The Allocation Problem for the US Army Corps Engineers - Essay Example

The Allocation Problem for the US Army Corps Engineers Question 1: Why does the US Army Corp of Engineers worry about cost allocations? Aren't they a branch of the US Federal Government? Why does it matter whether or not costs are allocated? Answer: It is important for the US Army Corps Engineers to worry about cost allocation as the cost allocations are drawn from impartial distribution of the costs for the authorised projects. An example of this is that the US Army Corps of Engineers have a number of projects that they deal with. However to ensure that the funds are allocated in an effective and efficient manner across all the authorised projects cost allocation is very important. Although the US Army Corps of Engineers are a part of the Federal Government there are a number of laws and regulations that need to be adhered to which relate to the reimbursement or cost sharing and also identifies the recovery of costs which are incurred for the functions and services. Hence it is essential for the US Army Corps of Engineers to be well aware of the cost allocations. Allocation of costs does clearly matter to a great extent as it is an essential part of the planning purpose and here cost sharing is an essential aspect. It plays an important role as it provides information that is required to find the proportion of the estimated projects costs and the reimbursablity of the costs (US Army Corps of Engineers). This information is essential for US Army Corps like any other business, to check for the feasibility and the acceptability of the plan. It is also important as it provides clear allocation of the expenses and also provides guidance and assignment of the actual expenses during the implementation and planning stages as well. Hence the cost allocations are an important aspect for the US Army Corps of Engineers. Question 2: The City of Seattle reading lists a series of costs and associated cost drivers for allocating these costs.  Do you agree with the cost drivers (cost allocation factors)?  Why do you suppose these drivers were selected?  Does it make sense to have all of these individual costs and drivers identified or should there be a more uniform method of allocating costs?  Why do they allocate costs anyway in a government (City Government) setting -- aren't cost allocation methods mostly for manufacturing companies? Answer: The City of Seattle has a number of cost drivers that it utilises for different departments. These cost drivers are used to ensure that the costs are distributed among the departments in an authorised manner. The drivers also provide rules that provide the right allocation of the costs and also determine which departments need to share the costs of the services. These factors are therefore kept in mind while allocation of costs, to ensure that the rules are complied with at all times. An excellent example of this is the cost of an auditor is divided to each department based on the number of audit hours, which is a fair and equitable methodology. This allows a large number of cost allocations to be made impartially. Another example can be that of the Civil Rights which is generally allocated based on the number of cases. Hence if one team is to have ten cases and the other zero case, then the allocation will be based accordingly. This ensures that only the department actually using the service pays for the same while the other department does not incur any cost in relations to the Office of Civil Rights (Seattle). The drivers have been selected for a number of reasons including, compliance with laws and regulations as well as compliance with agreement terms and in some cases also for the even distribution of the costs. The drivers are definitely a right choice for the teams as it allows the allocations to be more accurate and also permits that all project costs are as per the plans and also get reimbursed as well. Alongside, these drivers also ensure authorised use of the funds for the government as well. It is also essential to note that a very reasonable step has been taken and a number of cost items have also been allocated which are based as per the actual use. Question 3: Why does the US Department of Human Services have a special division just for Cost Allocation?  What are some of the ways in which they administer cost allocation for hospitals, colleges, and non-profit organizations? Answer: In order to be able to keep track of all cost allocation plans as well as to ensure that billing methods are in sync with the regulations as well as the ISF earning are in sync with the Federal regulations, the US department of Human Services has a strong and well developed team for the cost allocations. They ensure that all the above processes are in place and that all accounting principles and practises are followed to the word (PSC). In a case where a division is over billed or finds any form of discrepancy in the billed accounts then they can seek to get refunds as well. The team also uses training on the requirements for the cost rate proposals and also for the allocation plans for the hospitals, non profit organisations and also colleges. The department also takes the initiatives of negotiations with the Government in order for cost avoidances as well. Question 4: Is cost allocation only relevant for government agencies like those above? Why or why not? Support your arguments with references or examples as appropriate Answer: Every government agency requires having strong cost allocation as these departments work on acquiring and transforming resources to ensure that they are useful to the citizens in some form or another. The amount of costs involved in this is high and hence there is a need for cost allocations as well to ensure that the plan moves in line and the government can make informed decisions and well educated decisions at all times (ERIC). These cost allocations permit the government to work independently and also ensure that all reimbursements are fair and unbiased. There is a definite need for systematic cost allocation for almost every organisation that includes a policy and procedure which deals with cost allocation and also the recovery of indirect costs as well. It is also important to understand that organisations that have principles and regulations need to ensure that they are adhered to and all cost allocations need to be in sync with these principles and regulations. Works Cited ERIC. A Guide for State Government Agencies: Establishing Cost Allocation Plans and Indirect Cost Rates for Grants and Contracts with the Department of Health, Education, and Welfare. 1969. 10 September 2010 . PSC. Home. 2010. 10 September 2010 . Seattle. City Services. 2010. 9 September 2010 . US Army Corps of Engineers. Walla Walla District. 2010. 9 September 2010 . Read More