7 Roles & Responsibilities Ohio Department of Transportation (ODOT)
8 ODOT’s Role & Responsibilities State agencies (ODOT) are responsible for:providing oversight of Federal and State fundsensuring that funds are used appropriatelyensuring compliance with Federal and State guidanceensuring compliance with the terms of the contract
9 ODOT Roles & Responsibilities Two primary methods:Desk InspectionsAudits (On-site)
10 ODOT’s Roles & Responsibilities Desk InspectionsReview audit reports issued by Auditor of State and Independent Public Accountants (IPAs)Reconcile Schedule of Expenditures of Federal AwardsConfirm receipt /recognition of federal fundsIdentify and follow-up on audit findings & issuesBring significant or material issues to attention of the Office of Transit
11 ODOT Roles & Responsibilities AuditsConducted on-site (4 – 5 days)Cover a specific period of time (years)Up to 3 years after final paymentFormal Entrance & Exit conferenceRequest documents in advance of on-siteReview, reconcile and verifyFinancial statements to General LedgerODOT invoices to Transit source documentsSample of transaction (revenue and expense)Issue audit reportFindings for recoveryCorrective Action Plan
12 How is a Transit selected for Audit? Risk Assessment performed annuallyCombination of financial and programmatic criteriaInput from Office of TransitIncludes, but not limited to:Federal Funding/federal sourcesPrior audit findings (AOS)Prior QAR findingsAccuracy of invoicing
13 Additional Oversight Methods Produce annual report to assist Transits with Federal ReportingAKA “Pink Book”Available on ODOT – Audits website for TransitsReview Cost Allocation PlansReview Charge Rates (Central Garage)Provide training and technical assistance
15 Transit Responsibilities Follow Federal and State guidanceOffice of Management and Budget (OMB) Guidance (See chart)Ohio Revised CodeGAAP (Generally Accepted Accounting Principles)FTA GuidanceODOT Rural Transit ManualComply with terms of contractRequires the use of accrual accounting
17 Transit – General Requirements Must use accrual accounting when invoicing ODOT.Must provide supporting documentation for revenue and expense.Must provide detail to support cost allocation and overhead rates charged
26 What is the Difference between Cash and Accrual Accounting? Revenue when receivedExpense when paidDisregards matching / timing (revenue in one month – expense in a different month)Application:Personal HouseholdRevenue when earnedExpense when incurredMatches revenue & expense to period (month, quarter, year)Application:Company
27 Benefits of Accrual Accounting with Transit Grant Perfect match to grant budgetWhereas costs are applied over 12 monthsTrue cost of business is reflectedAllows for better projections for future yearsAllows for better management of Transit organization finances
30 An example of an accrual – contract revenue Transit Services (rides) provided in January.Invoice in the amount of $5,000 sent to provider in February.Provider pays $5,000 invoice in MarchWhen does the Transit record the revenue?
31 An example of an accrual – contract revenue When does the Transit record the revenue? Revenue must be recorded in the time period earned, which would be January for this example. Before accounting records are closed for January, the entry must be recorded. What is the accounting entry?
32 Adjusting Journal Entry to record revenue earned There is no exchange of cash – only the recording of the revenue and amount due.
36 Accrual Accounting - Revenues Revenues earned during the period but no cash payment has been received:Contract revenueAdvertising revenueMaintenance RevenueMay be billed and payment not receivedMay not be billed
37 What does the transit record? Insurance LiabilityTransit receives invoice for insurance - $12,000 for the current year in January.Transit pays $12,000 invoice in January.When does the Transit record the expense?What does the transit record?
38 An example of an accrual – Insurance Expense When does the Transit record the expense?What does the transit record?Expense must be recorded in the time period incurred, which would be January – December for this example.$1,000 insurance expense will be recognized each month. A prepaid expense is recorded initially.What is the accounting entry?
39 Journal EntriesEntries would also be made for April - November
40 What does the transit record? Insurance LiabilityTransit receives invoice for insurance - $12,000 for the current year in January.Transit pays $3,000 quarterly.When does the Transit record the expense?What does the transit record?
41 An example of an accrual – Insurance expense When does the Transit record the expense?What does the transit record?Expense must be recorded in the time period incurred, which would be January – December for this example.$1,000 insurance expense will be recognized each month. A prepaid expense is recorded initially.What is the accounting entry for the quarterly payment and the monthly accrual?
43 An example of an accrual – Utility Services Utilities Services provided to Transit in January.Invoice received in February for January services in the amount of $1,000.Transit pays $1,000 invoice in March.When does the Transit record the Expense?
44 An example of an accrual – Utility Expense When does the Transit record the expense? Expenses must be recorded in the time period incurred, which would be January for this example. Before accounting records are closed for January, the entry must be recorded. What is the accounting entry?
45 Adjusting Journal Entry to record expense No payment of cash, just the accrual of utility expense – (can be a reasonable estimate.)
51 Accrual Accounting - Expenses Expenses incurred during the period, but no cash payment has yet been made:Utility expenses incurred but not yet paidRepair services and/or parts received, but not yet paidAdvertisingPayrollFuelConsiders any good or service received, for which payment has not yet been made.
52 True or False1. GAAP allows cash basis accounting.FALSE
53 True or FalseAccrual accounting requires matching of revenues and expenses in the same period.TRUE
54 True or FalseAccounts receivable and accounts payable entries are necessary with cash basis accounting.FALSE
57 Grant – Common Rule 49 CFR 18.20Pursuant to the Standards for financial management systems,a transit is responsible for meeting the standards provided for:Financial reportingAccounting RecordsInternal ControlBudget ControlAllowable CostsSource DocumentationCash ManagementTransit bears the burden to support all claims of revenue and expense.
59 Supporting Documentation Revenues and Expenses invoiced to ODOTMust be supported by General LedgerListing of transactions from your accounting systemMust be able to reconcile amounts if multiple accounts are tied to one line item on the ODOT invoiceMust be supported by actual deposits or invoices or accrued journal entriesIf payments are made to vendors by statement, individual invoices with detail must be providedExamples provided later in Training
60 Transit Process Invoice Receipt Review and Approve Process for Payment Retain documentation
61 ODOT Process ODOT Quarterly Invoice Verify to General Ledger & FinancialsVerify to actual invoices (not statements)
62 True or FalseMonthly credit card statements are sufficient documentation for quarterly expenses charged to ODOT.FALSE
63 True or FalseA paid invoice represents a valid Transit expense that can be charged to ODOT.FALSE
64 True or FalseWhen reviewing transactions selected for audit, if the supporting documentation cannot be provided, the cost may be ineligible for ODOT reimbursement.TRUE
67 49 CFR – Program IncomeGrantees are encouraged to earn income to defray program costs.Maintenance ServiceAdvertising Income
68 Revenue Classification Drives the amount of reimbursement provided by ODOTIncorrect classification can result in:Loss of reimbursement if not found prior to project close-out.Requirement of payback for over –payment due to revenue misclassification
70 $4,750 (1/2 of $9,500 operating expenses are eligible for Federal Assistance after offsets from Passenger Fares. The other half ($4,750) will be considered for Non-Federal Assistance.Passenger Fares (Farebox Revenue) is applied to expenses total allowable expenses prior to consideration of Federal Assistance.
71 Non-Federal Share begins with 50% left from 50% Federal Assistance. $4,750 was eligible for Federal funding in the previous slide - The remaining $4,750 is considered eligible for non-Federal share. After local revenue and State E&D Fare Assistance is applied, the remaining non-Federal share is available for State Assistance.
72 What affect does reporting Contract revenue as Farebox revenue have on Federal Reimbursement? Earned $80,000 in contract RevenueEarned $20,000 in Fare box RevenueTotal Eligible Expenses = $206,600
73 What affect does reporting Contract revenue as Farebox revenue have on Federal Reimbursement? Reported both contract and farebox revenue as farebox revenue: Reported revenue correctly: Transit would have lost the opportunity to be reimbursed for $40,000
74 What affect does reporting Farebox revenue as Contract revenue have on Federal Reimbursement? Reported both contract and farebox revenue as contract revenue: Reported revenue correctly: Transit would have been overpaid $7,000 originally, but will eventually be required to pay the amount back to the Office of Transit.$100,000 is contract max.
75 Transportation Revenue 401 Passenger FaresRegular and discounted cash faresPre-purchased tickets or tokenseven when purchased by a contract provider if sold at fare box priceFare price dictates record, not purchaserCash contributions or donations from passengersThis includes tips402 Special Transit FaresContract RevenuesMust be fully allocated cost*Not general fare rateNon-Contract Special Service FaresDonations from others for providing service for a special eventFares are not guaranteed on a contractual basis
76 Transportation Revenue Advertising RevenuesRevenues received for selling advertising space on the interior or exterior of Operating vehiclesDetermining amount to chargeSale of Maintenance ServicesRevenues received for performing maintenance services on vehicles and equipment owned by other agencies, organizations and individuals.Profits can be used as local matchingLosses not eligible for Federal & State fundingCannot charge other for services and also charge to Transit Grant
77 Non-Transportation Revenue Investment IncomeInterest earned on deposited public transportation fundsShould be recorded even when in City, County, or Agency Cash on deposit409 Local Cash Grants & ReimbursementsFunds obtained from local government units that assist in defraying costs for public transportation.Includes funding from City or CountyPopulates automatically on invoice
78 Non-Transportation Revenue State Senior Citizens Fare AssistanceRevenues received from the Ohio Elderly & Disabled (E & D) Transit Fare Assistance Program413 “Other” Federal Cash Grants & ReimbursementsIncludes funds received from the Federal Government that help defray the costs of providing public transportation services.Originally set up for some other program CDBG, CSBG HUD, Local AssistanceFederal direct payments are not included
79 Non-Transportation Revenue 430 Contributed ServicesIn-kind services received from another agency, organization, or individual in which the grantee is under no obligation to pay for the services.Must be approved by Office of Transit prior to claiming.Must be matched by offsetting costs in expense accounts.All in-kind expenses and revenues must be documentedCan be difficult to value and document.Third parties can provide contributed services - may include associations, but not Federal , State or Local governmental agencies.Must be performed during period to which matching requirement applies.Cannot claim expense twice – for two different grants, or used as matching for other grants.Must be verifiable
80 An Example of great supporting Revenue detail from an Audited Transit
81 Example of Invoice Detail 279,315.35$Example of Transit GL Detail
82 Although this is listed as Other Revenue, this should be in Investment Income. However great match of dollars to GL.
83 Revenue Review*Dependent on Available Contract Award
84 How do I set up a Capital Replacement fund? Program must be approved by Office of Transit prior to implementationApplicable to Transit Agencies providing contract operating services. (Rides only)Charge an additional rate per mile or hour on contractAverage .10 to .13 cents per mileOffice of Transit can provide a spreadsheet for calculatingHelps offset local shareApplied to Capital invoice, not operating invoiceNeed to establish a separate bank account for the restricted fundsMoney cannot be used for other items such as operating matchingCash from vehicles sold must go back to Transit ProgramRecommend the cash goes to capital replacementWhether there is a capital replacement fund or notTransit must track funds from vehicles soldCannot set money aside from operating for capital replacement
91 Eligible Expenses per A-87 (city, state) per A-122 (non-profit) To be allowable under Federal awards, costs must be:Necessary and reasonable for proper and efficient performance and administration of Federal awards.May not be included as a cost or used to meet cost sharing or matching requirements of any other Federal award.Must be able to withstand public scrutinyAllocable to Federal AwardsA-87 - (2 CFR part 225)A-122 (2 CFR part 230)In accordance with GAAPAuthorized or not prohibited under State or local laws or regulationsBe the net of all applicable creditsBe adequately documented
92 Eligible Expenses Per USOA: For transit agencies providing more than one mode of service, it is necessary to furtheridentify and classify labor compensation by each mode of service. In most multi-mode systems, some labor is directly associated with each mode and some labor jointly serves more than one mode.Demand Response vs. Fixed RouteUniform System of Accounts (for Transits)
93 Reporting expenses Report all Transit expenses, even if ineligible Provides true cost of providing service.Provides transparency to all elements of expenseTotal cost of eligible + ineligible should reconcile to the general ledger/financials for the Transit.
96 Vehicle Operations and Vehicle Maintenance Supervising station and terminal transportation activities; clerical support for transportation administration activities, operators report, standby, instructor operators, inspecting operator performance, reporting accidents, representing union, selecting runs during sign-up, administering sign-ups.
97 Vehicle Operations and Vehicle Maintenance Providing supervision and clerical support for the administration of vehicle maintenance, preparing and updating vehicle maintenance records, accumulating and computing vehicle performance data, (e.g., mileage, fuel and oil consumption), providing technical training to vehicle maintenance personnel….
98 Non-vehicle maintenance Providing supervision and clerical support for the administration of transit way and structures maintenance and other buildings, grounds and equipment maintenance; preparing and updating transit way and structures maintenance records and other buildings, grounds and equipment maintenance personnel….
104 Examples of Eligible Expenses Operator’s Salaries and WagesCost of labor for transit agency’s employees who are classified as revenue vehicle operators.Wages for performing revenue vehicle operations (stand-by time, inspection, maintenance of revenue vehicles, servicing revenue vehicles, and customer service)DOES NOT include operator’s wages for performing non-vehicle maintenance functionsLabor – Other Salaries and WagesLabor of employees of the transit agency who are not classified as revenue vehicle operatorsWages for maintenance workers, administrative staff and transit managersSalaries & Wages (in general)Payments to employees arising from the performance of work,Shift differentialsOvertime PremiumsMinimum GuaranteesOther non-fringe benefit labor costs
106 Fringe BenefitsAll payments and accruals to others (insurance, government) on behalf of employees of the Transit agency.Payments to employee for leave.Payments arise from the employment relationship, but are over and above “labor” costs.FICAPension PlansMedical PlansDental PlansLife Insurance PlansDisability PlansUnemployment InsuranceWorkers CompensationSick Leave, Holiday, VacationOther paid absence (military duty, jury duty, and bereavement)
107 Eligible Expense – Separate Accounts Can cash be transferred to a separate account for transit employees’ vacation payouts?Assume this is related to an employee - separation from service.It depends – By-laws, Board of Directors, agency policies.Transit has an obligation to pay employee for leave payout at some point in the future = Liability.Governmental Accounting Standards Board - Statement No. 16 Accounting for Compensated Absences (Issued 11/92)Vacation leave and other compensated absences with similar characteristics should be accrued as a liability as the benefits are earned by the employees if the leave is attributable to past service and it is probable that the employer will compensate the employees for the benefits through paid time off or some other means, such as cash payments at termination or retirement.Statement of Financial Accounting Standards No. 43 "Accounting for Compensated Absences“ Issued in November 1980
108 Examples of Eligible Expenses Management Service FeesCompensation for Personal ServicesPer Cost Principles - Includes but is not limited to salaries, wages, director’s and executive’ committee member’s fees, fringe benefits, pension plan costs….to the extent that:Compensation to individual employee is reasonable for the services rendered rather than a distribution of earnings in excess of costs.
109 Examples of Eligible Expenses Advertising FeesWhen incurred for the purpose of:recruitment of personnelprocurement t of goods and servicesdisposal of surplus materials acquired in the performance of a Federal award.
110 Examples of Eligible Expenses Professional/Technical ServicesPer Cost Principles - When rendered by persons who are members of a particular profession or possess a special skill and who are not officers or employees of the organization.Consideration must be made to whether the service can be performed more economically by direct employmentAttorneys, Accountants, Auditors, Investment Bankers, Computer Service Companies, Engineering Firms, Management Consultants and Transit Industry Consultants
111 Examples of Eligible Expenses Temporary HelpWhen incurred for the sole purpose of Transit ActivitiesWork in the capacity of a transit agency employee under the supervision of transit agency personnel.Indirect salaries & Wages
112 Examples of Eligible Expenses Contract Maintenance ServicesPer Cost Principles - When Incurred for necessary maintenance, repair or upkeep of Transit equipmentProvided by external supplierIncludes Central Garage for city/countyMust be charged at actual cost, net of applicable creditsParts and supplies from general stores or stockrooms should be charged at their actual net cost.Upcharge cannot be applied to costs billed to grant
113 Examples of Eligible Expenses Custodial Services –performance of janitorial services under contract or on a single job basis with an outside organization.Other Services –Services not included previouslyDrug testing
115 Examples of Eligible Expenses Fuels & LubricantsLess fuel tax rebate (discussed later with offsets)Tires & TubesFor Transit vehiclesOther Materials and SuppliesIssued from inventory or purchased for immediate consumptionVehicle maintenance partsCleaning suppliesOffice forms
117 Examples of Eligible Expenses Utilities other than Non-PropulsionElectricNatural GasWater & SewerTrash collectionsTelephoneTransit having separate building – full cost is charged to Transit.Transit using shared area – only pro-rata share to be appliedCost Allocation Plan is necessary
119 Examples of Eligible Expenses Casualty & Liability CostsCosts for the protection of the transit agency from loss through insurance program, compensation of others for their losses due to incidents for which the transit is liable.Premiums for Physical DamageTo insure against loss through damage caused by collision, fire, theft, flood earthquakes and other types of losses.Recoveries of PDFrom Insurance companies or 3rd parties involved in accidentNeed to be entered as a negative amount on invoice.Credits discussed later in offsets.
121 Examples of Eligible Expenses Property TaxesBased upon valuation of property owned by TransitVehicle Licensing and Registration FeesOnly Transit VehiclesNon-Profits would need to include on invoice to ODOT
125 Examples of Eligible Expenses Dues & SubscriptionsLobbying costs are unallowableTransit RelatedFees for Membership in industry organizationsMembership must be in name of grantee organization and not in the name of an individualSubscriptions to periodicalsSubscription to local newspaper is not an eligible expense.
126 Examples of Eligible Expenses Travel & MeetingsPer Conus RatesCannot claim expenses covered by scholarship awards on invoice
127 Miscellaneous Expenses Bridge, tunnel, and highway tollsBad Debt ExpenseCosts are ineligibleReport in Non-Eligible column to reflect true costs
128 Miscellaneous Expenses Other Miscellaneous ExpensesCosts that were not detailed in other categories defined.Parking fees, copying,Staff recognition based upon performanceIncludes:Per cost principle: Staff recognition – to include employee morale and health and welfare costs.Certificate for years of serviceAttendance bonus - $25 savings bond
129 Miscellaneous Expenses Other Miscellaneous ExpensesDoes not Include:Retirement GiftsFlowers or gifts of any kindFood, coffee, pop, gift cards, hams, turkeys, tickets to games or events, company picnics, outings, etc.Office pool – coffee/pop
131 Examples of Eligible Expenses Interest ExpenseOn long term debt for capital assetsSales & RentalsAll lease agreements require prior approval from the Office of TransitApplies to vehicles, facilities, & other capital items.
134 Examples of Eligible Expenses Depreciation expense on assets – to include only those assets purchased with no portion of federal funding.OMB Circular A-122 Attachment B; Section 11 (Depreciation and use allowances); Subpart C provides that the calculation of depreciation will exclude:(1) Any portion of the cost of buildings and equipment borne by or donated by the Federal Government irrespective of where title was originally vested or where it presently resides.(2) Any portion of the cost of buildings and equipment contributed by or for the non-profit organization in satisfaction of a statutory matching requirement.
135 Examples of Eligible Expenses Depreciation expense on assets – to include only those assets purchased with no portion of federal funding.OMB Circular A-87 (2 CFR 225) Attachment B; Section 11 (Depreciation and use allowances); Subpart C provides that the calculation of depreciation will exclude:(1) Any portion of the cost of buildings and equipment borne by or donated by the Federal Government irrespective of where title was originally vested or where it presently resides; and(2) Any portion of the cost of buildings and equipment contributed by or for the governmental unit, or a related donor organization, in satisfaction of a matching requirement.
140 From ODOT Invoice:From Transit GL/Financials:Need to apply $25 credit to expense.
141 Example of Invoice Detail $58,002Example of Transit GL Detail$13,614
142 Expenses must be net of all applicable credits
143 General Principles for determining Allowable Costs per A-87 Entity is responsible forefficient and effective administration of Federal awards through the application of sound management practices.Employing whatever management techniques may be necessary for proper and efficient administration of awards.Complying with terms and conditions of Federal AwardsPurchases less applicable credits
144 Applicable Credits per A-87 “to the extent that such credits accruing to or received by the governmental unit relate to allowable costs, they shall be credited to the Federal Award either as a cost reduction….”
145 Expense Offset Accident claims Warranty Reimbursements - Vehicles Vendor invoice to repair vehicleInsurance reimbursement paid to transit for repairsWarranty Reimbursements - VehiclesWarranty Rebate for service completedSales Tax creditRebatesPurchase printer that has a rebate offerFuel Tax RebateProcessed quarterlyThe offset reduces the actual expense incurred by the transitODOT invoice must reflect the credit.
147 What is cost to be billed on ODOT invoice? Insurance PaymentsA vehicle incurs $10,000 damage in an accident.Insurance Company Reimburses $10,000 for vehicle damage.Local body shop completes repairs to vehicle at a cost of $9,000.Transit completes additional repairs to vehicle at a cost of $1,000.What is cost to be billed on ODOT invoice?
148 Insurance PaymentsWhat is cost to be billed on ODOT invoice? Costs would be included on ODOT invoice, but there is no expense - nets to zero. Salaries/Wages Expense $1,000 Contract Maintenance Expense $9,000 Recoveries of PD $10,000Show transaction – need transparency to the event
150 Who is eligible for rebate? XT Excise Tax Division Information Release - Revised Definition of Transit Buses – February 12, 2004The transit bus must be operated for public transit or para-transit service on a regular and continuing basis within the state by or for a county, a municipal corporation, a county transit board, or a regional transit authority or commission.DOES NOT include shared-ride taxi service, carpools, vanpools, jitney service, school bus transportation, or charter or sightseeing services.DOES NOT include vehicles used for service/maintenance or general administration.EVERY RURAL TRANSIT IS ELIGIBLE
151 Fuel Tax Rebate Requirements Claim must be filed within 365 days from the date of fuel purchase.Must report gallons, rather than dollars.Documentation - must keep separate reporting for fuel usage.
152 What is the state motor fuel tax rate? July 1993 through June 2003$0.22July 2003 through June 2004$0.24July 2004 through June 2005$0.26Beginning July 1, 2005$0.28
153 Minimum Rebate Requirement No refund shall be authorized under Ohio Revised Code Section for any single refund claim for less than 100 gallons.All motor fuel listed must be rounded to the nearest whole gallon.
154 Purchase Documentation Submitted to the Ohio Department of TaxationEvidence of fuel purchasesfuel invoicescash receiptscredit card receiptsor any other documentDocument must containthe name and address of the sellername of the purchaserdate of purchasetype of fuel,the number of gallons purchasedthe purchase price
155 Fuel Usage Documentation Fuel available (inventory)Fuel sold to othersConsumed in vehicles other than qualified transit buses (i.e., Service Vehicles & General Administration)Consumed in a non-qualifying mannerConsumed off the highwayConsumed in qualified transit Buses
156 Invoice Requirements ODOT Fuel expense to line item – Fuel & LubeRecord fuel tax credit as a negative amount on line – Fuel & Lube taxes (only for operations)Quarterly operating invoiceTAXATIONMinimum of 100 gallonsCan file monthly (if meet minimum consumption)Must file claim within 365 daysof fuel purchase
157 What is billed on the ODOT invoice? Fuel Tax RebatesFuel Cost - $50,000Tax Rebate $8,000What is billed on the ODOT invoice?
158 What is cost to be billed on ODOT invoice? Fuel Tax RebatesFuel Cost - $50,000Tax Rebate $8,000What is cost to be billed on ODOT invoice?Fuel cost of $50,000 recorded on quarterly invoiceline Fuel & Lubricants for the appropriate column only.Rebate of $8,000 recorded as a credit (negative amount) on quarterly invoiceline – Fuel/Lube taxesonly available for the Operations column.
159 Motor Fuel Tax Rebate - Effective Must begin 3rd quarter of State Fiscal Year (January - March 2012)Must keep documentation necessary to support rebate requirementsAll Transits must include the rebate as a credit (negative amount) to line item fuel/lube taxNote:The Transit’s failure to seek the rebate does not negate the requirement to recognize the credit to the fuel taxes.
160 ImplementationDetermine if the transit is actually incurring and paying the state taxes.If not incurring the tax, no additional reporting requirements.Retain documentation to support tax position.
162 Sales Tax Credits Many Transits are exempt from sales tax. If exempt, the transit must report expenses net of the sales tax, even if not taken.
163 Sales Tax Credits - Example Mechanic makes a purchase at the local auto parts store and charges it to the transit account. The sales receipt provided to the mechanic erroneously includes sales taxes.The Transit A/P employee identifies the error and contacts the auto parts store and has the sales tax removed.Transit processes payment of the invoice less the sales tax.
164 Sales Tax Credits - Example What happens if the A/P employee does not identify the error and pays the sales tax?What is the effect on ODOT quarterly operating invoice?Tax amount is recorded in the non-eligible column on the ODOT invoice.
166 Cost allocation plan (CAP) Overhead rates IT SupportStorageCEOOffice SpaceUtilities
167 Cost Allocation Plans Indirect Costs - defined “Incurred for a common or joint purpose benefiting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without disproportionate to the results achieved.”Note: Assigned based on use/consumption – not ability of a division, area, or program’s ability to pay.
169 Cost Allocation PlansFormal process to allocate indirect costs to all departments, divisions, or offices.Prepared annually (same basis as financials)Two approved methodsSimplified - Each agency’s departments benefit from indirect costs to approximately the same degree.Multiple-rate – Agency’s indirect costs benefit its major functions (departments) in varying degrees.Multiple- rate: when more definitive costing and should be used when operating differences between divisions or bureaus result in material differences in the use of resources and in costs.
170 Steps Involved in Calculating a Rate Under the Simplified Method Cost Allocation PlansSteps Involved in Calculating a Rate Under the Simplified Method1. Adjust indirect costs for the period by eliminating any costs directly reimbursed through a Federal award awarded specifically for that purpose.remove administrative salaries included in the pool that were funded as direct in a grant.Remove unallowable costs and capital expenditures.2. Adjust direct costs by eliminating flow-through funds and capitalexpenditures. Compute and add use allowances.3. Divide the total allowable indirect costs (net of applicable credits) by an equitable direct cost base (e.g. salaries and wages or modified total direct costs).
171 Steps Involved in Calculating a Rate Under the Multiple Rate Method Cost Allocation PlansSteps Involved in Calculating a Rate Under the Multiple Rate Method1. Classify departmental indirect costs into functional cost groupings (cost pools) which benefit divisions of the agency in significantly different proportions.2. Select appropriate basis for distribution of each classified pool of indirect costs.3. Distribute each classified pool to the benefitting division.4. Calculate an indirect cost rate for each division of the agency by relating the total indirect costs allocated to that division to that unit’s direct cost base.Rates must be calculated annually
173 Cost Allocation Plans Agency certification required Based upon auditable historical costsMust demonstrate that all unallowable costs have been excludedSupported by formal accounting and other recordsRequired annually, within six months of fiscal year
174 CAP Support Must be accompanied by An organization chart A copy of the Comprehensive Annual Financial Report (CAFR)Brief description of the service –who provideswho receivesItems of expense include in the cost of the serviceThe method used to distribute the cost of the service to benefitted agenciesTime-tracking source documents
175 CAP GuidanceASMB C-10Cost Principles and Procedures for developing cost allocation plans and indirect cost rates for agreements with the Federal governmentImplementation guide for Circular A-87Developed by US Department of Health and Human ServicesAs of April 8, 1997
178 Common Audit FindingsDouble dipping – claiming the same cost on both the operating and capital invoices.Depreciation on Federal funded assets.Misclassified RevenueLack of supporting documentation.Math errorsIncomplete or inaccurate fixed asset inventory listing.Unallowable expensesLack of support for cost allocations or charge rates.Inaccurate, out-dated or unapproved cost-allocation plans
179 Common Audit Findings Farebox issues abound Segregation of duties Internal controlsSafeguarding/security of cash, tokensTokens – Inventory, record keepingOutstanding tokens – what is the liabilityChain of custodyMatching payments to manifest
180 Common Audit FindingsUnallowable/Ineligible costs – Report in ineligible columnExecutive Director costsLate feesPenalties on credit cards (over limit)Credits due but not takenBad debt expenseContracts – (Please work with the Office of Transit to address)Not charging fully allocated costsNot charging actual trips/mileage to contractsLack of succession planning – training, manuals, policies and proceduresLack of documentation – current financial policies and proceduresOthers have policies and procedures, but are not following them.
181 Common Audit FindingsCharge rates for mechanics labor/central garage must be supported/documented based upon actual incurred costs.Must be able to provide evidence for time-tracking of resources.Operate on break-even basis, no profit motive when charged to Federal Programscannot mark-up laborcannot mark-up partsEntity must have a reliable work order system capable of tracking labor, materials and supplies for each vehicle.