Selected Area of Cost Guidebook: FAR 31.205 Cost Principles

The Selected Areas of Cost guidebook replaces Chapter 7 of the DCAA Contract Audit Manual (CAM) in total.  This Guidebook addresses FAR 31.2 and other areas of cost audited.  In this first edition of the guidebook, we have expanded what used to be included in Chapter 7 by adding 23 additional chapters to address FAR 31.2 cost principles that had not previously been included in CAM.  Initially, many sections of the guidebook are a replica of what was in Chapter 7; however, we have rewritten and updated 13 areas of cost.  We will be continuing to rewrite the other chapters in this guidebook and will publish them as completed.  The 13 updated areas are:

        • Bonus and Incentive Compensation
        • Joint Ventures and Teaming Arrangements
        • Depreciation
        • Insurance
        • IR&D/B&P
        • Idle Facilities and Idle Capacity
        • Legal
        • Patents
        • Royalties
        • Consultants
        • Pensions
        • Alcoholic Beverages
        • Manufacturing and Production Engineering

 


Contents
Chapter Title
Chapter 1 Advertising and Public Relations
Chapter 2 Cost of Alcoholic Beverages
Chapter 3 Bad Debt
Chapter 4 Bank and Purchase Card Transaction Fees
Chapter 5 Banked Vacations
Chapter 6 Bonding Costs
Chapter 7 Bonuses and Incentive Compensation
Chapter 8 Business Combination Costs
Chapter 9 Capital Items and Compensation Costs
Chapter 10 Compensation for Personal Services
Chapter 11 Computer Allocation Costs (Algorithms)
Chapter 12 Contingencies
Chapter 13 Continuation of Essential Contractor Services
Chapter 14 Contract Termination Costs
Chapter 15 Contributions and Donations
Chapter 16 Cooperative Research Consortium Costs
Chapter 17 Correction of Internal Control Deficiencies
Chapter 18 Cost of Money
Chapter 19 Depreciation Costs
Chapter 20 Domestic and Foreign Taxes – Differential Allowances
Chapter 21 Dues, Membership Fees, and Subscription Costs
Chapter 22 Economic Planning Costs
Chapter 23 Employee Stock Option Plans (ESOP)
Chapter 24 Employee Welfare and Moral Expense
Chapter 25 Entertainment Costs
Chapter 26 Environmental Costs
Chapter 27 Fines, Penalties, and Mischarging Costs
Chapter 28 Gains and Losses on Disposition or Impairment of Property or Other Capital Assets
Chapter 29 General Service Administration Schedule Contracts
Chapter 30 Goodwill
Chapter 31 Help-Wanted Advertising Costs
Chapter 32 Idle Facilities and Idle Capacity
Chapter 33 Independent Research and Development and Bid and Proposal Costs
Chapter 34 Insurance Costs
Chapter 35 Interest and Other Financial Costs
Chapter 36 Item Unique Identification and Valuation
Chapter 37 Joint Ventures and Teaming Arrangements
Chapter 38 Labor Relations Cost
Chapter 39 Labor Settlement and Strike Period Costs
Chapter 40 Leased Costs
Chapter 41 Legal and Other Proceedings
Chapter 42 Lobbying Costs and Legislative Earmarks
Chapter 43 Losses on Other Contracts
Chapter 44 Accounting for Lump-Sum Wages Resulting from Union Contracts
Chapter 45 Manufacturing and Production Engineering Costs
Chapter 46 Material Cost
Chapter 47 Mentor-Protégé Program Costs
Chapter 48 Military Operations – Hazzard, Reserve Supplements and Celebrations
Chapter 49 No Cost Storage Contracts
Chapter 50 Organization Costs
Chapter 51 Other Business Costs
Chapter 52 Patent Costs
Chapter 53 Pensions
Chapter 54 Plant Protection
Chapter 55 Plant Reconversion Costs
Chapter 56 Post Retirement Benefits
Chapter 57 Pre-contract Costs
Chapter 58 Professional and Consultant Services
Chapter 59 Purchased Labor – Personnel Procured from Outside Services
Chapter 60 Recruitment Costs
Chapter 61 Relocation Costs
Chapter 62 Research and Development – Sponsored by Grant/Required by Contract
Chapter 63 Restructuring Costs
Chapter 64 Royalty Costs
Chapter 65 Selling Costs
Chapter 66 Special Facilities Operating Costs
Chapter 67 Special Tooling and Special Test Equipment
Chapter 68 Taxes
Chapter 69 Termination, Early Retirement Incentives, and Severance Payments
Chapter 70 Trade, Business, Technical, and Professional Activities
Chapter 71 Training and Educational Costs
Chapter 72 Travel Costs
Chapter 73 Warranty Costs and/or Correction of Defect Costs
Chapter 74 Weather Related Closure
Chapter 75 Workforce Investment Act


All inquiries for additional information should be directed to the local DCAA field audit office (FAO). You can find the FAO’s address and telephone number by accessing the Audit Office Locator. The contractor's business location where the accounting records are maintained should be used for determining the appropriate DCAA office. If assistance is needed in determining the cognizant DCAA office, contractors may call DCAA Headquarters at (703) 767-3274.