect pools and allocation bases to match disclosed methods and accounting records, covering G&A, overhead, fringe, material handling, or intermediate pools where appropriate. FAR Part 31, available at acquisition.gov, remains the guiding source during audits and sets the standards for allowability, allocability, and reasonableness.
Build the Backbone Records First
Schedules H through L represent the backbone of the submission, covering costs by contract, cumulative allowable cost worksheets, subcontract details, T&M labor, and payroll reconciliations. The ICE Manual enumerates each schedule in detail. Every amount claimed must tie to auditable records, because FAR 52.215-2 gives the government audit access to supporting books. Organizations with clear job cost ledgers, labor distribution reconciliations, and subcontract files in place are positioned for smoother reviews.
Prepare the Package the Way DCAA Reviews It
The Checklist for Determining Adequacy of Contractor Incurred Cost Proposal (Version 3.4) is the official tool DCAA auditors use when conducting adequacy reviews. DCAA CAM Chapter 6 requires its use and notes the 60-day timeline for providing adequacy notifications. Structuring a submission in checklist order, and addressing each line with clear cross-references provides reviewers with what they expect and can prevent costly delays.
Address Allowability and Facilities Capital Cost of Money Up Front
FAR 31.201-2 defines allowability, allocability, reasonableness, and compliance with contract terms. Where facilities’ capital cost of money is claimed, FAR 31.205-10 provides the standards, and ICE includes Schedule F for calculating the factors. Preparing those calculations and linking them to auditable support before submission keeps the audit exchange focused and efficient.
Reinforce Documentation Beyond The Minimum
Strong submissions often go beyond meeting the baseline checklist and provide explanatory notes, reconciliation schedules, or narrative summaries that show how costs flow from ledgers to ICE schedules. While not mandated, these supporting materials can reduce follow-up requests from auditors and contracting officers.
They also demonstrate a proactive stance toward compliance, which builds credibility and strengthens working relationships with oversight agencies. Contractors who invest time in these enhancements tend to experience fewer audit adjustments and faster closeouts.
Close With Certification and Rate Settlement Mechanics
Each submission must include the Certificate of Final Indirect Costs, FAR 52.242-4. The ICE workbook integrates the certificate at Schedule N. Once the package is complete, the final rate process follows FAR 42.705 and DFARS 242.705, with rate determinations made by contracting officers or auditors. The Defense Contract Management Agency manual explains how administrative contracting officers process rate agreements and adopt audit recommendations.
Keep Current With the Latest ICE Release
The DCAA ICE Model download page lists the latest releases, including the August 2025 Power Query version and the legacy Visual Basic version. Confirming the current version before compiling the submission avoids format mismatches that could slow adequacy review. The ICE Manual remains the official reference for preparing schedules and supporting documentation.
When Outsourcing Strengthens Compliance and Cycle Time
Organizations that want predictable timelines, well-structured submissions, and audit-ready records often partner with specialists who operate daily inside FAR Part 31 and DCAA processes. Diener & Associates supports government contractors with dedicated attention, preparing ICE-ready records, mapping ledgers to schedules, assembling adequacy checklist documentation, and assisting through audit exchanges until rate agreements are signed.
At Diener & Associates, decades of experience supporting government contractors, nonprofits, and service businesses have shown that a proactive strategy to compliance supports long-term success. Schedule a consultation online or contact us at 1-(703)-386-7864 to speak with our professional CPA team.