Policy:
1.
The Mid-Ohio Psychological Services, Inc.
Board (herein referred to as Board) is responsible for all funds of the
Mid-Ohio Psychological Service,
Inc.
2.
The annual budget is prepared by the Executive Director, in
consultation with the Administrative Coordinator and Accounts Payable/Payroll
Manager. The
annual budget is to be reviewed by the Board for approval prior to the
beginning of the fiscal year. Any
significant modifications to the annual budget are to be reported to the Board
in a timely manner.
3.
The Executive Director is the staff person delegated by the Board to
keep them informed of the financial management of the agency.
4.
All requests for funding must be approved by the Board of Directors
prior to submitting the request. All
such requests must clearly document the purpose and philosophy of the agency
and must meet a proven need of the service area.
5.
The Accounts Payable/Payroll Manager is delegated by the Executive
Director to supervise the handling of all receipts and disbursements according
to the rules of the Board, their job description, the Fairfield County ADAMH Board, according to the contract between that agency and
Board, and all other agreements by the Board and good business practice.
6.
The Accounts Payable/Payroll Manager prepares financial statements and reports which are submitted
to the Board at each Board meeting for approval.
7.
All cash receipts received are recorded in a cash receipt journal and
kept by sequential number. Receipts
are deposited at least weekly.
8.
All cash disbursements are made payable by check which requires the
signature of two authorized personnel.
9.
A reconciliation of accounts is completed monthly.
10.
All clients paying fees receive a monthly statement in envelopes
bearing the Mid-Ohio Psychological Services’ street address only at the
return address. If an account has
had no receipts for thirty days or more, the designated billing personnel will mark the
statement past due and request that the responsible party contact the office
to arrange for a payment agreement.
If the party responsible for payment on the account is unable/unwilling
to make payment arrangements the account may be submitted to a collection
agency, submitted to the appropriate court for garnishing of wages, or written
off at the discretion of the Executive Director.
11.
The agency shall comply with all fiscal procedures required by the
Board, the Fairfield County ADAMH Board, and local, state
and federal grants.
12.
All employees handling funds must be bonded.
13.
Agency fees will be reviewed annually by the Board and reflect the
results of the cost finding process.
14.
The agency will have an independent audit annually.
The most recent audit report will be kept on file for public view in
the office providing that items related to confidentiality are not violated.
15.
An inventory of all equipment and furnishings will be conducted on an
annual basis.
16.
The agency shall utilize an accrual method of accounting.
17.
A chart of accounts shall be established and approved by the Board.
This chart of accounts shall be reflected in financial reports to the
Board.
18.
A review of these policies and procedures will be conducted annually by
the Board of Directors.
rev 2/2004
Procedure
BILLING PROCEDURES
Client
Fees
Clients
receiving court ordered evaluations/assessments that are not to be paid for by
the court or some other governmental agency are to pay the full cost prior to
the delivery of the service. If
the client is unable to pay the day of service, the appointment is to be
rescheduled to a date when payment can be made.
All
clients will be made aware of the current fee schedules prior to treatment.
Any client who is unable to pay the fee and who is not Medicaid
eligible will be referred to the appropriate local community mental health
agency which is Title XX certified.
Clients
who are receiving ongoing services that are not paid for by the Fairfield
County Mental Health and Recovery Services Board and are unable to pay for
services may negotiate a payment schedule.
If the client does not comply with the negotiated payment schedule, the
account shall be turned over to collection or submitted to the appropriate
court for the garnishing of wages.
Health
Insurance
If the client is insured under a health insurance
plan, we will file an insurance claim on their behalf. The client
must furnish the agency appropriate documentation required for the submission
of the claim as mandated by the health insurance company.
Prior to filing the insurance claim, the client must sign a consent
form allowing the agency to release pertinent information to the insurance
carrier. All clients who have a
co-pay will make payment at the time services are rendered.
Sliding Scale Fee
Some clients may be
eligible for sliding scale fee based on the program that they are
participating in and the availability of funds from outside agencies.
Admission criteria for these programs will be clearly defined and eligibility
criteria will be established for the sliding scale fee structure. Eligibility
will be based on household income and household size. Household income must
be verified prior to the establishment of the fee structure for a particular
client. Any client subject to a sliding scale fee shall sign a statement
claiming their household income, household size, and a statement of
understanding indicating they are aware of the possible ramifications for
providing false information as well as the funding source which allows for the
sliding scale fee structure. Clients receiving sliding scale fee services
will be provided an annual statement reflecting the full cost of the services
provided to them and reflecting the source of the sliding scale supplement.
Medicaid
Medicaid
reimbursement with local matching funds from the Board will be accepted as
payment in full. Note that some
procedures and missed appointments are not covered and therefore will be the
client's responsibility. Prior to
submitting an invoice for Medicaid reimbursement, each client must be issued a
Universal Client Identification (UCI) number.
The Medicaid card is to be verified as being active for the month that
the services are to be provided and copied for the client chart.
Board
Subsidized Services
Some
clients may be seen through programs funded by outside sources.
When a service is funded entirely by an outside source, the client will
not be billed for the services. When
practical, clients receiving services funded by outside sources will be
provided an annual statement reflecting the cost of services that they
received and the source of the funding for the services.
Failed
Appointment Fees
When
a client fails to cancel an appointment at least twenty-four hours before the
scheduled appointment, the client is charged a failed appointment fee.
The client will not be seen again until the missed appointment fee is
paid. The treating clinician may
wave the failed appointment fee if clinically indicated.
Procedure
For Posting Services
When
services are provided, the treating clinician is to complete a Daily
Schedule Sheet which must include the date and time the service was
rendered, the length of service, the nature of the service, the client name
and ID, and the name of the treatment provider.
This Daily Schedule Sheet is to be turned in to the
Transcription Supervisor who will confirm that case documentation has been submitted
for the services. The Daily
Schedule Sheet will then be delivered to the designated billing personnel who will post
the sessions to the billing software and will forward the Daily Schedule
Sheet to the Accounts Payable/Payroll Manager who will use the
Daily Schedule Sheet to compute clinician payroll and determine
agency percentage as discussed below.
Each
client having an outstanding balance will be billed on a monthly basis.
If the client is using health insurance or Medicaid for payment of
services, these third party payers are also billed on a regular monthly basis.
Second
notices on health insurance claims are forwarded to the insurance companies,
if we have not received a response within sixty days from the first insurance
billing. If no payment is made by
the insurance company after the second submission, the client becomes
responsible for the insurance company’s share of the claim.
rev.
02/2004
Billing Accuracy and Corrections
Every effort is made by
billing staff to insure the accuracy of the services being billed for, however
errors do occur on
occasion. All errors will be investigated and corrected upon discovery.
Billings are reviewed during the QA chart review process for the client's who
are randomly sampled each month. Errors discovered during this process are
documented by the reviewer and forwarded to the Billing Supervisor for
investigation and correction. In addition, the agency regularly reviews
client's with high utilization of services, during this review, billing records
are compared to clinical documentation, discrepancies are investigated and
corrected as needed.
Collection Agency
Billing
statements will be mailed to clients monthly. Any account without a
payment for 90 days will be sent a past due letter which
indicates that a payment arrangement must be made within 30 days to avoid
collection agency action. Any account left unpaid 30 days after the letter
is sent will be turned over to the collection agency for further action.
Accounts turned over to collection will have outstanding balances and an
additional thirty-five percent of the outstanding balance charged as a
collection fee charged to the collection agency account.
Charges under the collection agencies care will
remain there for one year. After one year if no payments are being received on
the account, it will be written off by the agency as bad debt, however the
collection agency will continue to pursue the account indefinitely. If payment
is received on an account that has been written off, the payment amount will be
charged back to the account and the payment posted at the time it is received.
Account Adjustments and Write-Offs for Mid-Ohio Psychological Services Inc.
Account adjustments are made when charges exceed the contracted amount to be
paid or when billing errors occur. Account adjustments do not need to be
approved by the Executive Director. Account adjustments are necessary when an
account incurs the following issues:
v
A refund
is owed to the insurance company
v
A refund
is owed to the client/responsible party
v
Insurance
EOB requires adjustment of charges due to contract rates
v
Medicaid
Remittance requires adjustment of charges due to contract rates
Account
write-offs occur when full payment for services was expected but is
unobtainable. When an account write-off is needed, the Billing Supervisor will
complete an Account Write-off Request and give it to the Executive Director for
approval. Any single account write-off of $5,000 or more will be taken to the
Board Directors for approval. Account write-offs are not made until the
Executive Director has approved the request. Account write-offs are necessary
when an account incurs the following issues:
v
Medicaid
reverses payments made to the account
v
An
insurance/ Medicaid charge is over one year old and non payable for that reason
v
The
client/responsible party cannot be located
v
The
client/responsible party is deceased
v
The
client/responsible party files bankruptcy
v
The
account has been turned over to collections but is uncollectible
Formal documentation is required for a write-off, notification can include a
court bankruptcy statement, death notice, or letter from the collection agency.
When an
adjustment or write-off becomes necessary, the Billing Supervisor will make an
adjustment to the account in the billing software. The adjustments will be
accounted for by labeling them appropriately.
The following is
a list of reasons used for adjustments:
v
Amount
owed to collection agency
v
Paid to
collection agency
v
Beyond
Customary Rate
v
Collection Fee
v
Duplicate
Claim
v
MACSIS
Adjustment
v
Medicare
Adjustment
v
Non-Billable Service
v
Rebate
Adjustment
v
Refund
v
Roll-Up
Adjustment
The following is
a list of reasons used for write-offs:
v
Bad Debt
v
Reject
v
Write-off
–Other
rev 02/2004
RECEIPTS
Any staff member performing job duties in the
front office may receive payment from
clients on accounts due. The
designated receptionist is responsible for sorting mail and receiving payment by mail on
accounts due. No other staff
member is authorized to receive payment from clients for accounts due.
When cash is received, a receipt shall be completed in triplicate, with
the payer receiving one copy and one copy being left in the receipt book.
Persons who pay with a check may be given a receipt if they desire to
have one. Cash payments are to be
placed in the appropriate deposit bag with the third copy of the receipt
attached. All checks received,
either in person or in the mail, are to have 1 photocopies made of them, are
to be stamped “For Deposit Only”, and are to be placed in the deposit bag
with documentation attached clarifying the account that the payment is to be
made to (an Explanation Of Benefits (EOB) if received from an insurance
carrier or a note if received from an individual client).
All receipts are to be logged on the Day Sheet, indicating the
date, client name, payment source, type of payment, and amount of the payment.
At the end of the workday the Deposit Bag is to be secured in the
designated locked drawer.
At the beginning of the workday, the designated
billing personnel is to balance the previous
day’s Day Sheet with the cash and checks in the Deposit Bag and is to
complete a bank deposit slip. One copy
of each check should be made before the deposit is made. The
cash and checks are then to be deposited in the appropriate agency account.
The designated billing personnel is to then post to the billing software the accounts
received from the Day Sheet. If
receipts are not directly related to a particular service, they will be
applied to the oldest service rendered on the client’s account.
The designated billing personnel will then forward a copy of the deposit slip, EOB’s,
cash receipts and copies of all checks to the Accounts Payable/Payroll Manager once the deposit has
been made. The Accounts
Payable/Payroll Manager
will post all receipt information into the accounting software.
The Accounts Payable/Payroll Manager will then place a copy of the deposit slip and
copies of all checks and cash receipts into the accounting file.
The designated billing personnel will then ensure that a copy of the EOB and
receipt/check will be filed in the client file.
At the end of each month the billing software and the accounting software will
be balanced.
rev 02/2007
ACCOUNTS PAYABLE
Acquisition
Requests for Purchase
All requests for purchase of
items or services are to be forwarded to the Accounts Payable/Payroll Manager. The
Accounts Payable/Payroll Manager will
then present the request to the Executive Director who will evaluate the
request. Approval for requests must be made in writing. Upon approval, the
Accounts Payable/Payroll Manager will make arrangements for securing the item or service being
requested.
ALLOWABLE EQUIPMENT
COSTS:
Depreciable Equipment -
Includes depreciation charges for capital equipment (any item costing $1000 or
more). Computation of depreciation is based upon the acquisition cost of the
item excluding: (1) any cost borne by the Federal Government through other
federal grant programs, and (2) any idle or excess equipment.
Depreciation
Adequate property records
must be maintained and the straight-line method of computing depreciation must
be used with an assumed life of five years for most items. When equipment is
replaced, the value received for the old equipment less the salvage value and
any unrealized depreciation charges are deducted from the acquisition cost of
the new equipment.
Nondepreciable Equipment -
Small equipment items costing less than $1000 may be expensed (purchased
outright) during the fiscal year in which they were purchased. This equipment
is expensed to the Equipment Expense Account.
Leased Equipment - The cost
of leased equipment is allowable, to the extent of its reasonableness as sound
business policy. Equipment obtained by lease/purchase agreement must be
depreciated.
Asset Identification
At minimum, all assets
acquired that have a value of $1,000 or more will be tagged by the
Administrative Coordinator and entered into the Inventory Database at the time
that they are received. Other items valued less than $1,000 may be tagged
with MOPS identification numbers and entered into the Inventory database.
Location reports from the Inventory Database are verified at a minimum of once
a year, more often if major changes occur.
Asset Disposal
The Administrative
Coordinator will be responsible for the disposal of agency owned surplus and
obsolete material, goods and equipment.
Obsolete Material, Goods and
Equipment are defined as material, goods and equipment no longer usable in the
service for which they were purchased, and cannot be used safely, or
economically for any other purpose.
Surplus Material, Goods and
Equipment are materials, goods and equipment in excess of operating,
maintenance, repair, or spare parts requirements; or any item not having a use
within the foreseeable future.
Departments having surplus,
or obsolete material, goods, or equipment shall notify the Administrative
Coordinator by email. Arrangements for relocation, removal to storage or
disposal will be made.
Notice shall include:
 | Complete description of
the goods including brand name, model and serial numbers where applicable, |
| Inventory number where
applicable |
The Administrative
Coordinator will add to the notice:
| Date of purchase |
| Purchase price |
The Administrative
Coordinator will dispose of surplus and obsolete material, goods and equipment
by the method that best obtains maximum value including:
- Transfer to another area
- Return to supplier for refund or credit
- Trade-in on the purchase of replacement equipment
- Donation to other non-profit agencies
- Scrap disposal in accordance with all Federal and
Provincial regulations
If the asset is returned,
traded-in, donated, or scrapped, it will be removed from the inventory with an
explanation in the comments and the Accounts Payable/Payroll Manager will be notified.
2/9/2007
Payment
of Invoices
Upon
receipt of an invoice for which prior approval for payment was made by the
Executive Director, the Accounts Payable/Payroll Manager will post the invoice to the computer.
If prior approval was not provided for the invoice, the invoice will be
presented to the Executive Director to determine the appropriateness of the
invoice. Twice monthly, at
approximately equal intervals, the Accounts Payable/Payroll Manager will present to the
Executive Director a listing of all outstanding liabilities.
The Executive Director will then determine the appropriateness of
payment of each of the liabilities and will provide verbal authorization for
payment. The Accounts
Payable/Payroll Manager will
then complete a check, sign the check, prepare the method of dispersment and
present this material to the Executive Director.
The Executive Director will then cosign the check and disperse the
check.
Payroll
Employees
shall be paid every other week in a cumulative twenty-six pay periods per year
by the Mid-Ohio Psychological Services, Inc.
The pay date will be the second Friday following the end of the pay period.
Each employee shall complete and sign the time sheet prior to the
issuance of payroll checks. Time
sheets must be submitted by the Monday following the end of the pay period to
be paid at the scheduled pay date. If
the scheduled pay date falls on a agency holiday, the pay date will be moved
to the preceding Thursday.
The supervisors are responsible for collecting time sheets from employees and
submitting them to the Accounts Payable/Payroll Manager. The Accounts
Payable/Payroll Manager
computing payroll (see bellow for “Allocation of Expenses to Related
Parties” issues), including the employee’s hourly rate and fringe
benefits. Appropriate taxes and
other required payroll deductions are to be made a part of the payroll
computation and presented as part of the payroll.
The time sheets, Computed Ratio Sheet, and Payroll Summary
Sheet, are to be presented to the Executive Director for approval of
payroll. Upon approval, the
Accounts Payable/Payroll Manager is to compete the checks, and sign them.
The Executive Director is then responsible for cosigning the checks and
dispersing them to the staff.
Five Day Rule
Clinical staff members must complete and turn in all schedulers, SALs, and
dictation within five calendar days of the date of service. The date of
service is the first day of the five day period. The purpose of this
ruling is to ensure all services are billed properly including any "bundling"
of services necessary for clients seen more than once on a particular day.
If the office is not open when the items are due (weekend, holidays, etc.) all
schedulers, SALs, and dictation are due on the last day the office is open
prior to the closing. All items must be completed and turned in prior to
any planned absences such as vacations, etc. Any exceptions to this must
have the written approval of the immediate supervisor or Executive Director.
All staff timesheets are due by 5:00pm on the Friday following the end of the
pay period. A list of pay periods and pay dates is posted in the File
Room.
Examples:
Services provided on:
Schedulers/SALs/Dictation due by:
Monday
Friday
Tuesday
Friday
Wednesday
Friday
Thursday
Monday
Friday
Tuesday
If the five day rule is not followed and no
exception is made by the immediate supervisor or Executive Director, then all
P time that was listed for the days that were late will be reduced to base
pay.
Reconciliation
Each
month, a non-support staff agency employee will reconcile the computer
accounting system with bank statements and deposit slips.
Additionally, each month a report of the accounts received generated by
the billing software will be reconciled with the accounts received as reported
in the accounting software.
rev 02/2007
REPORTING
A
monthly report will be submitted to the Board of Directors and the Executive
Director detailing income, expenses, and the balance for the previous period
for approval. A chart of accounts
will be maintained by the Accounts Payable/Payroll Manager in consultation with the Executive
Director and reviewed by the Board of Directors.
The Billing Supervisor will provide the Executive Director an account
aging report and other appropriate documents reflecting the accounts
receivable on a regular basis.
All
reports to funding sources will be completed and submitted to the Executive
Director prior to the established deadline for submitting said report.
An independent financial audit of Mid-Ohio
Psychological Services, Inc. accounts shall be conducted annually and a copy
of said audit presented to the Board of Directors, Executive Directors, and
Accounts Payable/Payroll Manager.
All accounting records will be maintained on a monthly basis following
standard accounting procedure.
rev 2/3/00
ESTABLISHMENT OF AGENCY SERVICE RATE
Unit
rates will be established annually based on the cost of providing the
services. Unit rates will be
established according the Unified Financial Management System techniques as
established by the Ohio Department of Mental Health.
rev 2/3/00
OTHER ISSUES
Bonding
All staff
responsible for the disbursement and collection of funds will be insured by a
blanket bond. The fee for such bonding will be paid by the agency.
Compliance With
Subpoenaed Records
Every effort
will be made to comply with a valid subpoena. Any support staff member
receiving a subpoena should consult with the Executive Director or designee to
determine if the subpoena is valid. The records covered by the subpoena
should be pulled for review by the Executive Director.
If a subpoena is provided in
less than ten days, the notice of the subpoena is considered insufficient.
The attorney of record should be notified verbally by the clinical staff
member as timely as possible, if this is challenged by the attorney, a letter
should be provided to the attorney.
In the event that a subpoena
is inappropriate, is deemed to violate client privilege, or places an undue
burden on staff then a motion to quash will be pursued.
Compliance With Search
Warrants and Other Investigation Demands
A search warrant is an order
signed by a judge that authorizes police officers to search for specific
objects or materials at a definite location at a specified time. Upon being
served with a search warrant, the Executive Director will be notified
immediately. The agency will make every effort to comply with the specific
requests of the search warrant and applicable confidentiality requirements.
In the event that the agency
receives notice of an investigation by an outside regulatory agency, the
Executive Director will be notified immediately. All notices of investigation
should provide written guidelines for compliance during the investigation, and
the agency will make every effort to comply with all requirements. Such
investigations could include but are not limited to U.S. Department of Health
and Human Services (HHS), Federal or State Medicaid, or Ohio Department of
Mental Health.
Revised 8/07
ALLOWABLE COSTS
All
expenses will be deemed allowable or unallowable based on the following
guidelines. All unallowable
expenses must be paid by monies not related to Federal or State funding
streams (ie. Non-Medicaid monies).
ALLOWABLE
STAFF COSTS:
Salaries
- Include all remuneration, paid currently or accrued, for services rendered
during the period of the contract. Salaries
are allowable to the extent that the costs are reasonable for the services
rendered, and are supported by documented payroll vouchers or a generally
accepted method of documentation. Payroll
must be further supported by time and attendance or equivalent records for
individual employees. Salaries of
employees chargeable to more than one program or cost center will be supported
by appropriate distribution records. The
method used should produce an equitable distribution of time and effort.
Payroll
Related Expenses - Employee benefits in the form of employer
contributions to Social Security, State and Municipal Retirement Systems, Life
and Health Insurance Plans, Unemployment Insurance Coverage, Workers’
Compensation and Pension Plans are allowable if equitably distributed.
Severance Pay is allowable when payment is consistent with standard or
approved policy.
Incentive
Compensation - Such payments to employees based on cost reduction, or
efficient performance, suggestion awards, etc., are allowable to the extent
that overall compensation is determined to be reasonable and such costs are
paid or accrued pursuant to an established plan followed by the institution so
consistently as to imply, in effect, an agreement to make such payment.
Deferred
Compensation - Such cost is allowable to the extent that except for
past service pension and retirement costs: (1) it is for services rendered
during the period of the projected budget; (2) it is, together with all other
compensation paid to the employee, reasonable in amount; (3) it is paid
pursuant to an agreement entered into in good faith between the institution
and its employees before the services are rendered, or pursuant to an
established plan followed by the institution so consistently as to imply, in
effect, an agreement to make such payments; (4) the benefits of the plan are
vested in the employees or their designated beneficiaries and no part of the
deferred compensation reverts to the employer institution; (5) for a plan
which is subject to approval by the Internal Revenue Service, and falls within
the criteria and standards of the Internal Revenue Code and the regulations of
the Internal Revenue Service.
Severance
Pay - Also commonly referred to as dismissal wages, it is payment in
addition to regular salaries and wages, by institutions to workers whose
employment is being terminated. Costs
of severance pay are allowable only to the extent that, in each case, it is
required by law; employer/employee agreement; or established policy that
constitutes, in effect, an implied agreement on the institution’s part.
Only severance benefits that accrue during the period of the contract
are allowable.
Consultation
Fees - The cost of consultation fees, charges for the use of personal
services of outside agencies or persons not on the payroll; or functions
related to contract services, i.e., audit service, legal counseling, and
specialized consultation.
ALLOWABLE
OPERATIONAL COSTS:
Travel
- Includes the costs of operation, maintenance, and repairs of agency vehicles
when relevant to the delivery of contract services; expenses for
transportation, lodging, subsistence, and related items incurred by employees
who are on a travel status on official business incident to delivery of
contract services either or an actual basis or a per diem and mileage basis;
expenses for meetings and conferences, if the primary purpose is the
dissemination of technical information relating to contract services.
Purchased transportation is allowable if required for the delivery of
contract services. Reimbursement
for travel shall not exceed maximum state reimbursement rates.
Consumable
Supplies - The costs of materials and supplies are allowable.
Direct charges to services should be based upon the actual price less
cash discounts, trade discounts, rebates, and allowances.
Consumable supplies are those items which will be used up within one
year.
Occupancy
Costs - Rental of Privately Owned Building - Rental cost for space is
an allowable charge and should not exceed the cost of comparable space and
facilities in the same locality. The
lease agreement must stipulate the extent of the lessor’s responsibility for
renovations. Major renovations
which add to the permanent value of the property or appreciably prolong its
intended life, the cost of which is borne by the provider, must be
depreciated.
Rental
of Publicly Owned Building - The rental cost of a publicly owned
building is allowable if the charge does not exceed the cost of comparable
space and facilitates in the same locality.
The rental charge should include the costs of service, maintenance,
depreciation on the building and depreciation of major renovation.
Rent
expenses must be justified with the following data:
Name
on property title; name to whom rent is paid; relationship between provider
and parties identified above; total square footage for program and non-program
usages; copy of lease agreement.
Use
Allowable or Depreciation of Provider Owned Building - The computation
of use allowances or depreciation will be based upon acquisition cost.
The computation will exclude any cost borne by the federal government
through other federal grant programs, the cost of land, and idle or excess
facilities. The straight line
method of depreciation will be used for buildings and capital improvement.
In lieu of depreciation, a use allowance for buildings and improvements
may be computed at an annual rate not exceeding two percent of acquisition
cost.
Repair
and Maintenance - Costs incurred for necessary maintenance, repair,
and upkeep of property which neither add to the permanent value of the
property nor appreciably prolong its intended life, but keep it in efficient
operating condition, are allowable. If
these expenditures add to the value or prolong the life of the property, they
must be depreciated as capital improvements.
Utilities
- Utility costs for agency facilities are allowable if equitably distributed
among programs and cost centers.
Insurance
Costs - Cost of insurance in connection with the general conduct of
activities is allowable to the extent that the cost will be in accordance with
sound business practice. Protection
against liabilities for loss of assets related to the provision of contract
services should be provided, because losses incurred through the lack of
available insurance coverage would not be considered an allowable cost.
However, the deductible portion of insurance coverage or minor
uninsurable losses are allowable.
Indirect
Costs - Indirect costs are those costs incurred for a common or joint
purpose benefiting more than one service area or cost center.
The allocation of indirect costs may be determined by any method,
assuring that the distribution is equitable.
A suggested method of allocating indirect cost is to divide the direct
delivery staff costs of the specific service area by the total direct delivery
staff costs of the entire agency. This
percentage is then applied to the indirect cost pool.
Allowable indirect costs for the indirect cost pool include, but are
not limited to, the accounting and budgeting functions, disbursing services,
personnel administration and payroll preparation, procurement services and
general administrator’s office.
Miscellaneous
- Allowable miscellaneous costs include memberships and subscriptions,
reference material, printing and reproduction, proposal preparation, mailing
and postage, and any other costs incidental to the delivery of service.
ALLOWABLE
EQUIPMENT COSTS:
Depreciable
Equipment - Includes depreciation charges for capital equipment (any
item or group of items costing $1000 or more).
Computation of depreciation is based upon the acquisition cost of the
item excluding: (1) any cost borne by the Federal Government through other
federal grant programs, and (2) any idle or excess equipment.
Adequate property records must be maintained and the straight line
method of computing depreciation must be used.
When equipment is replaced, the value received for the old equipment
less the salvage value and any unrealized depreciation charges are deducted
from the acquisition cost of the new equipment.
Nondepreciable
Equipment - Small equipment items costing less than $1000 may be
expensed (purchased outright) during the period of the contract.
Leased
Equipment - The cost of leased equipment is allowable, to the extent
of its reasonableness as sound business policy.
Equipment obtained by lease/purchase agreement must be depreciated.
UNALLOWABLE
COSTS:
Owed
Debt - Losses arising from uncollectible accounts and other claims and
related costs are unallowable.
Contingencies
- Contributions to a contingency reserve or any similar provision for
unforeseen events are unallowable.
Contribution
and Donations - Outlays of cash with no prospective benefit to the
contracting agency or program are unallowable.
Entertainment
- Costs of amusements, social activities, and related cost are unallowable.
Advertising
- Costs of advertising with the exceptions of contract related recruitment
needs, procurement of scarce items, public awareness and promotion.
Disposal of scrap and surplus is unallowable.
Fines
and Penalties - Costs resulting from violations of, or failure to
comply with, laws and regulations are unallowable.
Interest
and Other Financial Costs - Interest on borrowings, bond discounts, or
any cost of financing or refinancing operations are unallowable.
Costs
Borne by Other Federal or State Programs - Any costs specifically
subsidized by other state or federal dollars are unallowable and must be
deducted from the applicable line items prior to unit rate computation.
Clothing
- Clothing for eligible individuals or employees is unallowable.
Cash
Payments - Cash payments to eligible individuals such as a cash
allowance to children in residential treatment are unallowable.
Sabbatical
Leave - Payment of any sabbatical leave is unallowable.
Fund-raising
- Cost of activities to raise monies to support the provider program is
unallowable.
Education
- Cost activities provided by the public schools that are free of charge to
the general public is unallowable.
rev 2/3/00
