Our Services
Our services include indirect cost preparation, negotiation, and training. By hiring us you will gain access to the practical knowledge and expertise of trained accounting professionals. As an outsource provider, we offer you a cost-effective alternative to managing your indirect cost needs, while providing you and your employees with exceptional services based on the most current best practices. Past auditing experience allows us to analyze your financial statements with the objective of optimizing your rate and recovery.
What Is An Indirect Cost Rate?
An indirect cost rate is a formula consisting of indirect costs (overhead/administrative costs) that the Tribes can recover for administering federal government programs divided by the direct cost base. The direct cost base is usually composed of either total direct costs less equipment and flow through or pass-through costs, or direct salaries and wages. This rate is then used to distribute your indirect costs to the benefiting programs according to the proposed direct cost base. Recoveries vary based upon federal availability of funds and the addition and deletion of programs throughout the year.
What Is An Indirect Cost Rate?
An indirect cost rate is a formula consisting of indirect costs (overhead/administrative costs) that the Tribes can recover for administering federal government programs divided by the direct cost base. The direct cost base is usually composed of either total direct costs less equipment and flow through or pass-through costs, or direct salaries and wages. This rate is then used to distribute your indirect costs to the benefiting programs according to the proposed direct cost base. Recoveries vary based upon federal availability of funds and the addition and deletion of programs throughout the year.
In order to recover your indirect costs, Tribes must submit an Indirect Cost Proposal to the cognizant federal agency annually, who will then negotiate an indirect cost rate with you. The Office of Management and Budget made the Department of Interior the cognizant agency for all Indian tribal governments. The Department’s Interior Business Center (IBC) Indirect Cost Services, has been assigned the responsibility for negotiating these indirect cost rates and for ensuring compliance with applicable regulations. The primary regulation for negotiating the rates is Title 2 Section 200 of the Cod of Federal Regulations (CFR), formerly 2 Section 225, and OMB Circular A-87, “Cost Principles for State, Local, and Indian Tribal Governments”, which outlines the principles for determining which costs can be recovered for programs administered under grants or contracts with the federal government. In addition to this Circular, laws such as the Indian Self-Determination Act (Publication Law 93-638, as amended) and other individual federal program funding acts can affect the allowability of indirect and direct costs and the availability of funds for reimbursing indirect costs. All of these influences must be taken into consideration during the proposal preparation and negotiation phases.
Why Is It Important?
Although the Tribes are assured indirect cost reimbursement for overhead expenses related to managing and operating federal programs under the Indian Self-Determination and Education Assistance Act, recovering these costs can be complicated.
Some of the challenges faced by the Tribes negotiating Indirect Cost Rates are more aggressive negotiations with the Interior Business Center; recognizing which agencies have indirect cost caps, and budgeting appropriately; and educating Tribal Council and financial staff on not only how to account for indirect costs, but also how to negotiate the indirect costs to the full potential of the Tribe. Generally Accepted Accounting Principles make several options available to the Tribe but when the audit is completed the negotiator must be able to identify the indirect and the direct numbers used in the proposal from the final audit report.
How Can Parnell & Associates Assist Your Tribe?
How Can Parnell & Associates Assist Your Tribe?
We can help by utilizing our expertise and understanding of audits and indirect costs in the preparation and negotiation of your proposal with the Interior Business Center.
In addition, we provide in depth training specifically designed for your operation’s educational needs. We can assist your financial staff in understanding what indirect and direct costs are, how to successfully budget and allocate your indirect costs, how to prepare and negotiate your indirect cost rate with IBC, as well as a working knowledge of the applicable cost principles and how they are relevant to you.
We thank you for your interest in Parnell & Associates and look forward to speaking with you concerning the challenging times we face when negotiating with IBC.
Favorite Links:
Interior Business Center https://www.doi.gov/ibc/services/finance/indirect-cost-services
Title 2 CFR 200 https://www.ecfr.gov
Title 2 CFR 200 https://www.ecfr.gov
