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B-185886 1 (1976-07-15)

handle is hein.gao/gaobadcwu0001 and id is 1 raw text is: 0%,LER C - t THE COMPTROLLER GENERAL DECISION . / . OF THE UNITED STATES WASHINGTON, D.C. 20548 FILE: B-185886 DATE: July 15, 1976 MATTER OF: National Council on Crime and Delinquency DIGEST: Contractor's pension costs which were accrued but not funded are not allowable for reimbursement under applicable FPR cost principle. While unliquidated (unfunded) pension costs may be allowable costs under general accounting principles, FPR cost principle governs allowability under Government contracts. As general matter, costs which are not funded are unallowable since reimbursement for such costs would be in nature of advance payment. The Law Enforcement Assistance Administration (LEAA) has requested an advance decision regarding the allowability of pension costs under the Federal Procurement Regulations (FPR). LEAA reports that in 1972 it assumed audit authority over the National Council on Crime and Delinquency (NCCD), a non-profit corporation. Prior to LEAA assuming audit cognizance, no audit of NCCD's overhead rates was made. During the course of LEAA's audit of the 1972 and 1973 overhead rates (we are informed that the cost principles set forth in FPR 1-15.2 were applicable to all of NCCD's contracts and grants) it was discovered that pension costs for NCCD had been accrued but that not all of these expenses had been liquidated (funded). LEAA questioned the allowance of these unfunded amounts for 1972 and 1973 citing FPR 1-15.205-6(f)(2)(iii) (March 1975) which provides as follows: (iii) Pension costs of previous years which have not been funded as of the effective date of this paragraph are allowable to the extent they are systematically funded over not less than 10 years, provided the contractor can demonstrate that pension costs are allocated to Government contracts on a funding rather than an accrual basis in the account- ing periods previous to the effective date of this paragraph and also provided that the systematic fund- ing starts no later than the contractor's first full fiscal year after the effective date of this paragraph. (The effective date of the paragraph is May 26, 1975). - 1 -

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