Subject: Fiscal Year 2004 Cost Allocation Procedures

Reference: This IM has been replaced by Financial Operating Procedures Handbook Chapter 13, Burden Management and Chapter 16 Commitments, Obligations, and Expenditures.

Instructions: Reference Survey Manual 501.1

Background. The Federal Financial System (FFS) Cost Allocation subsystem provides the capability to collect expenditures in one account (called a "pool" account in FFS Cost Allocation) and redistribute them to other accounts (called "base" accounts in FFS Cost Allocation). The cost collection and redistribution is done on a periodic basis and is not retroactive; that is Cost Allocation does not redistribute costs incurred in an earlier period. The U.S. Geological Survey FFS processing cycle includes three different runs of Cost Allocation as follows. All three processing cycles are initiated in conjunction with the FFS PCAS distribution process.

• Cost Allocation #1 - Redistributes costs collected in one account number that apply to multiple projects (throughout the cost center or throughout the bureau). Examples of this use of Cost Allocation include costs of information technology (IT) services at the Earth Resources Observation Systems (EROS) Data Center distributed within the cost.

• Cost Allocation #2 - Redistributes reimbursable burden earned to cost center, bureau, and facilities income accounts for budget fiscal year (BFY) 2004. Since FFS has only a single burden rate per budget fiscal year, Cost Allocation is used to distribute the income from this single burden rate into its component parts. Also, Cost Allocation #2 redistributes reimbursable burden earned to cost center, bureau, and Water Resources discipline accounts (i.e., the 1.3 percent Water discipline overhead) for BFY 2003. This is run immediately after the FFS PCAS distribution process that calculates burden earned for reimbursable customers.

• Cost Allocation #3 - Redistributes the amounts credited to the bureau income account in Cost Allocation #2 to other bureau cost centers where the income will be spent. Also, Cost Allocation #3 redistributes amounts credited to the BFY 2003 Water Resources discipline income account to other Water Resources cost centers where the income will be spent. This is run immediately after the Cost Allocation #2 process.

Format for FFS Cost Allocation Groups and Steps. The section applies primarily to Fiscal Services personnel responsible for establishing and maintaining records in the Cost Allocation Pool/Base Definition Table (PBDF). The FFS Cost Allocation process is defined by Groups and, within each Group, Steps. The Cost Allocation Groups are established on the FFS ALLC Table and the Steps are established on the FFS CADO Table. Entries to the PBDF table must reference these Groups and Steps.

Beginning in FY 2004, the numbering scheme for these Cost Allocation structures will be as follows:

• Cost Allocation Groups = ZXXXX, where Z = last digit of the fiscal year (FY) and XXXX = the cost center (i.e., the FFS allocation organization). For example:
  • 49050 is the Cost Allocation Group for the Alaska Science Center Cost Centers (9050, 9051, 9052, etc.) for FY 2004

• For Cost Allocation #1 and #3, Cost Allocation Steps = AAAAAA, where AAAAAA represents an abbreviation describing the types of costs being redistributed within the cost center or the bureau. For example:
  • Within the Cost Allocation Group for the EROS Data Center (48836), ITS1 is the Cost Allocation Step for redistributing IT Services to other EROS Data Center accounts.
  • Within the Cost Allocation Group for the Office of Administrative Policy and Services (41125), CREDIT is the Cost Allocation Step for redistributing reimbursable burden income, which is a credit expenditure, to different cost centers within APS.

• For Cost Allocation #2, Cost Allocation Steps = XXXXYY, where XXXX = the cost center and YY = the FFS burden rate, truncated to the whole number. For example:
  • Within the Cost Allocation Group for the Oklahoma District (48642), 864244 is the Cost Allocation Step for redistributing reimbursable burden income for a truncated FFS burden rate of 44 percent.

It should also be noted that Cost Allocation Groups and Steps established in FY 2003 for Cost Allocation #2 and #3 must remain in the system. This is necessary to redistribute any FY 2004 activity against prior BFY account numbers. That is, the Cost Allocation process will continue to distribute changes in prior year (BFY 2003) reimbursable burden to the cost center (XXXX-0AR00), the bureau (1125-0AR00), and, if applicable, the Water Resources discipline (4531-0AR00).

Format for Account Numbers in Cost Allocation #2. A standard account number structure has been established for the Indirect Cost Transfer (ICT) process to accumulate burden associated with reimbursable customers. This account structure is in the format of XXXX-0ARYY, where:

• XXXX is the cost center collecting the burden,
• 0AR is the standard for the 5th through 7th characters of these accounts, and
• YY is the FFS composite burden rate, truncated to the whole number.

When reimbursable account funding is entered into BASIS+, the ICT target account numbers must be in the format listed above. When FFS PCAS distribution is run on a weekly or monthly basis, burden is calculated for reimbursable customers. Then, the FFS ICT process creates Internal Vouchers (IV documents) to transfer the income from this reimbursable burden to the standard account numbers as defined above. This income is in the form of a negative expenditure against these account numbers in the direct appropriation (i.e., SIRAD or SIRMD).

After PCAS distribution and ICT are run, then Cost Allocation #2 is run. The purpose of Cost Allocation #2 is to zero out the negative expenditure in the XXXX-0ARYY accounts and redistribute to the following standard accounts for collecting the various types of burden:

• XXXX-0AR00 for the cost center overhead,
• XXXX-0ARF1 for the facilities rent overhead,
• XXXX-0ARF2 for the facilities operations and maintenance (O&M )overhead, and
• 1125-0AR00 for the bureau overhead.

The negative expenditures that accumulate in these "0AR" accounts will serve as funding for indirect costs incurred by the cost center, facilities, and the bureau.

Cost Center Responsibilities. Administrative personnel in the cost centers are responsible for the following:

• Establish cost center level ICT account numbers in BASIS+ as outlined above. That is:
  • XXXX-0ARYY accounts for each composite FFS burden rate charged to reimbursable customers in the cost center (ICT target accounts). The composite FFS burden rate is displayed on the Update Fund Source screen, Account view (module BABFACFS_0020) in the field FFS Burden Rate. This composite FFS burden rate is calculated using the bureau rate, facilities rate, and cost center rate specified for the fund source. Note: the account must have a non-zero net budget for the composite FFS burden rate to be calculated.
  • XXXX-0AR00 for collecting the cost center's portion of the reimbursable burden for common services.
  • The fund code for the "0ARYY" and "0AR00" account numbers should be the direct appropriation where the cost center common services costs would be incurred (i.e., SIRAD or SIRMD).
  • The program element for the "0ARYY"and "0AR00" account numbers should be aligned with the major budget activity funding the cost center (i.e., 30000 for Biological Resources, 40000 for Water Resources, 50000 for Geography, 60000 for Science Support, or 70000 for Geology).
  • For integrated science centers and cost centers receiving funds from multiple budget activities, one program element must be chosen for the "0ARYY"and "0AR00" accounts. Depending on the set up of the common services accounts for these cost centers, a subsequent redistribution of the credits to the "0AR00" account may be necessary to apply the reimbursable burden to other program elements.
  • XXXX-0ARF1 for collecting the cost center's portion of the reimbursable burden for facilities rent, using fund code SIRAD and program element 21000.
  • XXXX-0ARF2 for collecting the cost center's portion of the reimbursable burden for facilities O&M, using fund code SIRMD and program element 22000.

• When entering reimbursable funding in BASIS+, associate reimbursable accounts with the appropriate ICT target account based on the composite burden rate:
  • Use the Update Fund Source screen to link the fund source subject to burden to the appropriate XXXX-0ARYY account. The pull down list for the ICT Account field will only display XXXX-0ARYY accounts belonging to the cost center of the reimbursable account or its parent allocation organization. Account Fund Source records for reimbursable funds with a non-zero burden rate must have the ICT Account field correctly entered (last two characters match the truncated composite FFS burden rate) before the account fund source can be sent to FFS.
  • See Attachment A for a sample BASIS+ screen.

• Establish agreement(s) with customer type 93A for the amount of reimbursable burden that is ultimately distributed to the cost center. This will provide funding for the cost center common services accounts (i.e., XXXX-COM**) and facility accounts (i.e., XXXX-REN** and XXXX-OMC**). Also, $.01 of 93A funding should be tied to the cost center accounts receiving the credit expenditures from reimbursable burden (i.e., the "0AR00," "0ARF1," and "0ARF2" accounts) for reporting purposes on the FFS 264 Report (Status of Funds by Customer Type).

• Monitor balance of actual common services and facilities costs compared to funding for cost center common services and facilities. Common services funding sources include (1) direct appropriations, (2) direct burden (i.e., customer type 91A funding), and (3) reimbursable burden (i.e., negative expenditures accumulating in XXXX-0AR00 account, supporting customer type 93A funding). Facilities funding sources include (1) direct appropriations and (2) reimbursable burden (i.e., negative expenditures accumulating in XXXX-0ARF1 and XXXX-0ARF2 accounts, supporting customer type 93A funding).

Fiscal Services Offices Responsibilities:

• Enter information in the PBDF table to distribute the appropriate portion of reimbursable burden collected to (1) the cost center (to offset common services costs in the "COM" accounts), (2) the facilities accounts (to offset rent costs in the "REN" accounts and O&M costs in the "OMC" accounts), and (3) the bureau.
  • Percentages need to be established on the PBDF table for each FFS reimbursable burden rate used by a cost center. One hundred percent of the costs to the XXXX-0ARYY accounts need to be distributed via Cost Allocation and the PBDF tables to the following accounts:
    • XXXX-0AR00 for the cost center overhead,
    • XXXX-0ARF1 for the facilities rent overhead,
    • XXXX-0ARF2 for the facilities O&M overhead, and
    • 1125-0AR00 for the bureau overhead.

  • It is the Fiscal Services Offices' responsibility to determine the facilities ratio between rent and O&M overhead, based on the approved Headquarters/Regional Facilities Allocation Plan.

  • A spreadsheet can be obtained from the Office of Accounting and Financial Management (OAFM) Web site to assist in the process of determining the percentages for each component of the FFS burden rate.

• The formula for combining the cost center, facilities and bureau overhead rates into a composite FFS rate is:

  FFS Burden Rate = Bureau Rate + Common Services Rate + Facility Rate + [(Common Services Rate + Facility Rate) * Bureau Rate/100]

• Monitor the activities of the cost centers to ensure that all appropriate ICT accounts are established and that all reimbursable accounts with burden are linked to the appropriate ICT account.

• Forward cost center/burden rate information to OAFM for establishing the necessary records in the ALLC and CADO Cost Allocation tables.

• Coordinate the funding and monitoring of the bureau cost budget for the bureau (i.e., the 1125-0AR00 account).

Office of Accounting and Financial Management (OAFM) Responsibilities:

• Populate the ALLC (groups) and CADO (steps) tables in FFS to support the Cost Allocation process.

• Provide reports to support the setup and monitoring of the appropriate accounts for this process and the spending of indirect cost budgets.

• Monitor and correct any rejects that occur in the weekly or monthly cost allocation process.

Changing Burden Rates

Since FFS calculates burden amounts retroactively, but Cost Allocation does not automatically recalculate dollars already allocated to base accounts, several actions will be required when it is deemed necessary to change the burden rate associated with a reimbursable account. These actions are:

• Establish a new XXXX-0ARYY account for the new burden rate (Cost Center responsibility).
• For all reimbursable accounts affected by this change, update the burden rate to the new rate and change the ICT target account to the new XXXX-0ARYY account - also called the Cost Allocation POOL account. (Cost Center responsibility).
• Request a new Group/Step combination reflecting the new burden rate through OAFM, if not already set up in the Cost Allocation CADO table. (Fiscal Service Office and OAFM responsibility).
• Establish new PBDF table entries for the new XXXX-0ARYY account, with the appropriate percentage split for cost center, two facilities accounts, and bureau. (Fiscal Service Office responsibility).
• Delete the old PBDF table entries for the old XXXX-0ARYY account. (Fiscal Service Office responsibility).
• Use the following Crystal reports in the "standard/2004/" directory to determine the burden that has been collected into the Cost Allocation base accounts.
  • "2004CA&ICT RateChangeSPENJ.rpt" is a summary report that will display the total of all burden credit that has been distributed from the reimbursable account to the current ICT account with IV documents, by reimbursable account number. (Example 1 in Attachment B)
  • "2004CA&ICT RateChangePBDF.rpt" will list the Cost Allocation pool and base accounts with the corresponding percent of the burden that was distributed. (Example 2 in Attachment B)
  • "2004CA&ICT results SV for RateChange.xls" is a spreadsheet. Fill out the information in the top block of this spreadsheet from the 2 Crystal reports already completed. The bottom block will then automatically display all of the information needed to enter and process an 8J document to move the burden credit distributed from the old ICT/POOL account to the new ICT/POOL account. (Fiscal Service Office responsibility). (Example 3 in Attachment B)

• Enter the standard voucher (8J) document with the information in the spreadsheet to reverse the impact of burden applied (IV's) and allocated (SZ's) year-to-date that originated with the reimbursable accounts affected. An example of the overall flow of this process is included in Attachment C. (Note the new XXXX-0ARYY account is adjusted, not the old ICT account with the old burden rate). (Fiscal Service Office responsibility).
  • Use the new Group/Step as the document number (e.g., Group Step "49677 967746").
  • Use the one character vendor code "G" as shown in the spreadsheet.
  • Use BOC "811A" as in the spreadsheet.
  • "I" increase amounts from old BASE accounts.
  • "D" decrease amounts to new ICT/POOL account. (The old ICT/POOL account remains at zero dollars.)

(signed) Carol F. Aten
Chief, Office of Administrative Policy and Services

Attachments