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  2. Government Contracting
  3. Set up Government contracting

Set up indirect cost plan

Set up indirect cost plans to simulate and determine the indirect cost composition and target rates as required by FAR Subpart 31.2-Contracts with Commercial Organizations.
To set up an indirect cost plan, you need the setup for:

  • Unallowable costs
  • Account structures
  • Cost pools
When active, you can assign an indirect cost plan to project contracts, project quotations, and projects.


Accounting manager Accounting manager Oversees various portions of the accounting processes and team members. Chief financial officer Chief financial officer The executive member oversee all accounting and finance operations Start Start Set up indirect cost plan Set up indirect cost plan Set up indirect cost plans to simulate and determine the indirect cost composition and target rates as required by FAR Subpart 31.2-Contracts with Commercial Organizations. You can have several indirect cost plans with different dates, rates, structures, and formulas. Procedure 1. Go to Budgeting > Government contracting > Indirect cost plan. 2. Click New. 3. In the Indirect cost plan field, In the Indirect cost plan number field, type a value or leave blank if number is set to be system-assigned. 4. In the Description field, type a value. 5. In the From date field, enter a date. 6. In the To date field, enter a date. 7. You can expand the Notes section to enter notes. Set up account structures for indirect cost plan Set up account structures for indirect cost plan For the indirect cost plan, link the applicable cost pools to the applicable general ledger account structures. For example, link the overhead cost pool to the general ledger account structure for overhead expenses, such as rent or utilities.Note: Before you can link general ledger account structures to cost pools, you must have set up your account structures in the general ledger. Procedure 1. Go to Budgeting > Government contracting > Indirect cost plan. 2. In the list, find and select the desired record. 3. Click Edit. 4. Click Account structure. 5. In the list, mark the selected row. 6. In the Cost pool ID field, enter or select a value. 7. In the Account structure field, enter or select a value. 8. Click New to continue adding more lines. 9. Click Save. 10. Close the page. Set up tiered indirect costs structure Set up tiered indirect costs structure You can apply a tier structure to indirect cost pools, also called cascading or waterfalling pools. You can set up indirect cost pools that apply allocations to other indirect cost pools. For example, apply overhead costs to fringe benefits or apply general and administrative expenses across other indirect cost pools. Procedure 1. Close the page. 2. Close the page. 3. Go to Budgeting > Government contracting > Indirect cost plan. 4. In the list, find and select the desired record. 5. Click Edit. 6. Click Tiered indirect costs structure. 7. In the list, find and select the desired record. 8. Click 9. Click Save. Set up formula for indirect cost plans Set up formula for indirect cost plans Set up the formulas for the indirect cost plan to calculate target rates. These formulas are used in the month-end rate update process and to create cost adjustments. Procedure 1. Go to Budgeting > Government contracting > Indirect cost plan. 2. In the list, find and select the desired record. 3. Click Edit. 4. Click Formulas. 5. Click New. 6. In the Cost pool ID field, enter or select a value. 7. Click New. 8. In the Variable field, type a value. 9. In the Type value field, type a value. 10. In the Test value field, enter a number. 11. In the Formula field, type a value. 12. Click Calculate. Note: Note: the calculation result on this page is a simulated rate for testing and informational purposes only. 13. Click Save. Simulate and define target rates for indirect cost plan Simulate and define target rates for indirect cost plan Run simulations for different indirect cost pools as related to the direct costs to calculate target rates. Run simulations for each combination as needed to determine the value to use for your target rates. Procedure 1. Go to Budgeting > Government contracting > Indirect cost plan. 2. In the list, find and select the desired record. 3. Click Edit. 4. Click Simulate and define. 5. In the Indirect cost pool field, enter or select a value. 6. In the Direct cost pool field, enter or select a value. 7. In the Date interval field, enter or select a value. 8. In the Budget model field, enter or select a value. 9. On the Action Pane, click Indirect cost plan. 10. Click Search. 11. On the Action Pane, click Indirect cost plan. 12. Click Apply target rate. 13. Select the rate for the pool by changing the flag to Yes for the calculation option. 14. Click OK. Add target rates manually Add target rates manually You can manually add target rates to your indirect cost plan. Procedure 1. Go to Budgeting > Government contracting > Indirect cost plan. 2. In the list, find and select the desired record. 3. Click Edit. 4. Click Target rates. 5. Click New. 6. In the Cost pool ID field, enter or select a value. 7. In the Target rate field, enter a number. 8. Click Save. Submit indirect cost plan for approval Submit indirect cost plan for approval If an indirect cost plan is properly set up, submit the indirect cost plan for approval. Procedure 1. Go to Budgeting > Government contracting > Indirect cost plan. 2. In the list, find and select the desired record. 3. Click Edit. 4. In the Workflow status field, select an option. 5. Click Save. 6. Click Workflow. 7. Click Submit. 8. In the Comment field, type a value. 9. Click Submit. Approve indirect cost plan Approve indirect cost plan Approve or reject the indirect cost plan following the applicable workflow. Procedure 1. Go to Budgeting > Government contracting > Indirect cost plan. 2. In the list, find and select the desired record. 3. Click Workflow. 4. Click Approve. 5. In the Comment field, type a value. 6. Click Approve. Activate indirect cost plan Activate indirect cost plan Once approved, you can activate the indirect cost plan. This will make it ready for use. Procedure 1. Close the page. 2. Go to Budgeting > Government contracting > Indirect cost plan. 3. In the list, find and select the desired record. 4. Click Activate. End End

Activities

Name Responsible Description

Set up indirect cost plan

Accounting manager

 		Set up indirect cost plans to simulate and determine the indirect cost composition and target rates as required by FAR Subpart 31.2-Contracts with Commercial Organizations. You can have several indirect cost plans with different dates, rates, structures, and formulas.

Set up account structures for indirect cost plan

Accounting manager

 		For the indirect cost plan, link the applicable cost pools to the applicable general ledger account structures. For example, link the overhead cost pool to the general ledger account structure for overhead expenses, such as rent or utilities.
Note: Before you can link general ledger account structures to cost pools, you must have set up your account structures in the general ledger.

Set up tiered indirect costs structure

Accounting manager

 		You can apply a tier structure to indirect cost pools, also called cascading or waterfalling pools. You can set up indirect cost pools that apply allocations to other indirect cost pools. For example, apply overhead costs to fringe benefits or apply general and administrative expenses across other indirect cost pools.

Set up formula for indirect cost plans

Accounting manager

 		Set up the formulas for the indirect cost plan to calculate target rates. These formulas are used in the month-end rate update process and to create cost adjustments.

Simulate and define target rates for indirect cost plan

Accounting manager

 		Run simulations for different indirect cost pools as related to the direct costs to calculate target rates. Run simulations for each combination as needed to determine the value to use for your target rates.

Add target rates manually

Accounting manager

 		You can manually add target rates to your indirect cost plan.

Submit indirect cost plan for approval

Accounting manager

If an indirect cost plan is properly set up, submit the indirect cost plan for approval.

Approve indirect cost plan

Chief financial officer

 		Approve or reject the indirect cost plan following the applicable workflow.

Activate indirect cost plan

Accounting manager

Once approved, you can activate the indirect cost plan. This will make it ready for use.

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