Month: February 2026

Your company incurred $145,000 in legal fees defending against an employment discrimination claim and $78,000 in consultant fees for “business advisory services”—both charged to indirect pools allocating across government contracts. During your incurred cost audit, DCAA questioned the entire $223,000, citing inadequate documentation supporting business purpose, lack of evidence demonstrating services were necessary and reasonable,…

Your company paid your CEO $875,000 in total compensation and charged the full amount to indirect pools allocating across all contracts including government work. During your incurred cost audit, DCAA applied the executive compensation benchmark limitation—currently $487,000 for the relevant year—and questioned $388,000 in excess compensation plus the associated fringe benefits and overhead allocation, totaling…