• Test 1

Cost Accounting Disclosure - QMAC

Contractors undertaking single source work for the UK Ministry of Defence are required to disclose their cost accounting practices. The document especially prepared to assist and enable the contractor to make these disclosures is called “Questionnaire: Method and Allocation of Costs” or QMAC for short. In its structure and intent it is not wildly different from the US Cost Accounting Disclosure Statement DS-1 and indeed the US Government’s Cost Accounting Standards Board recognises the QMAC, when accompanied by a QMAC supplement, to be an alternative to a DS-1 filed with the relevant DCMA ACO.

MOD says that it considers this document as a key component of equality of information. If properly and fully developed it also provides great benefit to contractors. 

The QMAC is not a description of the contractor's estimating methodology nor does it set out how MOD single source labour and overhead rates are calculated, the QMAC is a description and disclosure of the contractor's cost accounting methodologies. 

An industry group working with UK MOD CAAS updated the QMAC to produce a document that is better structured for the 21st century, The updated QMAC takes a fundamentally different approach to disclosure, where possible the long lists of how each type of cost are treated have been replaced by a more systems based approach. The new QMAC asks the contractor to disclose the criteria used in deciding which costs are to be treated as direct and which are indirect; the disclosure also requires the contractor to set out its control mechanisms whereby it can give assurance that like costs incurred for similar events are treated in the same way (consistent application) and set out the consequences of the criteria and the control system by listing significant examples. The QMAC still contains some seemingly archaic structure that is specific to the needs of MOD's CAAS Cost Engineers e.g. list of processes.  

It is hoped that the SSRO will eventually be persuaded to take ownership of the QMAC form and thereby support modernisation and communication to MoD and SSRO of the contractors cost allocation criteria and controls.

The updated QMAC can be downloaded here.

NOTE: The completed QMAC should be sent to MoD as a pdf. document and not a word document.