Costpoint Year-End Close and Indirect Rate True-Up
Costpoint year end close and indirect rate true-up
Also searched as
- Costpoint fiscal year end closing procedure
- Costpoint provisional billing rates vs actual rates true-up
- Costpoint year-end indirect rate adjustment entries
- Deltek Costpoint close fiscal year checklist
Short answer
At year end a Costpoint contractor closes the periods, computes actual indirect rates from final pool and base amounts, and posts a true-up for the difference between provisional rates used all year and the actual rates. Do these in sequence, with reconciliations between each step, and the later incurred cost submission becomes mostly a reporting exercise.
Applies to: Deltek Costpoint 7.x and cloud, General Ledger and indirect cost allocation for government contractors. Process names differ by release; follow your own documented procedure.
Year-end sequence
- 1Set a cutoff calendar: last timesheet date, last vendor invoice entry date, accrual deadline and the date periods will be locked.
- 2Post all accruals and reclassifications, including unallowable cost identification, so pool contents are final.
- 3Close the operational subledger periods (for example AP, AR, timesheets, inventory if used) before closing the general ledger period.
- 4Run the indirect cost allocation for the final period and for each prior period if actual rates are applied on a cumulative basis.
- 5Compute the actual annual rate for each pool from final pool cost and base. Compare to the provisional rates used for billing.
- 6Post the true-up entries for the over- or under-absorbed amount, and calculate any billing adjustment that results on flexibly priced contracts.
- 7Reconcile pools and bases to the ledger, then lock the periods and run the fiscal year-end closing process to roll balances into the new year.
- 8Archive reports and the rate computation, and note open items that affect the incurred cost submission.
Provisional versus actual rates
During the year you bill cost-type contracts using provisional billing rates, usually based on a forecast or last year's actuals. Costs are also applied to projects using these rates. At year end the real pool and base amounts produce actual rates. The difference between the two, multiplied by each project's base, is the over- or under-recovery.
On a cost-plus contract an underrun means you under-billed and may be owed money; an overrun means you over-billed and may owe a refund. On fixed-price work the difference simply affects profit. It is worth knowing, by pool, which direction the year went before anyone argues about numbers.
Sequencing and reconciliation
The order matters because indirect pools depend on cost that must be final. Closing the GL before late costs are in forces reopening periods, which creates audit trail noise. Treat the cutoff calendar as a control, and communicate it early to project managers and subcontract administrators.
Reconcile at each gate. After the final allocation, check that allocated indirect cost equals the pool less any unabsorbed amount. After the true-up, check that the sum of adjustments across projects ties to the pool difference. Differences of a few cents from rounding are normal; anything larger deserves a named explanation.
True-up per pool (concept) actual_rate = final_pool_cost / final_base provisional_rate = rate used in billing/allocation during the year adjustment(proj) = (actual_rate - provisional_rate) * proj_base_amount Sum of adjustment(proj) across projects ~= pool under/over absorption
Controls to put in place
Use a close checklist with owners and dates, stored where auditors can see it. Include a sign-off for each reconciliation and for the final rate approval. Costpoint can lock periods, but the lock only protects the data; the checklist is how you prove the process was followed.
Review rate reasonableness. Compare actual rates to provisional rates and the prior year. A large swing usually has a cause, such as a headcount change, a reclassified account or a base that excluded cost it should have included. Explain it before it is explained to you by someone else.
Common pitfalls
- !Closing the ledger period before late accruals and subcontract invoices are posted.
- !Computing actual rates on pool amounts that still contain unallowable cost.
- !Not updating forward-looking provisional rates for the new year based on the actual results.
- !Posting the true-up without calculating its billing impact on cost-type contracts.
- !Locking periods without a documented process for correcting a later-discovered error.
How an ERP-grounded AI assistant handles this
An assistant grounded in your Costpoint ledger can compare actual and provisional rates by pool, list which projects carry the largest true-up, and flag entries posted after your cutoff date. It reads data and shows its queries; the controller reviews and posts. This is useful during the tight window between last accrual and period lock, when the checks otherwise run on spreadsheets.
Frequently asked questions
What is a true-up in Costpoint?
It is the adjustment between costs applied and billed at provisional indirect rates during the year and what the final actual rates would have produced. The result can increase or decrease cost and billings, depending on whether the provisional rate was too low or too high.
Do I have to close the fiscal year before computing final rates?
You need final cost, so periods should be substantially closed and all adjustments posted. Many companies compute actual rates after the last period is closed but before the formal year-end closing step. Follow your documented procedure and auditors' expectations.
How often should provisional rates be updated?
At least annually, and sooner if the forecast changes materially. Agreeing updated provisional billing rates with your cognizant agency, where applicable, reduces the size of the year-end true-up and the cash surprises that come with it.
Can I reopen a period if I find an error?
Costpoint permits controlled reopening, but doing so affects rates and may affect submitted work. Use a documented approval, record the reason and recompute any dependent rates and reconciliations afterward.
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