Audit Guidance on Revison to FAR 31.205-35, Relocation Costs

DEFENSE CONTRACT AUDIT AGENCY DEPARTMENT OF DEFENSE 8725 JOHN J. KINGMAN ROAD, SUITE 2135 FORT BELVOIR, VA 22060-6219 IN REPLY REFER TO PAC 730.3.B.01/2006-02 December 19, 2005 05-PAC-074(R) MEMORANDUM FOR REGIONAL DIRECTORS, DCAA DIRECTOR, FIELD DETACHMENT, DCAA SUBJECT: Audit Guidance on Revision to FAR 31.205-35, Relocation Costs SUMMARY FAR 31.205-35, Relocation costs, was revised to add three additional types of relocation costs that may be reimbursed on a lump-sum basis in lieu of actual costs. The three additional types of relocation costs are: 1) costs of finding a new home; 2) costs of traveling to the new location; and 3) costs of temporary lodging. The revised cost principle is applicable to contracts awarded on or after October 31, 2005. Auditors should continue to follow the guidance in CAM 7-1004 when evaluating relocation costs for allowability and ensure that contractors maintain adequate data supporting the estimated lump-sum reimbursement for the three types of relocation costs. Claimed lump-sum relocation costs without adequate data supporting the estimated lump-sum reimbursement should be questioned by the auditor. GUIDANCE The revised rule extends reimbursement on a lump sum basis in lieu of actual costs to three additional types of relocation costs. They are: 1) costs of finding a new home, 2) costs of traveling to the new location, and 3) costs of temporary lodging. Costs of traveling to the ...