Week Five: Identifying Allowable Deductions
IDENTIFYING ALLOWABLE DEDUCTIONS
The U.S. Office of Management and Budget (OMB) provides guidance on the allowability of costs under federal grand agreements in Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The following is a list of costs being considered for reimbursement under a federal grant:
1. Bad debts
2. Costs of contributions and donations
3. Recruiting costs
4. Value Added Tax (VAT) charged for the purchase of goods or services that a non-federal entity is legally required to pay to a foreign country
5. Publication costs for electronic print media, including distribution, promotion, and general handling
6. Reasonable and necessary expenses incurred for security to protect facilities, personnel, and work products
7. Employee dependent care costs
8. Alcoholic beverages purchased to host a foreign dignitary
For each of the costs listed, indicate with an A (allowable) if the cost is always allowable under OMB guidance, an N (non-allowable) if the cost is not allowable under OMB guidance, and an M (may be allowable) if the cost is allowable under specified circumstances. For any costs marked with an M, explain the circumstance necessary for the cost to be allowable. Also, next to A, N, or M include the section number of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards that is associated with the particular cost for each item. For each of the listed costs, write an A (allowable) if the cost is always allowable under OMB guidelines, a N (non-allowable) if the cost is not allowable under OMB guidelines, and a M (may be allowable) if the cost is allowable under certain conditions. For any costs that have a M next to them, explain what needs to happen for that cost to be allowed. Also, next to A, N, or M, write the section number from the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards that corresponds to the cost of each item.
1. Standard audit reports for both corporate and government entities include sections addressing both management and auditor responsibilities. In addition to the management and auditor responsibilities sections, what two unique sections would a government audit report contain, if applicable? What is the purpose of each of these sections?
2. You completed a managerial accounting class last semester and learned about budgeting concepts. How do government budgeting concepts differ from those used in a corporate setting? Explain.
• Submit your responses to Parts A and B in a 4-page Microsoft Word document.
Requirements: 4 pages, double spaced