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Unsettled claimed costs are contract costs that have not been audited by DCAA. Audited amounts are logged in DCAA's Cumulative Allowable Cost Worksheet which is a summary schedule of contractor costs for each open flexibly priced contract with the most recent settled indirect cost rates.

These steps are summarized in the Contract Closeout Checklist, which shall be completed by the contracting officer and included in the contract file. The contracting officer shall indicate any items that are not applicable (e.g., patent reports, royalty reports, etc.).

Allowable costs are defined in the FAR as costs that are reasonable and allocable to the contract, per the terms of the contract at issue, Cost Accounting Standards and the FAR. (See FAR 31.201-2). Although this is a broad definition, FAR Section 31 specifically addresses many types of costs a contractor may incur.

(a) The factors to be considered in determining whether a cost is allowable include the following: (1) Reasonableness. (2) Allocability. (3) Standards promulgated by the CAS Board, if applicable; otherwise, generally accepted accounting principles and practices appropriate to the particular circumstances.

DCAA audits are trigged by a contracting officer's or administrative contracting officer's need for audit service to make decisions or regulatory requirements. DCAA does not perform audits requested by a contractor. DCAA only performs audits based on a request or established need from a federal entity.

These allowable costs include salaries, travel expenses, medical expenses, publication fees, and other items deemed necessary to running a business. Far section 31 specifically covers many different types of costs contractors may incur.

As defined by Federal Acquisition Regulation (FAR) 31.001 and Cost Accounting Standards (CAS) 405, expressly unallowable costs are a “particular item or type of cost, which under express provisions of an applicable law, regulation, or contract is specifically named and stated to be unallowable”.