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About here_2_help

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  • Birthday 12/17/1960

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    No special interests, really. Kind of a jack-of-all-trades/master-of-none kind of person.

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  1. here_2_help

    31.205-26(e) clarification

    I honestly cannot tell whether your quote supports, or refutes, my suggestion to the OP.
  2. here_2_help

    31.205-26(e) clarification

    The cost principle applies to any transfer of goods or services between affiliated entities under a common control. As Retreadfed correctly noted, the cost principle contains a general rule and an exception to that rule. You are stating the general rule. Further, it is possible for a performing entity to bill profit if the responsible entity does not apply profit to the transaction. In addition, the "cannot include profit" general rule applies to government contract costing and billing. It is possible for profit to be billed and then treated as an unallowable cost for government contract costing and billing purposes. Note, however, that any profit between affiliated entities under a common control would be "eliminated" during consolidation of the books for financial reporting purposes. Using the title of something to interpret the substance of the language below the title is not typically the way you want to go. Instead, I suggest looking at the language itself.
  3. here_2_help

    Excessive Salaries

    Contractors certainly have that option and the government will, generally, thank them for the voluntary reduction. However, I'm of the opinion that there are better ways to reduce G&A rates besides reducing bottom-line profit. For example, -- Review the G&A base to make sure it complies with CAS 410 requirements -- Review the G&A expense pool to make sure it complies with CAS 410 requirements -- Create a deferred comp plan for executives -- Move marketing to a commission-based paradigm -- Reduce executive office space Hope this helps.
  4. here_2_help

    A Marketing Question

    A smart boss I had once told me that he shot for an 80 percent win rate. He said that if the company was winning less than 80%, then the bid/no-bid decision process wasn't working properly. He also said that if the company was winning more than 80%, then it wasn't stretching enough.
  5. here_2_help

    Exempt EE's working LESS than 40 hours

    Thank you, rfpro, for the courteously phrased request for more information. Let me try to amplify. The interesting thing about timekeeping and labor accounting requirements is that they have, generally, sprung from the minds of DCAA auditors. Most of the control activities in these areas are found in the DCAA Contract Audit Manual and related audit programs, but nowhere else. To my knowledge, nobody has ever challenged DCAA's notions of what constitutes an "adequate" timekeeping and/or labor accounting system. That said, there are a few rules that might have bearing on this discussion. First, CAS 408 discusses measurement of employee entitlement to "compensated personal absence." In this particular situation, I believe there may be a disconnect in the calculation of the employees' entitlement, since PTO is accruing each period (based on the standard work week, I assume) but the company is telling its employees that they don't actually have to use the PTO if they work less than the standard work week. Second, DFARS 252.242-7006(c)(9) and (10) are similarly relevant to this discussion. (9) requires "a timekeeping system that identifies employees’ labor by intermediate or final cost objectives," and (10) requires "a labor distribution system that charges direct and indirect labor to the appropriate cost objectives." From what I've seen posted on this thread, an auditor might assert, with reason, that the company does not comply with those requirements, because it allows employees to not report PTO hours (which would be charged to an intermediate cost object) in certain circumstances.
  6. here_2_help

    Exclusion of Joint Ventures

  7. here_2_help

    Exempt EE's working LESS than 40 hours

    Because the timekeeping and labor accounting systems that feed the accounting system are not adequate.
  8. here_2_help

    Exempt EE's working LESS than 40 hours

    I have been in this business since Reagan was President. I have had many employers and been a consultant to many, many more companies. I have never, ever, seen a Government contractor permit an exempt employee to avoid using PTO by claiming that they still get paid for the full day, so why should they use PTO when they don't have to? (I have seen Comp Time banks used, but that's not your scenario.) Employees can "make up" time by working OT on other days in the week, but the number of recorded hours in a work week is never less than 40 (alternately never less than 80 in a two-week pay period). Given your scenario, the impact of the practice of not recording PTO to a Fringe Benefit account is to artificially decrease the Fringe Benefit rate and to increase the cost of the other labor hours. Depending on the labor distribution and contract mix, that practice could be inflating costs charged to certain contracts while decreasing costs charged to other contracts. Maybe; it's not possible to say with any certainty from afar. If I found a contractor using that practice, I would advise them that their timekeeping system was not adequate for cost-reimbursement or T&M contract types.
  9. here_2_help

    Exempt EE's working LESS than 40 hours

    Funny that this is the exact opposite situation from uncompensated overtime, where employees record more hours than they get paid for. In this case, employees are getting paid for more hours than they are recording. Yes, exempt employees can get paid for partial work days; that's what "exempt" means with respect to FLSA. However, in my experience timecards for exempt employees must record 40 hours in a week (assuming that's the standard work week for them) regardless of how many hours they actually work. It's not a matter of proration, it's a matter of timekeeping accuracy and labor accounting. Remember, payroll is distributed based on those timecards. Your system appears to let employees avoid recording hours to PTO, which means that you are missing some indirect expenses. Why is the company averse to having an indirect expense for PTO? Because there is no PTO expense the company seems to be increasing the "cost" of the hours that the employee is actually recording and charging to cost objectives, which might lead to allegations of an inflated direct labor cost. Re: your LWOP question. The situation is complicated. There are Federal labor laws I'm not going to get into here (and I'm probably not qualified to discuss them). That said, typically an employee takes LWOP when the PTO balance is insufficient to cover time not worked. If an employee is on LWOP then they are actually not getting paid for that time. So this is, fundamentally, a labor law compliance issue more than a labor accounting issue. You need better advice than you will get here, and I suggest you pay somebody for it.
  10. here_2_help

    Exempt EE's working LESS than 40 hours

    Hours less than 40 are recorded to either Paid Time Off or to Leave Without Pay. No exceptions.
  11. With respect to college grants and scholarships reserved for certain socioeconomic classes, many use the 25% test. E.g., if you are 25% Hispanic then you can claim to be Hispanic when applying for (many but not all) grants and scholarships.
  12. I sincerely apologize if I upset you. I hope you will continue to post questions because, obviously, these are issues that need to be addressed.
  13. The fact that one of the government's arguments in the cited case was almost exactly what Marc said the prime's position was makes me think that the 52.232-7 language is not as well understood as Vern's 2nd post would indicate. (Yes, that is the legal decision to which I was referring in my 1st post.) If the interpretation of the language is "seemingly obvious" then I hope the government attorneys were sanctioned and otherwise disciplined for putting a contractor through unnecessary litigation and associated stress. I hope the CO who so completely misinterpreted the clause requirements had their warrant pulled.
  14. Yes, this is correct. The DCAA CAM suggests several options for dealing with the difference between the amounts of direct labor recorded versus actual wages paid. You should read it. Your prime is ill-informed and doesn't understand how T&M (sub)contracts work. I would suspect that you don't actually bill time-and-a-half but, instead, you bill for overtime hours as recorded at the contractual T&M billing rates. In fact, I'm surprised your prime has the information to distinguish between "standard" straight time hours and "overtime" hours, since all hours should look the same on the billing. Your CEO is correct and there is at least one legal decision that supports that position. Assuming your contract has the standard 52.232-7 payment clause, your customer is ill-informed and the position conflicts with at least one legal decision.