# Moorestown DCAA Audit Flags $1.2M Unallowable Costs

The Defense Contract Audit Agency’s Moorestown Branch completed an audit of an unnamed contractor’s FY2024 incurred cost proposal 90 days before its due date. The audit identified **$1.2 million** in unallowable employee morale and entertainment costs. By using data analytics and coordinating with the contractor and the Defense Contract Management Agency, the audit team saved approximately 1,200 hours—an estimated $235,000 in labor—and provided findings for DCMA’s final rate negotiations.

- Contractors should review employee morale and entertainment expenses for allowability when preparing incurred cost proposals; the audit shows these costs can materially affect rate negotiations.
- DCAA’s early completion and data-analytics approach reduced audit effort while giving DCMA findings to use in final rate negotiations.
- Contractors can use the identified cost categories to focus their internal review and supporting documentation for incurred cost submissions.

**Jurisdictions:** federal
**Industries:** Defense & Military
**Topics:** Regulatory Compliance
**Published:** October 15, 2026

### Government Entities
- Defense Contract Audit Agency (DCAA)
- Defense Contract Management Agency (DCMA)

### Sources
- [
	Moorestown Branch Audit Identifies $1.2 Million in Unallowable Costs > DCAA > Article View
](https://www.dcaa.mil/Agency-News/Article-View/Article/4626454/moorestown-branch-audit-identifies-12-million-in-unallowable-costs/) - DCAA