Audited Overhead Rates – The Good, The Bad, and The Ugly. AASHTO Subcommittee on Internal and External Audit 2014 Annual Meeting August 10 – 13, 2014 Savannah, Georgia. MH Miles Company CPA PC. Niche Certified Public Accounting Firm Specialize In Governmental Compliance
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AASHTO Subcommittee on Internal and External Audit
2014 Annual Meeting
August 10 – 13, 2014
Common issues and findings noted
Facilitate open discussion
Employee Team Building
The Key is Proper Documentation
Who – employee name and names of all guest
What – was purchased and price (including itemized meal receipts)
When – date meal occurred
Where – place meal occurred
Why – purpose of the meal/meeting
Credit Card statement only
Purpose of meal missing
Meal cost excessive
Alcohol not removed
Misinterpretation of < $75 receipt rule
Poll – State procedure for unallowable costs
FAR 31.201-4: Cost Allocability and Assignability to Final Cost Objectives
CAS 418.40: Proper Allocation Bases for Direct and Indirect Costs
Implied that all hours worked are needed to correctly determine the beneficial/causal relationship between the cost and the cost objective.
CAS 401: Consistency in Estimating, Accumulating, and Reporting Costs (Bid = Book = Bill)
The premise is that consistent application of cost accounting practices will result in reliable cost estimates, and later facilitate comparing the estimated cost of contract execution with the actual cost.
Owners only recording 40 hours/week
Employees stop recording time at 40 hours
Time in excess of 40 hours only recorded if billable
All hours recorded but only direct time is compensated
Poll – State procedure for correcting
Does the accounting treatment match billings?
Bill as employee direct labor – Accounted for as ODC or Indirect expense (And Vise-Versa)
CPA firms performing substantial work to produce overhead audit without identifying Internal Control weaknesses
Travel expenses not limited to FTR
Indirect Labor on timesheets not detailed enough to identify unallowable activities.
Rotary and Chamber of Commerce Dues
Common Control Rent
Parent Company Allocations