Businesses and organizations receiving government grants, or operating under government contracts – whether federal, state or municipal – are often required to conduct an audit of their overhead rates. For government contracts these audits must be completed in accordance with the Federal Acquisition Regulation Part 31 (FAR) guidelines. Federal grant recipients may be subject to an audit annually to ensure compliance with government regulations and evaluation of financial information related to expenses paid for with federal award funds.

Unless you are prepared for this audit process, you could discover that anticipated profits may disappear after adjustments are made for overhead.

Gray, Gray & Gray can help avoid such problems by reviewing your overhead rate calculations to ensure that the rates are “allowable, reasonable and allocable” and comply with applicable guidelines. We also work to identify, segregate and remove costs that are not allowed to be billed under government contracts or paid for by funds from federal grants. Additionally, we can help manage the accurate and timely filing of required reporting forms at both the federal and state level.

But we do more. Because we have such a deep understanding of overhead rate calculation requirements, we can work with you to identify ways to improve profit margins on government contracts by ensuring you are receiving all allowable costs. This includes the calculation of the facilities cost of capital and the preparation of the required report on compliance and internal control matters. We also look for ways to enhance efficiency in calculating and reporting overhead for future audits. 

In addition to federal overhead audits, we have extensive experience working with various state agencies, which frequently have their own unique audit requirements and deadlines.

Our Services

Our overhead rate audit consulting services include:

  • Review of historical FAR overhead rates and disallowed expenses
  • Review of internal controls and policies to ensure compliance with regulations
  • Projections of future overhead rates
  • Calculation of reasonable compensation
  • Calculation of facilities cost of capital
  • Prepare necessary filings required by government agencies

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