To emphasize the importance of documenting costs incurred please consider the following.

I was retained by a new client to help them resolve a nasty DCAA audit report of a small business. The report questioned $200,000 in costs mainly due to a lack of cost support such as receipts, invoices, consulting agreements and mileage logs. The company relied mainly on credit card statements. This simply will not answer the mail. Additionally DCAA is attempting to apply Level 1 Unallowable cost penalties equal to the $200,000. So as you might imagine this is a huge issue for the small business. I expect I will be able to at least cut that number in half and hopefully negotiate something reasonable with the ACO.

This is a classic example why it is so important to maintain adequate records and fully document the costs incurred as well as business purpose. Credit card statements simply will not fly in an audit. Must have receipts, must document consultants and legal charges with agreements and require your consultants to detail the charges on their invoices. If you are involved with automobile expense must document the business usage with mileage logs or similar documentation. Need written plans or policies for any bonuses, etc.

Yes this is very bureaucratic and an nuisance to everyone involved, but better to be safe today than sorry later.