Federal contractors performing under cost-reimbursement or other flexibly-priced contracts must file an Incurred Cost Submission (ICS) within six months of fiscal year-end. The Defense Contract Audit Agency targets adequacy assessments in 60 days and audits within one year. Plus: DoD must present an evaluation plan for Independent Public Accountants by April 30, 2026. Coverage from DCAA, GAO-25-107558, and Cherry Bekaert.
The key deadlines
- ICS filing: 6 months after contractor fiscal year-end (Calendar-year contractors: June 30)
- DCAA adequacy review: Target 60 days from receipt
- DCAA audit completion: Target 1 year from adequate submission
- April 30, 2026: DoD plan to Congress on future use of Independent Public Accountants for incurred cost audits
Risk-based sampling and the low-risk pool
Submissions meeting adequacy and falling below auditable dollar volume thresholds qualify for inclusion in DCAA's low-risk pool — exempt from audit through statistical sampling. DCAA attributes elimination of its historical incurred-cost backlog to this risk-based approach.
What auditors examine
- Direct labor and materials costs
- Indirect costs (overhead, G&A)
- Subcontract costs
- Allowability and reasonableness against contract terms
- Compliance with FAR Part 31 cost principles
What to do
- Calendar your ICS submission deadline — late or inadequate filings trigger formal audits and potential cost disallowance
- Use DCAA's public adequacy guide to self-check before submission
- Watch the April 30 IPA evaluation — outcome could shift incurred-cost audit work to private accounting firms over time