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Q: Can businesses create more than one cost allocation plan during the year?
Yes, an agency can create as many cost allocation plans as they want throughout the year. I would say it is fairly typical for Governmental Agencies to only go through this process once per year. They do the budgets once per year, so they only do the cost allocation plan once per year as well. That being said, on the nonprofit side it is
done more frequently. For nonprofits they are running scenarios or updating staff costs on a quarterly, monthly or even bi-weekly process. Private sector depending on their reasoning also benefit from creating multiple cost allocation plans per month to help with decision making, make tax reporting period payments and calculate tax liabilities.
22 CAPTURE. COSTTREE 2016 Q1 ISSUE
Q: What time frame during the year encompasses the government and nonprofit cost plan season?
This varies. It all depends on the end of the fiscal year. The OMB plan process is as follows: After the end of the fiscal year it takes approximately 3 months to close the books. Once that happens then the cost plan preparation begins. It typically takes another 3 months to prepare. Then the cost plan is due 6 months from the close of the fiscal year. Then the auditors have approximately 6
months to review and approve, so that it is
ready to use for the estimated year prepared. A full cost plan varies, but most agencies will begin the process approximately 3 to 4 months before the budget process and then complete it in time to build it into the budget.
Q: Would a cost allocation plan be beneficial to someone who only has one enterprise fund?
Absolutely, a cost plan is beneficial for organizations of all sizes. Even those with only one enterprise fund. An enterprise fund means it is some type of utility like water, sewer, trash, that gets charged out to the public on a rate basis. If they do not have a cost plan that means they have no basis for charging an overhead component to the outside public who should be paying for that service.
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Q: My private company doesn't operate internationally, but we have manufacturing facilities, sale centers and corporate offices scattered across the United States? How can a cost allocation plan help me?
You do not need to have an international
company to benefit from having a cost allocation plan. By having a cost allocation plan you will be able to allocate all support and intangible costs and calculate intra-company invoicing amounts.
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