Have you ever had one of those moments when you think you did something and then realize you didn’t? That would be me looking at the history of posts today. I really thought I had posted this piece of the series late last week, then I realized I was interrupted by those pesky feds issuing guidance and proposed rules and decisions. Oh well, here we go.
FAR 31.205-15 Fines, Penalties, and Mischarging Costs
As a former auditor, the stories of the rise and fall of Enron and Arthur Andersen were drilled into me during the subsequent backlash against the industry. Here was a “pillar” of the accounting community directing the destruction of documentation! I realize they may have gotten in more trouble had the actual documents not be destroyed, but it seems implausible that those in control would have ordered such an act. Then, I read through the regulation passed down in FAR 31.205-15 and realize we have given such power to Contract Officers to direct such things. (Yes, I realize that is not the intent of the rule, but I like to play the advocate sometimes too).
Who would have thought charging the government for violations of the laws and regulations of this great land would have been an allowable cost anyway? Just in case you were one of those raising your hand – sorry, unallowable. Also, just for the record, costs incurred in connection with mischarging Government contracts are unallowable… but the regulation doesn’t stop there… “when the costs are caused by, or result from, alteration or destruction of records, or other false or improper charging or recording of costs.” (Other than that – mischarging costs are ok?!)
There are, of course, exceptions to the rule. If the contract tells you to violate the laws and regulations by complying with specific terms of the contract, you are OK to charge the government for those costs incurred for that purpose. Also, if the CO says it’s OK, you are also allowed to charge those costs (but make sure the CO puts it in writing!).
We are at 15 out of 52 (about 29% through, but we will call it 1/3 of the way since some of these are real simple one-liners anyway). Still there? I wanted to share a little snippet of something I have been working on in my spare time. I would be interested to see what you think, I offer no insight into what it is other than the following image (clickable for larger size)…