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Local Agencies' Use of Highway Funds <br /> <br /> i <br /> <br /> ~ Performance Audit <br /> SUMMARY AND RECOMMENDATIONS (Continued) <br /> D. Establish Administrative and Indirect (Overhead) Criterion. (Continued) <br /> limited to, such ,items as. no city or county. engineer, all street and highway projects <br /> - constructed by outside parties, and difficulty in the allocation of personnel costs in small <br /> entities. ~ _ - - . <br /> Parameters should be established to, determine. the economy,-,and .reasonableness of <br /> .administrative and indirect overhead ,,costs: that ,areallocated -to .road; and-:street <br /> programs.; These parameters should be jointly~established_by personnel of the Oregon <br /> -Department of Transportation and .representatives of the cities and counties. After the <br /> parameters have been established a comparison of the economy and reasonableness <br /> of administrative and indirect (overhead) costs .charged -against road ..and street <br /> programs can be made. between cities and counties with similar characteristics. . <br /> E. Allocation Procedures for Administrative and Indirect (Overhead) Costs <br /> Should be Standardized. <br /> _ - _ <br /> During our audit we noted the allocation method used for indirect (overhead) and <br /> administration costs were inconsistent among cities and counties in our. sample. In <br /> many instances .the allocation of indirect (ovefiead) and administrative costs were <br /> based on estimates by city and county personnel, budget constraints or out of date <br /> information. This has lead to inconsistencies in the manner in which administrative and <br /> indirect (ovefiead) costs are .allocated for the purposes of preparing the Loca/ Road <br /> and Street Questionnaire. <br /> We recommend the allocation methodology for administrative and indirect (overhead) <br /> costs be standardized. The inclusion of administrative and indirect (overhead) costs to <br /> be allocated should be supported by the formal accounting records of the city or county. <br /> Adoption of standard allocation methodology, which includes actual costs, would permit <br /> a better comparison among cities and counties of the administrative and indirect <br /> (overhead) costs allocated to road and street programs. <br /> Talbot Korvola & Warwick, uP 28 <br /> _ <br /> <br />