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in-country legal and accounting compliance costs

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does anyone know how DCAA would want legal and accounting costs specific to contracts in a foreign country accounted for?  we have always treated legal and accounting as G&A costs; however we have some costs that are specifically grown out of having to comply with in-country tax laws, reporting, filing tax returns to be in compliance in that country.  We have not charged legal and tax work as direct costs before, but they do not exactly fit a homogenous definition either.

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Its not how DCAA would view this practice, but what does the FAR say on this?  Look at FAR 31.202(a) and see if charging these costs direct would comply with the guidance set forth there.  To me, the key phrase is "in similar circumstances."  One thing to remember is that 31.202 is a part of cost reimbursement and T&M contracts because of FAR 52.216-7.

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17 hours ago, CFO said:

does anyone know how DCAA would want legal and accounting costs specific to contracts in a foreign country accounted for?  we have always treated legal and accounting as G&A costs; however we have some costs that are specifically grown out of having to comply with in-country tax laws, reporting, filing tax returns to be in compliance in that country.  We have not charged legal and tax work as direct costs before, but they do not exactly fit a homogenous definition either.

Don't your in-country operating locations have their own indirect costs? Charge 'em there; but not as direct costs of the contracts they are performing.

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we have never charged audit/tax work as direct expenses before, directly to a contract.  it has historically been treated as G&A costs, G&A indirect cost pool.  in this particular year we moved from corporate governance costs of registration and establishment of business in this foreign country which we charged to G&A, to annual audit work that is specific to audit work and tax work to be in compliance in the country and therefore, in contract compliance relative to only two contracts;  therefore, this is a change, but it does not seem equitable to charge domestic or other country projects in this case when this work is benefiting only work in this foreign country.  In reading FAR, I can see logical arguments both ways; however, while direct expensing will be an allocation to both a FFP and a CPFF contract, it does results in a higher value billed than the result of this expense being charges to a G&A account.    

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2 hours ago, CFO said:

direct expensing will be an allocation to both a FFP and a CPFF contract, it does results in a higher value billed than the result of this expense being charges to a G&A account.    

 I don't know your circumstances or whether you are subject to CAS; however, I like the result of the change!

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20 hours ago, CFO said:

it does not seem equitable to charge domestic or other country projects in this case when this work is benefiting only work in this foreign country.  In reading FAR, I can see logical arguments both ways; however, while direct expensing will be an allocation to both a FFP and a CPFF contract, it does results in a higher value billed than the result of this expense being charges to a G&A account.    

...But, as you say, the costs will be billed/allocated to the benefiting contracts, right? That seems fair. 

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