GovCon Wednesday’s
Your Guide to Wrapping Up the Fiscal Year Right
Estimated Read Time: 8 minutes
You’ve used Provisional Billing Rates (PBRs) to recover indirect costs throughout the year but now it’s time to settle up. The Incurred Cost Submission (ICS) is where estimates meet reality.
In Part 8 of VSINGH CPA’s 10-part series, we walk through what the ICS is, why it’s critical for federal contractors, and how accurate PBRs can make or break your year-end closeout.
What Is the Incurred Cost Submission (ICS)?
The ICS is a required submission under FAR 52.216-7 for contractors working on cost-type contracts. It provides DCAA with your actual indirect cost rates, supporting data, and schedules for the fiscal year.
DCAA uses this data to establish your Final Billing Rates and compare them to the PBRs you billed during the year. This comparison determines whether you’ve overbilled or underbilled the government.
True-Up: Overbilled or Underbilled?
At the core of the ICS is the true-up process:
- If your PBRs were higher than actuals: You may have overbilled and owe the government money.
- If your PBRs were lower than actuals: You may be due a reimbursement.
Either way, accuracy matters. A mismatch between your PBRs and actuals can lead to repayment demands, audit findings, or strained government relationships.
Why Strong PBRs Matter
Well-supported, realistic PBRs reduce your risk of large variances during true-up. That means:
✅ Less back-and-forth with auditors
✅ Fewer questioned costs
✅ Faster contract closeouts
✅ More predictable cash flow
A weak PBR strategy sets you up for painful adjustments. A strong one keeps your compliance and finances in check.
Compliance Tip: Don’t Delay
You must submit your ICS within six months after your fiscal year ends. DCAA expects a complete package, including Schedules A–N, prior year reconciliations, and detailed support for all indirect rates.
Missing this deadline can result in rejected invoices, contract hold-ups, and added scrutiny.
What’s Next in the Series?
✅ Part 1: Intro to PBR
✅ Part 2: Do I Need a PBR? And How Do I Get One Approved?
✅ Part 3: What Goes Into a PBR?
✅ Part 4: How Do I Calculate My PBR?
✅ Part 5: What Happens After I Submit My PBR?
✅ Part 6: How PBRs Impact Invoicing and Cash Flow
✅ Part 7: Can I Update My PBR Mid-Year?
✅Part 8: Year-End ICS
9️⃣Part 9: How Are PBRs Different from Final Billing Rates?
🔟 Part 10: Are You Audit-Ready? Supporting Your PBR with Documentation
The ICS can feel like a paperwork burden but it’s also your chance to close out contracts cleanly, reclaim underbilled costs, and demonstrate audit readiness.
📩 Let VSINGH CPA guide you through the year-end true-up process with confidence.
Connect today for expert support on your ICS.
👉 Check out our YouTube Shorts: https://youtube.com/shorts/cg8AlRJnJss?si=_n0LTleqSQ-0_u-U