--- title: "The Incurred Cost Submission: Why is Schedule K Important?" description: Schedule K is one of the most important parts of the Incurred Cost Submission and is an area of great interest for the Government and its auditors. image: https://info.redstonegci.com/hubfs/RGCI%20-%20The%20Incurred%20Cost%20Submission%20Why%20is%20Schedule%20K%20Important.png --- [ PAY INVOICE](https://redstonegci.com/invoice-payment/) [Call Us Today 256-704-9800](tel:2567049800) [info@redstonegci.com](Mailto:info@redstonegci.com) [![Redstone_Logo](https://info.redstonegci.com/hubfs/redstone%20logo%20version%201%20-%20rgb-1.png)](https://www.redstonegci.com/) # The Incurred Cost Submission: Why is Schedule K Important? [Posted by Redstone Team on Fri, Oct 28, 2022 @ 11:10 AM](https://info.redstonegci.com/blog/author/redstone-team) - [Tweet](https://twitter.com/share) Schedule K is one of the most important parts of the Incurred Cost Submission and is an area of great interest for the Government and its auditors. This VLOG will briefly explain the Incurred Cost Submission, how to complete Schedule K, and the importance of Schedule K. ## What is the Incurred Cost Submission (ICS)? The incurred cost submission goes by many names/acronyms, including final indirect rate proposal, incurred cost electronic submission, indirect cost rate submission, incurred cost proposal, ICES, ICS or ICP. Regardless of name, it is simply the mechanism for the true up of your actual indirect cost to the indirect costs provisionally billed in a single contractor fiscal year. An ICS must be submitted for each business unit of a contractor that holds applicable contracts subject to the [Allowable Cost and Payment clause (FAR 52.216-7)](https://www.acquisition.gov/far/52.216-7) and is required to be submitted 6-months after fiscal year end. ## What is Schedule K in the ICS? Within the Incurred Cost Submission, there are many worksheets or tabs in an Excel workbook that are referred to as “schedules.” Previously, we discussed [the importance of Schedule I](https://info.redstonegci.com/blog/what-is-schedule-i-in-the-incurred-cost-submission). Each schedule in the Incurred Cost Submission is responsible for a piece that culminates on schedule I, which is the presentation of cumulative cost incurred, cumulative billings and calculation of over or underbilling amount. One of those schedules that leads to Schedule I is Schedule K, which is the summary of hours, bill rates, and non-labor costs for time-and-material and labor-hour contracts. ## Why does Schedule K matter? Schedule K is important because it is the place in the Incurred Cost Submission that shows the project cost detail for time-and-material contracts. The total costs from Schedule K get pulled over to Schedule I to be compared to the billings, so if Schedule K is not properly completed, Schedule I can inaccurately state the over or under billing for the project. When completing Schedule K, the first area to pay attention to is that the contract labor categories are used and not the company labor categories or employee names. Along with that, it’s critical that the labor rate that is entered is the bill rate for the labor category and not the employee’s hourly salary rate. Remember that Schedule K is to show the total billed cost for the project and not the total raw cost of the project, which is why it’s important to use the bill rate from the contract instead of the employee hourly salary rate. After the contract labor category, number of hours for the year, and bill rates are entered in for the time and material project, it’s important to enter the non-labor direct costs associated with the project. This section should be tailored for each individual project or contract due to the varying nature of contract terms. For example, a contract might not allow for travel to be billed for the T&M project, so while the company incurred a travel cost it is considered unbillable and should be adjusted on Schedule I. The last key item on Schedule K is the ceiling amount for each project and ensuring the total project costs do not exceed the ceiling. If the cost exceeds the ceiling, it’s important to analyze if the project costs truly are in excess or if there is an error in the calculation. If it truly is in excess then the amount in excess needs to be adjusted on [Schedule I](https://info.redstonegci.com/blog/what-is-schedule-i-in-the-incurred-cost-submission). At the end of the day, Schedule K is one of the more important schedules in the incurred cost submission because it is the buildup of the T&M billed costs that are represented on Schedule I. Redstone GCI is available to assist contractor’s in assessing their incurred cost as adequate or inadequate as well as assist in the development of the proposal. Redstone GCI assists contractors throughout the U.S. and internationally with understanding the Government’s expectations in [applying FAR Part 31, Cost Principles and completing incurred cost proposal requirements](https://www.acquisition.gov/far/part-31). 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We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals. Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs. 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