98 Local Agency Audit of Hwy Trust Funds

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i b Local Agencies' Use of Highway Funds = - ~ - Performance Audit - . ADMINISTRATIVE AND.INDIRECT (OVERHEAD) EXPENSES (Continued) , , T ` D. Economy, and Reasonableness ~~of Administrative and ~ Indirect = (Overhead) Expenditures. (Continued) - - (mean) for the_sample shown in the last column of Table 1 is 20 percent: ~ .The higher percentage of-indirect (ovefiead) for the larger cities skews.the result. ~ - _ - ~ - _ - _ .Another.-signficant ~~observation is.~ that some ~ smallerentities charge very little ~-to administration,and indirect overhead -:This is icall attributed to rel ~in" -more on the private _ sector; fog road "related.:expenditures: ==Although using `contractors `exclusively ,would result in _aower: or `no county/city indirect (overhead) charges, `the'govemment .entity clearly would be paying those costs in -the fees charged by the contractor. ~~This is because the contractor would be required to be reimbursed -for his overhead and profit within his normal fee schedule. _ The information depicted in. Table 1 and Table 2 show a wide range of calculated percentages. No standards exist against which to compare the administrative and - s. It is not ossible to draw direct conclusions r arding the d char a e9 v rhea P indirect o e ( ) 9 economy and efficiency of indirect (overhead) and administrative charges from the scope of work we have performed. We offer recommendations for improving the ability to gather credible information under Recommendation, Establish Administrative and Indirect (Overhead) Criterion.=--- . In Appendix A, we listed some of our findings, not discussed above, relative to administrative and indirect (ovefiead) expenses. EXPENSE SUMMARY Table 2 on the following pages summarizes fiscal year 1996-97 administrative, indirect (overhead), construction, maintenance and repair, debt service and other costs for all cities and counties included in our sample. Talbot Korvola & Warwick, LIP 22 ;u,;