ALLOCATION OF COSTS – PLAN DOCUMENTATION - 9214

(Revised and renumbered from 9203)

All state agencies/departments will document and retain their cost allocation procedures and methodology in a Cost Allocation Plan (CAP). Each CAP will contain detailed information regarding the costs being allocated, the allocation methodology, and the following information:

• The frequency of allocating various costs to programs
• The foundation for selecting an allocation base
• How often the allocation base is evaluated to determine its continued accuracy
• Anticipated changes in the bases used to allocate costs

All CAPs should be supported by appropriately cross-referenced working papers or system documentation, updated periodically, and retained for reference and audit purposes. A sample outline of a CAP is displayed below:

PROGRAM COST ACCOUNTING, COST ALLOCATION PLAN

1. Purpose/Scope/General Overview
2. Definitions
3. Budget Structure
4. Methodology

   Allocation of Indirect Cost Pools-Explain the basis for the allocation of administration costs

   1. Include a description of costs charged to administration.
   2. Describe the method or methods for allocating each type of cost to programs.
5. Allocation Sequence
6. Program and Organization Charts in Picture Form Displaying Roll-Up Levels and Coding Schemes

Illustration 9214 displays a sample Cost Allocation Plan.