Engineering Inc. - March/April 2010 - 26

Guest Column By T. Wayne Owens U AASHTO Uniform Audit & Accounting Guide: New Solutions for an Old Problem pdating the American Association of State Highway costs, there is no single piece and Transportation Officials’ (AASHTO) new Uniof documentation that supform Audit & Accounting Guide took two years to ports the allowance of this finalize and required much time and effort from the cost. In addition, executive AASHTO Task Force and ACEC. compensation represents the Calling the Audit Guide an update or a guide probably is greatest risk, since the owners unfair. This new version contains more meaningful information typically are the executives. and clearly defines what should be included in an overhead rate. For the purposes of overhead, In addition, it recognizes that staffing issues at state DOT audit “executives” are defined as the agencies result in more reliance on external CPAs. Plus, stanfive highest compensated indidard forms have been created to help build trust between states viduals, plus 2 percent shareand create more consistency in reporting for consultants. holders and family members The Federal Highway Administration (FHWA) plans to issue of this group. a rulemaking, which will incorporate this document into reguUnder prior guidance, firms T. Wayne Owens lation by reference and make it authoritative, meaning all of the enjoyed significant flexibility guidelines as they apply to federally funded projin their comects must be followed. pensation policies—so much so that it was not “Starting this The guide is effective after Dec. 31, 2009, and unusual for firms to achieve the 75th percentile all states have agreed to drop individual policies in allowable compensation. Compensation levels year, the guide in favor of a uniform standard. Any departure of firms that earned a majority of revenues from from the guide must comply with state. commercial clients were set by the market. The will become only limitation to allowable compensation was authoritative, Cognizance at Last the Benchmark Compensation Amount, the Consultants who contract with multiple states and states must highest amount firms can charge to a government spend considerable time trying to comply with contract. With the new guide, these presumed the various “interpretations of the Federal Acquilevels of compensation no longer are available. To comply or risk sition Regulation (FAR)” and other limitations achieve maximum allowable compensation, firms losing federal established by various states. Firms that have must use a combination written compensation presented a cognizant letter have been forced highway funds.” policy and a written bonus plan. to modify their overhead rates to comply with The written compensation policy must include unique state requirements. Indiana, for example, can handle an analysis of the compensation structure. Practically speaking, only one rate, forcing firms to contract on a blended rate as standardized job titles must be used along with three surveys opposed to, say, their home office rate. Such practices have to establish a base compensation for all executives. Although resulted in as much as a 50-point drop in the overhead rate. a lower compensation level could be established and the difOther states have salary limitations (caps are illegal), and cogference made up in bonuses, there is a risk of the bonus plan nizant rates have been modified for “excess compensation” or being unallowable, thus the firm would have much lower “unallowable bonuses.” compensation. The problem of multiple rates is not simply one of lost time. Scrutiny of bonus plans has increased with the new guide. Firms in cognizant states with policy limitations have been Plans must be written and cover an entire group or class of forced to use artificially low overhead rates, thus putting them employee with a reasonable, justifiable basis. A reasonable in the position of having a lower profit than firms from nonexclusion would be non-exempt employees who receive prepolicy states. mium overtime, which compensates them for extra efforts. Care Starting this year, the guide will become authoritative, and states should be taken to develop bonus plans that eliminate the posmust comply or risk losing federal highway funds. FHWA will sibility that such plans are seen as a distribution of profits. This monitor state compliance and provide guidance where necessary. can happen if the only participants in the plan are owners. Even if the bonus percentages do not match the ownership, a DOT Reasonable Compensation Defined could successfully challenge these efforts. Labor and benefits are the single largest items of overhead and The guide recommends the development of a compensation represent the greatest risk to the government. Unlike other matrix by FHWA that can be used to determine reasonable26 ENGINEERING INC. MaRCh / apRIl 2010

Engineering Inc. - March/April 2010

Table of Contents for the Digital Edition of Engineering Inc. - March/April 2010

Engineering Inc. - March/April 2010
Table of Contents
From ACEC to You
News and Notes
Market Watch
Legislative Action
How to Survive the Down Economy
Annual Convention Preview
Putting Transportation Design in Context
Sustainable BIM
The Case for QBS
AASHTO Uniform Audit & Accounting Guide
Insights from ACEC's Institute for Business Management
Members in the News
Engineering Inc. - March/April 2010 - Engineering Inc. - March/April 2010
Engineering Inc. - March/April 2010 - Cover2
Engineering Inc. - March/April 2010 - Table of Contents
Engineering Inc. - March/April 2010 - From ACEC to You
Engineering Inc. - March/April 2010 - 3
Engineering Inc. - March/April 2010 - News and Notes
Engineering Inc. - March/April 2010 - Market Watch
Engineering Inc. - March/April 2010 - Legislative Action
Engineering Inc. - March/April 2010 - 7
Engineering Inc. - March/April 2010 - How to Survive the Down Economy
Engineering Inc. - March/April 2010 - 9
Engineering Inc. - March/April 2010 - 10
Engineering Inc. - March/April 2010 - 11
Engineering Inc. - March/April 2010 - Annual Convention Preview
Engineering Inc. - March/April 2010 - 13
Engineering Inc. - March/April 2010 - 14
Engineering Inc. - March/April 2010 - Putting Transportation Design in Context
Engineering Inc. - March/April 2010 - 16
Engineering Inc. - March/April 2010 - 17
Engineering Inc. - March/April 2010 - 18
Engineering Inc. - March/April 2010 - Sustainable BIM
Engineering Inc. - March/April 2010 - 20
Engineering Inc. - March/April 2010 - 21
Engineering Inc. - March/April 2010 - 22
Engineering Inc. - March/April 2010 - The Case for QBS
Engineering Inc. - March/April 2010 - 24
Engineering Inc. - March/April 2010 - 25
Engineering Inc. - March/April 2010 - AASHTO Uniform Audit & Accounting Guide
Engineering Inc. - March/April 2010 - 27
Engineering Inc. - March/April 2010 - Insights from ACEC's Institute for Business Management
Engineering Inc. - March/April 2010 - 29
Engineering Inc. - March/April 2010 - Members in the News
Engineering Inc. - March/April 2010 - 31
Engineering Inc. - March/April 2010 - 32
Engineering Inc. - March/April 2010 - Cover3
Engineering Inc. - March/April 2010 - Cover4
https://www.nxtbook.com/nxtbooks/acec/engineeringinc_spring2020
https://www.nxtbook.com/nxtbooks/acec/engineeringinc_winter2020
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1119
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0919
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0719
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0519
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0319
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0119
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1118
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0918
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0718
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0518
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0318
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0118
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1117
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0917
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0717
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0517
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0317
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0117
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1116
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0916
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0716
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0516
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0316
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0116
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1115
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0915
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0715
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0515
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0315
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0115
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1114
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0914
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0714
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0514
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0314
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0114
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1113
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0913
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0713
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0513
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0313
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0113
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1112
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0912
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0712
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0512
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0312
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0112
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1111
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0911
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0711
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0511
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0311
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0111
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1110
https://www.nxtbook.com/nxtbooks/acec/engineeringincSeptOct
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0910
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0710
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0510
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0310
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0110
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1109
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0909
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0709
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0309
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0109_v2
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0109
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1108
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0908
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0708
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0508
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0308
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0108
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1107
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0907
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0707
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0507
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0307
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0107
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0505
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0305
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1105
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0306
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0105
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1103
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0906
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0903
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0703
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0106
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0506
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0503
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0303
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0904
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1104
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0704
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0504
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0304
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0905
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0705
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0104
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1106
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0706
https://www.nxtbookmedia.com