The DCAA Incurred Cost Audit Program (Activity Code 10100) is the structured procedure DCAA auditors follow when examining a contractor's annual incurred cost proposal. Understanding this audit program tells you exactly what evidence to prepare, which cost elements receive the most scrutiny, and how auditors evaluate your submission from entrance conference through final report. DCAA publishes two versions of the 10100 program — one for small contractors and one for large contractors — each tailored to the complexity and risk profile of the contractor being audited.
What Is the 10100 Audit Program?
The 10100 audit program is DCAA's standardized audit procedure for incurred cost audits. It contains step-by-step instructions that auditors follow to evaluate every cost element in the contractor's incurred cost proposal. The program is organized into 9 sections (B through A), each targeting a specific cost category — from preliminary planning and direct labor through indirect expenses and concluding steps. Every audit step maps to specific FAR and CAS requirements, and auditors document their work, findings, and conclusions for each step before issuing the final audit report.
Small vs. Large Contractor Programs
DCAA maintains two versions of the 10100 incurred cost audit program. The small contractor program is a streamlined version with standard procedures for contractors with lower dollar volume and less complex cost structures. It contains 114 audit steps across 9 sections. The large contractor program is an expanded version with 121 audit steps that includes enhanced testing for contract brief reliability, T&M employee qualifications per FAR 52.232-7(a)(3), subcontractor billing verification, Cost of Money rate validation against published Treasury rates, pension cost significance evaluation, and health care dependent eligibility review. The version your auditor uses depends on your contractor profile and risk assessment. Visit GovConDash.ai to determine if your company is a small or large contractor.
The 9 Audit Sections
Section B — Preliminary Steps: Risk assessment, materiality determination, internal controls evaluation, and planning for the engagement.
Section D — Direct and Indirect Labor: Labor hour and rate testing, timekeeping controls, compensation analysis, and FAR 31.205-6 statutory cap verification.
Section E — Direct Material: Material cost analysis, purchasing controls, and transaction testing for allocability and reasonableness.
Section F — Subcontracts: Pass-through charge evaluation per FAR 52.215-23, consent verification, and assist audit coordination.
Section G — Other Direct Costs: Travel, consultants, equipment, and miscellaneous direct charges including ODC allocability and reasonableness testing.
Section H — Indirect Expenses: GL and trial balance analysis, income and credit adjustments, Cost of Money verification, pension costs, health care eligibility, IR&D/B&P compliance, and indirect rate analysis — the most extensive section with 15 audit steps.
Section I — Inter-Organizational Transfers: IOT pricing evaluation per FAR 31.205-26(e), cost-based vs. price-based transfer testing, and intercompany profit elimination.
Section U — Compensation Reasonableness: FAR 31.205-6(p) statutory cap testing, market survey comparisons, and total compensation reasonableness analysis.
Section A — Concluding Steps: Audit opinion formulation, questioned cost compilation, penalty assessment per FAR 42.709, exit conference, and DMIS reporting.
Section D — Direct and Indirect Labor: Labor hour and rate testing, timekeeping controls, compensation analysis, and FAR 31.205-6 statutory cap verification.
Section E — Direct Material: Material cost analysis, purchasing controls, and transaction testing for allocability and reasonableness.
Section F — Subcontracts: Pass-through charge evaluation per FAR 52.215-23, consent verification, and assist audit coordination.
Section G — Other Direct Costs: Travel, consultants, equipment, and miscellaneous direct charges including ODC allocability and reasonableness testing.
Section H — Indirect Expenses: GL and trial balance analysis, income and credit adjustments, Cost of Money verification, pension costs, health care eligibility, IR&D/B&P compliance, and indirect rate analysis — the most extensive section with 15 audit steps.
Section I — Inter-Organizational Transfers: IOT pricing evaluation per FAR 31.205-26(e), cost-based vs. price-based transfer testing, and intercompany profit elimination.
Section U — Compensation Reasonableness: FAR 31.205-6(p) statutory cap testing, market survey comparisons, and total compensation reasonableness analysis.
Section A — Concluding Steps: Audit opinion formulation, questioned cost compilation, penalty assessment per FAR 42.709, exit conference, and DMIS reporting.
Download the Structured Audit Programs
We've parsed both versions of the DCAA 10100 incurred cost audit program into structured data with section mappings, regulation references, and CAM references for every audit step. Download and use these as a preparation checklist for your next incurred cost audit.
Why This Matters for Your ICP
Every step in the 10100 audit program maps to specific schedules in your incurred cost proposal. By reviewing the audit steps before submission, you can identify gaps in documentation, ensure unallowable costs are properly adjusted, and verify that your cost accounting practices are consistent with disclosed methods. The ICP Dashboard automates the 47-question DCAA adequacy checklist and flags compliance gaps before auditors arrive. Preparation is the best defense.