Questions and Answers on the Coop Audit Policy Implementation to: "DC - All District Chiefs", "AO - All Administrative Officers" cc: "A - Division Chief and Staff", "B - Branch Chiefs and Offices" subject: Questions and Answers on the Coop Audit Policy Implementation Date: Tue, 05 Mar 1996 18:38:04 -0500 From: "Alice A Sabatini, Administrative Officer, Reston, VA" These questions and answers on WRD's implementation of the recommendations in the Audit Report of the Federal-State Cooperative Program and specifically, the changes in the common services policy are forwarded because this information should be of benefit to all Districts. Please let me know if you find this useful or if you have more questions that you would like to see answered. Q: Do "report preparation and publication costs" include all time spent on supervisory reviews, colleague reviews, and District Chief reviews? A: The Common Services Policy in WRD Memo 92.21 outlines personnel costs to be charged to the Common Services Account (CSA). This includes costs for the District Chief, Reports Specialist, and other various personnel. WRD Memo 96.08 does not supersede that portion of the earlier policy outlining personnel costs that are appropriately chargeable to CSA. Q: Why were reports costs singled out for direct charging and not other costs like ADP, GIS, Admin, and project management? A: Report costs were removed from overhead because: o the costs can be clearly identified with a specific work effort; o some projects benefit from the services to a much greater extent than others (this is not generally true of ADP, project management and Admin costs); and o all other divisions have agreed to this change as a part of the bureau assessment policy to be implemented in FY 1997. Q: What is the guidance for handling a reports surcharge in AIS? A: The acceptable method for applying the surcharge is through the use of a standard voucher (SV). Most offices collect these reports costs in an existing subaccount in the CSA. In applying the surcharge, credit the CSA subaccount and debit (charge) the individual project accounts. The surcharge may be distributed to projects at an interval determined by each cost center (e.g. monthly, quarterly, annually, etc.). Q: Will the auditors support the use of a surcharge? A: The auditors will support the surcharge if the methodology is clearly stated, supportable, and consistently applied. In simple terms, decide the basis for the surcharge in your cost center, write it down in policy that is distributed to the cost center staff, and apply the surcharge according to your internal policy. If your actual practice deviates from your stated policy, amend your policy to reflect the changes. Q: Can we use the working capital fund to amortize report costs over the life of the project? A: At this time, the WCF cannot be used for reports processing without a change to our appropriation language, because it is considered an "operational" type of expense. Because of the conservative nature of our Bureau, it took a lot of debate and hard work just to convince some folks that we could manage a WCF at the field level. As we demonstrate our ability to successfully manage WCF's at the field level, it is worth revisiting the issue again to see if we can gain additional authority in this area. In the meantime, the WCF can be used for any type of equipment, including reports processing equipment, and contributions may be made from any funding source/account. Q: How will Districts be judged in FY 1996 for implementing this policy? A: We consider FY 1996 a transition year. As such, Districts will be permitted to use overhead funds to offset deficits in project accounts. However, project accounts MUST reflect their true balance (red or black). The overhead account does not have to be used; technically the guidance is to balance the cost center in the black. Offsetting project account deficits with surpluses in the overhead account is only permitted in FY 1996 and is being allowed so that common service rates do not have to be renegotiated in mid-year. DO NOT SV FUNDS OR EXPENSES FROM THE OVERHEAD ACCOUNT TO THE PROJECT ACCOUNT. Q: How can we implement a policy without the requisite procedures and necessary systems changes? A: The policy had to be determined before we can begin the task of implementation. In this case, because of the audit follow up being tied to our financial statements, we are under pressure to show we are making substantial progress this FY (1996). This is extremely frustrating for everyone, but it is important to keep in mind that part of the delay in issuing policy is due to the attempt by the Division to integrate field comments and structure a policy that we could live with in the coming years. Q: How is HQ tracking unsigned agreements on which work is being performed? Districts should not have to prepare a manual report each month; this is too time consuming. A: We are planning to add a funding status code of "W" to AIS to track unsigned agreements for which work is being performed. This will allow us to use AIS to obtain the needed information and eliminate the manual reporting requirement. The timeframe for this enhancement has not been determined; we recognize the urgent need. Q: What is the difference between underfunded work and unfunded work? A: Underfunded work is work that has been funded previously but that funding has now been exhausted. An example of underfunded work is project work where the report has not been completed but all of the funding was spent last year. Unfunded work is work that was never funded; the work never had a funding source. An example would be a project on which work was begun in good faith or in anticipation of finding a funding source, but for which no agreement was ever signed. Most unfunded mandates fall into this category.