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Acct410 Forum 5 - or other records CITATION Fre13\l 1033...

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Why would a grantor not permit general municipal overhead to be charged to a capital project financed by its grant or insist that allowable (reimbursable) overhead be calculated by means of a predetermined formula related to direct project costs? All costs incurred related to a project include direct costs for items such as land, buildings, materials, and labor. The costs for engineering and architect fees, transportations costs, damages, and any other costs that are associated with the project. The way overhead is treated merits further consideration [ CITATION Fre13 \l 1033 ]. General government overhead is seldom charged to the project unless it is reimbursable under the terms of the grant that is financing the project. When overhead costs are reimbursable, the amount is usually listed in the grant or calculated with a predetermined formula, and is not the result from cost accounting
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Unformatted text preview: or other records[ CITATION Fre13 \l 1033 ]. However, grants are usually intended only to supplement current funds. A grantor may not permit general municipal overhead to be charged due to the possibility of abuses, such as manipula±on of accoun±ng records to maximize the amount received for a grant. Even if the charging of overhead is deemed acceptable, it may be di³cult to determine the correct percentage that should be charged to the project, which could cause audit problems. There may also be exclusions that prevent the charges of overhead from the project cost as outlined by statute, grant or contractual agreement, or by administra±ve determina±on[ CITATION Fre13 \l 1033 ]. Works Cited Freeman, R. J., Shoulders, C. D., Allison, G. S., & Smith, Jr., G. R. (2013). Governmental and Nonproft AccounTng: ±heory and PracTce,. New Jersey: Pearson....
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