The Florida Department of Transportation requires consultants requesting professional services prequalification at the unlimited level (greater than $500,000 in fees) to certify the establishment of an accounting system that separates and accumulates direct and indirect costs, and identifies and records labor charges and expenditures for specific projects or jobs.
Focusing on the flow of information and the records that you maintain may help you attain or retain prequalification status with the FDOT by assuring that your firm’s accounting systems are compliant. The FDOT Accounting System Requirements Checklist includes provisions relating to:
- tracking labor costs (time sheets) and expenses;
- accounting for costs and expenses;
- reconciling job cost records and labor distribution records to the general ledger;
- and assessing the allowability of costs in accordance with regulations.
FDOT’s Job Cost Accounting System Requirements Primer provides an overview of the department’s demands of professional consultants. You can typically satisfy the requirements by providing the FDOT with a transportation audit prepared by an independent certified public accountant. But you may be able to request that the FDOT’s Procurement Office perform an Accounting System Review instead, if you have been in business for less than one complete year or have not previously needed an audit.
Your job cost accounting system must support the preparation of financial statements in accordance with FDOT Reimbursement Rate Audit Guidelines and the American Association of State Highway and Transportation Officials (AASHTO) Uniform Audit and Accounting Guide for architectural and engineering (A/E) consulting firms. Key FDOT job cost accounting system requirements include the following.
- Charges in Job Cost Reports must be traceable both to source documentation (e.g. timesheets or evidence of receipt, billing, and payment) and to General Ledger accounts.
- Timesheets must include time worked directly on each individual project or contract, as well as time not chargeable to any specific project or job.
- Subsidiary job cost records must be reconciled to direct charge General Ledger accounts.
If the FDOT reviewed your accounting system and cost projections, it will use its findings to establish provisional rates for you to use until your first CPA audit is reviewed. Subsequently, when you renew your qualification, the FDOT will use your annual CPA Rate Audit report to establish reimbursement rates for Overhead, Facilities Capital Cost of Money, and Direct Expenses. FDOT provides the following explanations of reimbursement rates in its Job Cost Accounting System Requirements Primer.
- “The “Overhead” rate is computed comparing the indirect costs of operations against the direct labor base.”
- “The Facilities Capital Cost of Money rate (FCCM) is determined from the ‘Average Net Book Value’ of the Consultant’s capital assets and rates covering six month periods established and published by the U.S. Office of Management and Budget.”
- “The Direct Expenses rate is calculated comparing total qualifying direct costs charged and reported to specific jobs against the same direct labor base used for the Overhead rate.”
Complying with FDOT job cost accounting system requirements will help you work with the department more efficiently.