Cost Principles and Procedures for Developing Cost Allocation Plans and Indirect Cost Rates (PDF) 10% De Minimis Indirect Cost Rate Certification (PDF) Subsection D. De Minimis Rate Subsection E. Other Federal Cognizant Approval Fringe Benefit Rate Subsection G. Other Information ICAP/ICRP Submission and Approval Processes Attachment C. LGA ICAP/ICRP Checklist Attachment D. ICAP/ICRP Submission Certification Attachment E. SAMPLE ICAP/ICRP SCHEDULES Supplementary Guidance ICAP/ICRP Extension Request Process Frequently Asked Questions

ICAP/ICRP EXTERNAL LOCAL GOVERNMENT



10% DE MINIMIS INDIRECT COST RATE CERTIFICATION

[Local Agency Name]
Effective Fiscal Year [xxxx]

Certification of Eligibility:

I, the undersigned, certify that our agency is eligible to use the 10% de minimis indirect cost rate as we have:

Certification of Financial Management System:

I, the undersigned, certify that our agency has a financial management system that accumulates and segregates direct costs (costs that can be specifically identified to a final cost objective [e.g.. a project, program, or other direct activity of an organization]) from indirect costs (Costs incurred for a common or joint purpose benefitting more than one final cost objective e.g. administrative costs such as clerical support, human resources, accounting, payroll, financial audits, rent, utilities, supplies, vehicle expense, executive management,  etc. that is not readily assignable to the final cost objectives specifically benefitted, without effort disproportionate to the results achieved) and by project/activity, that are allowable in accordance with Title 2 Code of Federal Regulations Part 200 (2 CFR Part 200).

I certify the agency’s financial management system has the following attributes:

I also certify that the types of records that are used to support the existence of these attributes include the following:

Finally, I understand:

  1. The de minimis rate of 10% is to be applied to modified total direct costs which means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). Modified total direct cost excludes equipment, capital expenditures, rental costs, and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs.


  2. Costs must be consistently charged as either indirect or direct but may not be double charged or inconsistently charged as both.

  3. The proper use and application of the de minimis rate is the responsibility of [AGENCY NAME] and Caltrans Audits and Investigations may perform an audit on our agency to ensure compliance with 2 CFR Part 200 and agreements with Caltrans. If it is determined we are inconsistently charging costs, or not in compliance with 2 CFR Part 200 we may be required to reimburse Caltrans for any identified overbillings.

  4. [AGENCY NAME]’s schedule of expenditures of federal awards must include a note on whether it elected to use the 10% de minimis cost rate in accordance with 2 CFR 200 Part 200.510(b)(6).

I declare that the foregoing is true and correct.

Governmental Unit                                                                                                                                 

 

Signature:                                                               

Name of Official*:                                                 

Title:                                                                             Date:    _____________________________

Telephone No.:                                                            E-mail: _____________________________

*(Must be executive, financial officer, or equivalent of agency)

 

Please submit this certification to the address below. 

California Department of Transportation
Independent Office of Audits and Investigations, Attn: MarSue Morrill
P.O. Box 942874, MS-2
Sacramento, CA  94274-0001

Attachment A: INDIRECT COST ALLOCATION PLAN/INDIRECT COST RATE PROPOSAL SUBMISSION PROCESSES AND DOCUMENTATION OF PROPOSAL

Section I. ICAP/ICRP Annual Submission Processes

Due to the new 2 CFR Part 200 regulations, the California Department of Transportation (Caltrans) Audits & Investigations (A&I) has revised its processes to provide Local Government Agencies (LGAs) different options for the submittal of an Indirect Cost Allocation Plan/Indirect Cost Rate Proposal (ICAP/ICRP).  These options include:

  • Submit ICAP/ICRP Certification only (See Subsection A for Revised Streamlined Process). 
  • Submit complete ICAP/ICRP package (See Subsection B for Complete ICAP/ICRP Package Submission Process).
  • Submit ICAP/ICRP Extension Request of a current negotiated indirect cost rate(s) (See Subsection C for ICAP/ICRP Extension Request Process).
  • Submit a notification for the use of a de minimis rate (See subsection D for De Mininus Rate).
  • Submit an ICAP/ICRP for Other Federal Cognizant Approval (See Subsection E for Other Federal Cognizant Approval).

The options and submission processes described below will help a LGA determine what option(s) to be utilized.  

Subsection A. Revised Streamline Process

LGA may submit the ICAP/ICRP certification (Attachment D) and Streamlined Submission Checklist (Attachment C) to A&I for review and acceptance, if the LGA did not meet any of the following conditions: 

  • The LGA receives more than $35 million in direct federal funding.
  • The LGA is designated as a high risk recipient by Caltrans.
  • The LGA has changed its ICAP/ICRP calculation methodology.
  • The LGA’s most recent ICAP/ICRP required an indirect cost rate(s) change due to an improper, inaccurate, or unsupported rate calculation.
  • The LGA has a major change to its financial management system (i.e. change in processes, or in accounting software).
  • This is the first ICAP/ICRP submission by the LGA.

The ICAP/ICRP certification must be submitted within six months after the close of the LGAs fiscal year or within 30 days from the date the LGAs annual financial statement audit is complete.

Within 10 business days of receipt A&I will review the ICAP/ICRP certification and Checklist to determine whether the LGA qualifies for the streamlined process.

  • If the LGA qualifies for the streamlined process, A&I will sign and return the ICAP/ICRP certification with an Acceptance Letter.
  • If the LGA does not qualify for the streamlined process A&I will notify the LGA that the LGA must follow the complete ICAP/ICRP submission process in Subsection B.

The LGA must receive an Acceptance Letter from A&I prior to billing for indirect costs. Although not required to be submitted to A&I under the streamlined process all LGAs desiring to claim indirect costs for federal-aid and/or state funded projects must annually prepare and maintain an ICAP/ICRP and related documentation to support those costs. All documents related to the ICAP/ICRP must be retained for audit in accordance with the record retention requirements m 2 CFR Part 200. 333 and Agreements between the LGA and Caltrans.

Subsection B. Complete ICAP/ICRP Package Submission Process

A complete ICAP/ICRP submission package (Section II, Subsection A) should be submitted to A&I when the LGA's ICAP/ICRP has not been approved by a federal cognizant agency and meets one of the following conditions:

When the LGA does not qualify for the revised streamlined process the LGA will submit a complete ICAP/ICRP proposal to A&I for review and acceptance prior to invoicing for indirect costs. If allocated central service costs are included in an ICRP, the LGA should also submit its Central Service Cost Allocation Plan along with the ICRP to A&I.

Within 30 business days of receipt, A&I will review the ICAP/ICRP for compliance to the submission requirements of 2 CFR, Part 200, Subpart E, Appendix V & VIL Caltrans acceptance must be received by the LGA prior to the LGA billing for indirect costs.

If necessary, A&I will advise LGAs of the additional documentation needed to support/evaluate the proposed plan or changes required to make the proposed plan compliant. Non-compliant submissions may be returned to the LGA if requested documentation is not provided or required changes are not made within 5 business days of notification to the LGA.

Subsection C. ICAP/ICRP Extension Request Process

LGAs that wish to apply for an extension of a current negotiated indirect cost rate(s) for a period of up to four years may do so unless the LGA meets one of the following conditions:

LGAs should provide the following information that will be used in evaluating their extension request:

LGAs with a fixed rate(s) with carry-forward agreement(s) for previous year(s) that are requesting extension of a proposed final or predetermined rate(s), must resolve the carry-forward for the last approved rate fixed year(s).

Within 45 business days of receipt, A&I will review the extension request and the Extension Checklist to determine whether the LGA meets the conditions listed above and notify the LGA if the extension request is approved.

Subsection D. De Minimis Rate

LGAs that have never received a negotiated indirect cost rate and receive less than $35 million in direct federal funding may elect to charge a de minimis rate of 10% of modified total direct costs. LGAs electing to use the de minimis rate must complete and submit to A&I the “10% De Minimis Indirect Cost Rate Certification” found at the website: https://www.dot.ca.gov/hq/audits/. A de minimis rate may be used indefinitely. Costs must be consistently charged as either indirect or direct but may not be double charged or inconsistently charged as both. A&I will notify the LGA if it does not qualify for the use of a de minimis rate. A&I may perform Incurred Cost Audits or Financial Management System Audits of LGAs to ensure compliance with 2 CFR Part 200 and Agreements with Caltrans. LGAs using a de minimis rate(s) found to be inconsistently charging costs or not in compliance with 2 CFR Part 200 will be required to reimburse Caltrans for any identified overbillings.

Modified total direct cost means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). Modified total direct cost excludes equipment, capital expenditures, rental costs, and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs.

Subsection E. Other Federal Cognizant Approval

LGAs with an ICAP/ICRP approved by a cognizant federal agency other than FHWA will submit a copy of the cognizant federal agency’s approval to A&I.

Subsection F. Fringe Benefit Rate

If the LGA’s overall fringe benefit rate is not approved for the LGA as part of its Central Service Cost Allocation Plan (i.e. citywide cost plan or countywide cost allocation plan), a proposed fringe benefit rate should be included as a separate rate in the ICAP/ICRP certification submittal. However, LGAs that charge actual fringe benefit costs per individual employees are not required to establish a fringe benefit rate.

Subsection G. Other Information

On a monthly basis, A&I will post a listing of all LGAs utilizing a de minimis rate and non-FHWA cognizant approval rates on Caltrans Intranet website. Unless the LGA receives an extension for a fiscal year, LGAs will submit their ICAP/ICRP within six months after the close of the fiscal year or within 30 days from the date the LGA’s annual financial statement audit is complete. LGAs that submit an ICAP/ICRP after this time frame may be at risk of not being eligible for indirect cost billing and reimbursement.

Section II: Documentation of Proposal

Subsection A. Documentation for a Complete ICAP/ICRP Package

A complete ICAP/ICRP Submission Package should include the following as prescribed by 2 CFR Part 200, Subpart E – Cost Principles, and Appendices V and VII:

  1. A schedule showing calculation of rates proposed including subsidiary worksheets and other relevant data, cross-referenced and reconciled to the financial data noted below.
  2. Subsidiary worksheets that include the following:
    • Schedule of actual direct / indirect /unallowable costs incurred by cost category type (i.e., rent, utilities, etc.) as well as by departmental unit, or
    • Schedule of budgeted direct costs and indirect costs by cost category type and department unit supported by Board approved budget or prior year’s actual costs
    • Schedule showing calculation of the over/under carry- forward amount when “fixed rate” is used.
  3. A copy of the financial data (audited financial statements, comprehensive annual financial report, single audit reports and management reports, if applicable, etc.) on which the rate(s) is based.
  4. The approximate amount of direct base costs incurred under federal-aid and state reimbursement. These costs should be broken out between salaries and wages and other direct costs.
  5. A chart identifying the organizational structure of the LGA during the period for which the proposal applies along with a functional statement noting the duties and/or responsibilities of all LGA units. (After initial submittal, only revisions need be included with subsequent proposals.)
  6. Certification that the ICAP/ICRP was prepared in a manner consistent with and in compliance with the Cost Principles of 2 CFR Part 200, Subpart E and Appendices V & VII. (See Attachment D for Sample Certification)
  7. A&I’s Submission Review Checklist to assist LGAs in understanding the documentation that is used to review submittals (See Sections 3, 4 and 5 of Attachment C “LGA ICAP/ICRP Checklist”)

Subsection B. Central Service Cost Allocation Plan

Central Service Cost Allocation Plans - If allocated central service costs are included in an ICRP, the LGA should submit its Central Service Cost Allocation Plans, along with the ICAP/ICRP, to A&I. If Agencies have an approved citywide and countywide cost allocation plan with a cognizant agency other than FHWA, the LGA should also submit to A&I, a Certificate showing approval from the cognizant agency. Approval by the cognizant agency must be obtained in order for costs to be included in the ICAP/ICRP.

All Central Service Allocation Plan should include supporting documentation in accordance with 2 CFR Part 200, Appendix V, Section E. See ASMB C-10 (Assistant Secretary Management and Budget Cost Principles and Agreements with the Federal Government), issued by the Department of Health and Human Services) for a Sample Central Service Cost Allocation Plan and supporting documentation.

Subsection C. Retention/Audit

All documents related to the ICAP/ICRP must be retained for audit in accordance with the record retention requirements in 2CFR Part 200.333, and Agreements between the LGA and Caltrans

Annually, A&I will perform a risk assessment of accepted ICAPs/ICRPs for audit. If an ICAP/ICRP is selected for audit, the LGA will be notified. A&I will perform an audit to determine whether the ICAP/ICRP exists and complies with the applicable cost principles. Material audit adjustments will require reimbursement if proposals are found to have included costs that are unallowable as specified by law or regulation or by the terms and conditions of federal or state awards. These adjustments or refunds will be made regardless of the type of rate negotiated (predetermined, final, fixed or provisional). For rates covering a future fiscal year (i.e. extended rates), the unallowable costs will be removed from the indirect cost pool(s) and the rate(s) appropriately adjusted for all fiscal years covered by the extension. FHWA may also conduct reviews/audits.

ICAP/ICRP SUBMISSION AND APPROVAL PROCESSES

Click Here To Download File

Attachment C. LGA ICAP/ICRP CHECKLIST

Click Here To Dowload File

Name of Agency               ____________________ Date Completed                       __________________

Name of Preparer               ____________________ Current ICAP/ICRP Period      _________________

In order to expedite your request, please be sure your submittal contains all required checklist, certification, and information.  Reviews will be conducted once all required information is received.

        Has the LGA received more than $35 million in direct federal funding?        Yes          No            N/A

The LGA has determined that their federal cognizant agency is _________________________. Your federal cognizant agency is the federal agency with the largest dollar value of direct federal awards given to a governmental unit. Attach support (e.g. federal expenditures, CAFR, SAR etc.) showing a breakdown of federal funds by federal agency/division/unit requesting the rate)

1.ICAP/ICRP STREAMLINED SUBMISSION Checklist:     

  • Is the LGA currently designated as a High Risk Recipient by Caltrans?          Yes          No            N/A  
  • Has the LGA changed its ICAP/ICRP calculation methodology since the last acceptance of  LGA’s ICAP/ICRP?     Yes          No            N/A
  • Has the LGA’s most recent ICAP/ICRP required an indirect cost rate change due to an improper, inaccurate, or unsupported rate calculation?    Yes          No            N/A
  • Has the LGA had major changes to its financial management system (i.e. processes or accounting software) since the last acceptance of  LGA’s ICAP/ICRP?    Yes          No            N/A
  • Is this the first ICAP/ICRP submission by the LGA?    Yes          No            N/A

If LGA has answered “NO” to all of the above, then LGA may be eligible for the Streamlined Process

2.ICAP/ICRP Predetermined Rate and Extension Checklist:

Request Predetermined Rate(s) for the fiscal year(s) of ______    ______    ______    _______

  • Are there no outstanding audit finding(s) that   would impact the LGA’s indirect cost rate(s)? Yes          No            N/A
  • Will there be any substantial change to the LGA’s organizational structure and program for the period of the predetermined rate? Yes          No            N/A
  • Have you  included a summary schedule showing the accepted ICAP/ICRP rates for the last five consecutive submission years?  (If rates were audited, the audited rates should be included) Yes          No            N/A
  • Have you included a schedule of recalculated rates based on  actual costs if last five submissions accepted/audited by A&I were fixed rates? Yes          No            N/A
  • Proposed predetermined rate based on the lower of either: 

    The lowest of the last five year’s accepted/audited fixed rates reduced by fifteen percent of the rate, or the lowest of the last five year’s actual rates reduced by fifteen percent of the rate? Yes          No            N/A

  • For Metropolitan Planning Organizations and Regional Transportation Planning Agencies, the current year’s approved Budget is provided? Yes          No            N/A
  • If the LGA used a fixed rate for prior year(s), a schedule showing the calculation of the over/under carry forward amount with component costs cross-referenced to ledger reports that cross-reference to audited financial statements is provided?  (Include the carry-forward calculation worksheet.) Yes          No            N/A
  • Prepared a schedule to resolve the carry-forward for the last two approved fixed rate year(s) by providing one of the following? Yes          No            N/A
    • Evidence that Caltrans was reimbursed for projects over-billed, or evidence that an invoice was adjusted to compensate Caltrans for the over-billing, or
    • Dividing the over-recovery amount by the number of years in the proposed predetermined period and reduce the total indirect costs used in the proposed predetermined rate by this amount.

Request Extended Rate(s) for the fiscal year(s) of ______    ______    ______    _______

3. Complete ICAP/ICRP Package Submission Checklist

Are costs included in the rate calculation schedule (schedule showing component costs used in the calculation of the rates proposed) cross-referenced and reconciled to the financial data noted below? Yes          No            N/A

For ICAP/ICRP year(s) based on actual costs, a schedule(s) of actual direct, indirect, and unallowable costs incurred by cost category type (i.e. rent, utilities, depreciation, etc.) and by departmental unit with total costs reconciled to audited financial statements? Yes          No            N/A

For ICAP/ICRP year(s) based on budgeted or estimated costs, a schedule(s) of budgeted or estimated direct, indirect, and unallowable costs by cost category type and by department unit supported by Board-approved budget or prior year’s actual costs? Yes          No            N/A

4.Central Service Cost Allocation Plan Submission Checklist:

5.Additional Information:
*(Note: The requested information below is useful to A&I for ICAP/ICRP acceptance purposes)

ATTACHMENT D. ICAP/ICRP SUBMISSION CERTIFICATION

[LOCAL AGENCY NAME]
Indirect Cost Rate
FY XXXX
 
The indirect cost rate plan contained herein is for use on grants, contracts and other agreements with the Federal Government and the California Department of Transportation (Department), subject to the provisions in Section II.  This rate(s) was prepared by the [LGA NAME] and accepted by the Department.


SECTION I: Rates
 

                                                              
Rate Type* Effective Period Rate* Applicable to
Fixed w/ carryforward or   7/1/14 to 6/30/15 xx.xx% LIST APPLICABLE AREAS
Final w/o carryforward or** 7/1/14 to 6/30/15  xx.xx% LIST APPLICABLE AREAS
Predetermined w/o carryforward** 7/1/14 to 6/30/xx xx.xx% LIST APPLICABLE AREAS
Fringe Benefit (if applicable)***  7/1/14 to 6/30/15 xx.xx% LIST APPLICABLE AREAS

*         Base:  [IDENTIFY BASE]
**  [A final or predetermined rate(s) must be used by a Local Governmental Agency (LGA) requesting a (1-4) year extension on its current proposed indirect cost rate(s).]
***  [A proposed fringe benefit rate computation should accompany the ICAP/ICRP if it is not approved as part of the LGA’s central service cost allocation plan.  A fringe benefit rate is not required for Agencies that specifically identify fringe benefit costs to individual employees.]

SECTION II:  General Provisions

  1. Limitations:

    The rate(s) in this Agreement is subject to any statutory or administrative limitations and applies to a given grant, contract, or other agreement only to the extent that funds are available.  Acceptance of the rate(s) is subject to the following conditions:  (1) Only costs incurred by the LGA were included in its indirect cost pool as finally accepted; such costs are legal obligations of the LGA and are allowable under the governing cost principles; (2) The same costs that have been treated as indirect costs are not claimed as direct costs; (3) Similar types of costs have been accorded consistent accounting treatment; (4) The information provided by the LGA which was used to establish the rate(s) is not later found to be materially incomplete or inaccurate by the Federal Government or the Department.  In such situations the rate(s) would be subject to renegotiation at the discretion of the Federal Government or the Department; (5) Prior actual costs used in the calculation of the approved rate(s) are contained in the LGA’s Single Audit which was prepared in accordance with 2 CFR 200.  If a Single Audit is not required to be performed, then audited financial statements should be used to support the prior actual costs; and, (6) For fixed and final rates, the rate(s) is based either on an estimate of the costs to be incurred or actual costs incurred during the period.  For predetermined rates, the rate(s) will be based on actual costs or prior actual costs only.

  2. Accounting Changes:

    This Agreement is based on the accounting system purported by the LGA to be in effect during the Agreement period.  Changes to the method of accounting for costs which affect the amount of reimbursement resulting from the use of this Agreement require prior approval of the authorized representative of the cognizant agency.  Such changes include, but are not limited to, changes in the charging of a particular type of cost from indirect to direct.  Failure to obtain approval may result in cost disallowances.


  3. [Fixed Rate with Carry Forward, Final Rate, or Predetermined Rate]:

    The [fixed/final/predetermined] rate(s) used in this Agreement is based on an [estimate/actual] of the costs for the period(s) covered by the rate(s).  

    [For fixed rates, when the actual costs for the period is determined by the LGA’s audited financial statements – any differences between the application of the fixed rate(s) and actual costs will result in an over or under recovery of costs.  The over or under recovery will be carried forward, as an adjustment to the calculation of the indirect cost rate(s), to the second fiscal year subsequent to the fiscal year covered by this plan].  (Note:  If a predetermined rate(s) or final rate(s) is used, then the carry forward provision does not apply).


  4. Audit Adjustments:

    Immaterial adjustments resulting from the audit of information contained in this plan shall be compensated for in the subsequent indirect cost plans approved after the date of the audit adjustment.  Material audit adjustments will require reimbursement from the LGA.  For rates covering a future fiscal year, unallowable costs will be removed from the indirect cost pool(s) and the rate(s) appropriately adjusted.


  5. Record Retention:

    The proposal and all related documentation must be retained for audit in accordance with the record retention requirements of the State or Federal agreements for which the indirect rate(s) will be billed or for three years after the fiscal year for which the rate(s) is calculated, whichever is longer.  

  6. Use by Other Federal Agencies:

    Authority to accept this agreement by the Department has been delegated by the Federal Highway Administration, California Division.  The purpose of this acceptance is to permit the LGA to bill indirect costs to Title 23 funded projects administered by the Federal Department of Transportation (DOT).   
     
    The acceptance will also be used by the Department in state-only funded projects.

  7. Other:

    If any Federal contract, grant, or other agreement is reimbursing indirect costs by a means other than the accepted rate(s) in this Agreement, the LGA should (1) credit such costs to the affected programs, and (2) apply the accepted rate(s) to the appropriate base to identify the proper amount of indirect costs allocable to these programs.

  8. Rate Calculation for Fixed Rate with Carryforward (Example):
  9. FY 2015 Budgeted/Estimated Indirect Costs 

    $x,xxx,xxx

                    Carry Forward from FY 2013                          

    $x,xxx

    Budgeted FY 2015 Indirect Costs                   

    $x,xxx,xxx

    FY 2015 Budgeted/Estimated Direct Salaries
    & Wages (or applicable base)

    $x,xxx,xxx

    FY 2015 Indirect Cost Rate

     xx.xx%

CERTIFICATION OF INDIRECT COSTS

This is to certify that I, [NAME OF RESPONSIBLE OFFICIAL], have reviewed the indirect cost rate proposal submitted herewith and to the best of my knowledge and belief:

  1. All costs included in the proposal to establish billing of an indirect cost rate(s) for fiscal year 201X (July 1, 201X to June 30, 201X) are allowable in accordance with the requirements of the Federal and State award(s) to which they apply and 2 Code of Federal Regulations (CFR), Part 200, "Cost Principles”, Subpart E, and Appendices V & VII for State, Local, and Indian Tribal Governments. Unallowable costs have been adjusted for in allocating costs as indicated in the cost allocation plan.
  2.  

  3. All costs included in this proposal are properly allocable to Federal and State awards on the basis of a beneficial or causal relationship between the expenses incurred and the agreements to which they are allocated in accordance with applicable requirements.  Further, the same costs that have been treated as indirect costs have not been claimed as direct costs.  Similar types of costs have been accounted for consistently and the Federal Government and the Department will be notified of any accounting changes that would affect the fixed, final, or predetermined rate(s).
  4.  

  5. I understand that during the predetermined (or extension) period, there will be no changes to the ICAP/ICRP calculation methodology used, no changes to our financial management system (i.e. change in processes, or in accounting software), and no substantial changes to our organizational structure and program(s).
  6.  

  7. I understand that if a rate extension is granted, I may not request a rate review until the extension period ends and that at the end of the extension period, I must re-apply to develop and negotiate a rate(s).
  8.  

  9. I understand that the ICAP/ICRP package along with all supporting documentation from which the proposed rates are developed must be retained for audit in accordance with the record retention requirements of the State or Federal agreements for which the indirect rate(s) will be billed or for three years after the fiscal year for which the rate(s) is calculated, whichever is longer. 
  10.  

  11. Additionally, I understand that in accordance with 2 CFR, Part 200, Appendix VII, refunds shall be made if proposals are later found to have included costs that are unallowable as specified by law or regulation, as identified in Subsection 200.420 to this part, or by the terms and conditions of Federal and State award, or are unallowable because they are clearly not allocable to Federal or State awards.  These adjustments or refunds will be made regardless of the type of rate(s) negotiated (predetermined, final, fixed or provisional).  For rates covering a future fiscal year (i.e. extended rates), the unallowable costs will be removed from the indirect cost pool(s) and the rate(s) appropriately adjusted for all fiscal years covered by the extension.

                             
I acknowledge as a representative of [NAME OF LGA] that the proper use and application of the indirect rate contained in this indirect cost rate proposal is the responsibility of the [NAME OF LGA] and such use may be subject to audit by the Department or Federal Highway Administration.  Failure to cooperate with an audit can result in the withdrawal of Department acceptance and require immediate reimbursement of previously reimbursed indirect costs.


I declare that the foregoing is true and correct.

Government Unit:  [LGA NAME]

      
Signature:         Signature:
Reviewed, Approved and Submitted by: Prepared by:
Name of Official: Name of Official:
Title Title
email: email:
INDIRECT COST RATE(S) SUBMISSION ACCEPTANCE 

The Department has received this ICAP/ICRP and accepts the plan for billing and reimbursement purposes. 



Accepted by:                            

MARSUE MORRILL, CPA
Chief, External Audits – Local Governments
California Department of Transportation, Independent Office of
Audits and Investigations
(916) 323-7105


______________________________
Signature

ATTACHMENT E. SAMPLE ICAP/ICRP SCHEDULES

Click Here To Download File

SUPPLEMENTARY GUIDANCE ICAP/ICRP EXTENSION REQUEST PROCESS

In addition to the guidance outlined in Attachment A, Subsection C, of the new Indirect Cost Allocation Plan/Indirect Cost Rate Proposal (ICAP/ICRP) process issued on February 4, 2015, Local Government Agencies (LGAs) that wish to apply for an extension must first submit and negotiate a predetermined rate(s)with the California Department of Transportation (Caltrans) Audits & Investigations (A&I) . Extension requests can be made prior to the predetermined rate period expiration for an additional one to four years. Predetermined rates will only be allowed for LGAs requesting an extension.

Establishing a Predetermined Rate

A predetermined rate(s) is based on an estimate of the costs to be incurred during a current or future period. A&I will not negotiate a predetermined rate(s) with an LGA that has not previously submitted an ICAP/ICRP to A&I. The negotiation of a predetermined rate(s) for indirect costs for a period of two to four years will be considered where the cost experience and other pertinent facts available are deemed sufficient to enable A&I and the LGA involved to reach an informed judgment as to the probable level of indirect costs during the ensuing accounting periods.

LGAs should provide the following information which will be used to determine if the LGA qualifies for a predetermined rate and for negotiating a predetermined rate(s):

  • Summary schedule showing the following:
    • The accepted ICAP/ICRP rates for the last five consecutive submission years. If rates were audited, the audited rates should be included and
    • Recalculated rates based on actual costs if last five submissions accepted/audited by A&I were fixed rates.
  • Proposed predetermined rate based on the lowest of:
    • The lowest of the last five year’s accepted/audited fixed rates reduced by fifteen percent of the rate, or
    • The lowest of the last five year’s actual rates reduced by fifteen percent of the rate.
  • The period of the proposed predetermined rate(s) to be used.
  • Metropolitan Planning Organizations and Regional Transportation Planning Agencies should submit the current year’s approved budget.
  • A signed certification (Attachment D) stating the LGA’s ICAP/ICRP calculation methodology and its financial management system (i.e. change in processes, or in accounting software) will remain unchanged, and that the LGA’s organizational structure and program will not substantially change for the period of the predetermined rate, and a completed Checklist that includes Sections 1 & 2 of Attachment C.

LGAs with a fixed rate(s) with carry-forward agreement(s) for previous year(s) that are requesting a predetermined rate(s), must resolve any over-recovery from the last two approved fixed rate year(s) using one of the following options:

  1. Provide evidence that Caltrans was reimbursed for projects over-billed, or provide evidence that an invoice was adjusted to compensate Caltrans for the over-billing.
  2. Divide the over-recovery amount by the number of years in the proposed predetermined period and reduce the total indirect costs used in the proposed predetermined rate by this amount.

Within 45 business days of receipt of request, A&I will either negotiate or reject the LGAs proposed predetermined rate(s):

Requesting a One-Time Extension

Once a Predetermined Rate(s) is negotiated with A&I and prior to the predetermined rate period expiration, LGAs may submit a one-time request to extend their predetermine rate(s) for a period of one to four years unless the LGA has the following conditions:

LGAs should provide a signed certification (Attachment D) indicating the proposed extension period and a completed Checklist that includes Sections 1 & 2 of Attachment C.

Within 20 business days of receipt, A&I will review the extension request and the Extension Checklist to determine whether the extension will be granted to the LGA and notify the LGA if the extension request is approved or rejected.

Once the extension is granted, the LGA may not request a rate review until the extension period ends.

Requesting a Rate after the Extension Period is Over

After the extension period is over, LGAs can seek reimbursement of indirect costs by choosing one of the options detailed in Attachment A. If the LGA requests a predetermined rate, it will be based on either the LGA’s ICAP/ICRP for the current year or the current year plus the last two to four consecutive years. A&I will determine the number of consecutive years required based on the LGA’s history and overall risk. LGAs should propose a predetermined rate based on the same criteria outlined under the section above titled, “Establishing a Predetermined Rate”.

FREQUENTLY ASKED QUESTIONS

Were there any changes relating to the cost allowability from 2 CFR 225 to 2 CFR 200?

2 CFR 200 includes language that strengthened certain areas such as conferences, morale, relocations, and student activities to appropriately limit allowable costs under Federal awards. See Office of Management and Budget response to similar questions.

What were some of the changes between the 2 CFR 225 and 2 CFR 200?

2 CFR 200 supersedes and streamlines requirements from OMB Circulars A–21, A–87, A–110, and A–122 (which have been placed in OMB guidance); Circulars A–89, A–102, and A–133; and the guidance in Circular A–50 on Single Audit Act follow-up. 2 CFR 200 updated policies on indirect costs and seeks to reduce the administrative burden by providing more consistent and transparent treatment governmentwide. Please visit www.cfo.gov/COFAR for more information on the following resources:

  • A link to a recorded webcast that was broadcast on December 20th
  • A link to a recorded training webcast that was broadcast on January 27th
  • Crosswalks and side-by-sides that explain where to find revised sections of the old guidance in the uniform guidance and show the language from the old guidance next to the new language. These crosswalks and side-by-sides are available at http://www.whitehouse.gov/omb/grants_docs

The Federal Department of Transportation (DOT) adopted OMB's revised Governmentwide Supercircular. DOT submitted to OMB an Interim Final Rule (IFR) to adopt the Supercircular regulation under 2 CFR Part 1201. The implementation of the Supercircular canceled 49 CFR Parts 18 and 19.

When does the new ICAP/ICRP process go into effect?

It’s effective for ICAPs/ICRPs for fiscal years beginning on or after July 1, 2015.

Can you clarify the Extension Request Process?

See Supplementary Guidance on the ICAP/ICRP Extension Request released on March 26, 2015 which is also posted on Caltrans website at http://dot.ca.gov/audits/

How many years may the agency use the pre-determined rate if the extension request was utilized?

An agency may request the use of a predetermined rate for two to four years and request the one-time extension of the predetermined rate for a period of one to four years. See Supplementary Guidance for additional details.

If the extension request was utilized and a pre-determined rate was established, how would the carryforward be handled?

LGAs with a fixed rate(s) with carry-forward agreement(s) for previous year(s) that are requesting a predetermined rate(s), must resolve any over-recovery from the last two approved fixed rate year(s) using one of the following options:

  • Provide evidence that Caltrans was reimbursed for projects over-billed, or provide evidence that an invoice was adjusted to compensate Caltrans for the over-billing.
  • Divide the over-recovery amount by the number of years in the proposed predetermined period and reduce the total indirect costs used in the proposed predetermined rate by this amount.

Is the pre-determined method still subject to Audit?

Once a pre-determined rate is agreed and negotiated, except under very unusual circumstances it is not subject to adjustment. The results of each negotiation must be formalized in a written agreement between the cognizant agency for indirect costs and the governmental unit. This agreement will be subject to re-opening if the agreement is subsequently found to violate a statute, or the information upon which the plan was negotiated is later found to be materially incomplete or inaccurate. Also other audits of the local government agency may be performed.

A&I indicated if the extension request method is utilized and the average ICAP rate for the past three years for example is 82 percent, the negotiated rate will be less. How much less will the agency have to negotiate? What would A&I’s basis be for negotiating a lesser rate?

See Supplementary Guidance on the ICAP/ICRP Extension Request released on March 26, 2015, which is also posted on Caltrans website at http://dot.ca.gov/audits/

For agencies that have been submitting annually, do they have an option to stay with the current process?

Yes.

For agencies who have been submitting annually and have no audit issues do they have to submit a complete ICAP Package similar to the current process?

Agencies still have to prepare an ICAP annually. However, certain agencies may qualify for the Revised Streamline Process and only need to submit the ICAP/ICRP certification and the Streamline Submission Checklist. See Section I of Attachment A, ICAP/ICRP Submission Processes and Documentation of Proposal for additional details and to determine whether the Agency qualifies for the Revised Streamline Process. It can be found at http://dot.ca.gov/audits/.

The streamline process indicates an agency will qualify if they received $35 million or less. Is the $35 million threshold at the County level or is it at the Department level?

It is at the Department level that is submitting the ICRP.

If an agency selects the streamline process are they subject to audit?

Yes. The selection of agencies to be audited will continue to be risk based.

When would the Caltrans Supplemental ICAP process be available?

It was released on March 26, 2015. It can be found at http://www.dot.ca.gov/hq/audits/index.html