Cost Accounting Q & A
- Does the Metro Local Cost Allocation Plan have to be approved by a cognizant agency?
- Based on Circular A-87 guidelines local governments
are not required to submit their LOCAP for approval to a cognizant
agency. See OMB Circular A-87 info below.
A-87 gives the cognizant federal agency the decision-making authority to review or not to review a cost allocation plan. Attachment E, section D states:D. Submission and Documentation of Proposals.
Attachment A of the Circular, Section B, Definitions, item 6 states:
1. Submission of indirect cost rate proposals.
a. All departments or agencies of the governmental unit desiring to claim indirect costs under Federal awards must prepare an indirect cost rate proposal and related documentation to support those costs. The proposal and related documentation must be retained for audit in accordance with the records retention requirements contained in the Common Rule.
b. A governmental unit for which a cognizant agency assignment has been specifically designated must submit its indirect cost rate proposal to its cognizant agency. The Office of Management and Budget (OMB) will periodically publish lists of governmental units identifying the appropriate Federal cognizant agencies. The cognizant agency for all governmental units or agencies not identified by OMB will be determined based on the Federal agency providing the largest amount of Federal funds. In these cases, a governmental unit must develop an indirect cost proposal in accordance with the requirements of this Circular and maintain the proposal and related supporting documentation for audit. These governmental units are not required to submit their proposals unless they are specifically requested to do so by the cognizant agency. Where a local government only receives funds as a sub-recipient, the primary recipient will be responsible for negotiating and/or monitoring the sub-recipient's plan.6. "Cognizant agency" means the Federal agency responsible for reviewing, negotiating, and approving cost allocation plans or indirect cost proposals developed under this Circular on behalf of all Federal agencies. OMB publishes a listing of cognizant agencies.
Contact Information
Herbert Majors, CPA 615-862-6483