Describe the flow of labor costs from the employee to the company and the customer and the importance of accuracy in reference to future proposals and reporting. Understand the audit process, the government agencies involved and your legal responsibilities and rights in audit interviews. Key Learning Points Labor charges are included among cost elements in billing customers and are used as historical data in preparing cost proposals submitted for new work. Labor charging involves money and intentional charging errors are fraud. Direct labor can be readily identified with a particular cost objective.
Indirect labor has no readily identifiable cost objective.
Overhead pools are used to accumulate and measure indirect costs which are not in accord with single cost objectives. Bid and proposal costs are incurred in preparing, submitting and supporting offers and proposition on potential government or non-government contracts.