GovCon Wednesdays
Estimated Read Time: 5 minutes
Once your Incurred Cost Submission (ICS) is submitted, it undergoes review by federal audit organizations responsible for ensuring taxpayer dollars are used appropriately. Depending on the agency you support, your ICS may be audited by DCAA, an Inspector General office, or another federal audit branch.
This installment explains who reviews ICS packages and the standards they must follow.
Core Concept: Who Reviews ICS?
Your ICS is reviewed by auditors responsible for validating the allowability, reasonableness, and allocability of the costs you submit. Your slide deck outlines several key entities involved in ICS reviews.
Business Impact: Key Audit Organizations
1. DCAA – Defense Contract Audit Agency
For Department of Defense (DoD) contracts, DCAA is the primary reviewer of incurred cost submissions.
DCAA examines your:
- Direct and indirect costs
- Indirect rate calculations
- Compliance with FAR Part 31
- Supporting documentation
2. Civilian Agency Audit Offices
Other agencies such as the Department of Homeland Security, Department of Energy, NASA, and others — conduct ICS reviews through their own audit units or Inspector General (IG) offices.
Your slide deck states that each major federal department has an internal audit structure responsible for contractor oversight.
3. Oversight Driven by the CFO Act of 1990
The CFO Act requires 24 major federal agencies to complete annual financial statement audits.
These audits include the review of contractor cost submissions, including ICS packages.
4. All Auditors Must Follow GAGAS
Every federal audit organization is required to follow Generally Accepted Government Auditing Standards (GAGAS) also called the Yellow Book.
Your slides highlight that:
- GAGAS is issued by the Government Accountability Office (GAO)
- GAO is an independent, nonpartisan agency that oversees federal audit quality and accountability
- GAGAS ensures uniform standards across all government audits
This means whether DCAA or a civilian agency audits your ICS, they must follow the same standards.
5. GAO — The Government Accountability Office
GAO is described in your slide deck as the “congressional watchdog.”
Its responsibilities include:
- Setting audit standards (GAGAS)
- Overseeing federal audit consistency
- Reviewing agency compliance
- Supporting Congress in oversight efforts
GAO plays an indirect but critical role in ICS reviews by enforcing audit discipline across federal agencies.
What Contractors Should Do
To prepare for ICS audits across agencies, contractors should:
✔ Maintain documentation for all claimed costs
✔ Follow FAR 31 cost principles and contract-specific clauses
✔ Ensure indirect rate calculations are accurate and traceable
✔ Prepare reconciliations for billed vs. actual costs
✔ Organize support for materials, subcontractors, labor, and travel
✔ Understand the audit processes of the agency you support
Regardless of who audits your ICS, preparation and documentation determine audit success.
Key Takeaways
- ICS packages may be reviewed by DCAA or civilian agency auditors.
- The CFO Act requires major agencies to conduct audits that include contractor cost submissions.
- All government auditors must follow GAGAS issued by GAO.
- GAO provides oversight and ensures audit consistency across the federal government.
- Contractors should prepare documentation with the expectation of audit review.
Need Support Preparing for ICS Audits?
VSINGH CPA assists GovCons with ICS preparation, indirect rate modeling, audit support, and documentation organization ensuring your submission is ready for DCAA or any federal audit office.
👉 Check out our YouTube Shorts for quick GovCon Essentials: https://youtube.com/shorts/raJPTQ6yjZM
Coming Up in the GovCon ICS Essentials Series
✅ ICS Essentials #1: What Is an ICS?
✅ ICS Essentials #2: Who Must Submit an ICS?
✅ ICS Essentials #3: Thresholds & Deadlines
✅ ICS Essentials #4: T&M & Mixed Contract Requirements
✅ ICS Essentials #5: Required ICS Schedules
✅ ICS Essentials #6: Who Reviews ICS?
7️⃣ ICS Essentials #7: Key FAR Clauses for ICS Compliance
8️⃣ ICS Essentials #8: How to Prepare a Compliant ICS