Sneak Preview: Board Sides With Ohio in Applicable Credits Case

January 12, 2012 | By Jerry Ashworth | Post a Comment

(The following was excerpted from an article in the February issue of the Federal Grant Management Handbook.) Based on a recent Department of Health and Human Services Departmental Appeals Board ruling, states that can prove that they are adequately managing applicable credits according to Office of Management and Budget cost principles may not be required to refund them in cash to the federal government if challenged.

The Ohio Department of Administrative Services appealed a March 2011 determination by the HHS Division of Cost Allocation that required ODAS to refund about $7 million in excess reserves from its Office of Information Technology internal service fund for acquisition management as of June 30, 2008. Specifically, the state appealed DCA’s determination that ODAS return about $2.8 million, which was the federal share of the excess reserves. DCA later adjusted that amount to approximately $3.8 million, saying that ODAS failed to treat the fees that its contracted vendors were obligated to pay as “applicable credits.”

ODAS argued that it had accounted for all of the excess reserves for the acquisition management internal services fund, and that the vendor fees were properly accounted for under the approved statewide cost allocation plan as revenues that reduced the allocated costs for acquisition management services. The appeals board ruled that no excess reserves were required to be refunded, and that ODAS was not required to account for the vendor fees. Therefore, it reversed DCA’s decision that ODAS had to return the $3.8 million.

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