Thank you for the reply, Greg. I will confess that I don't really understand
the difficulty this award generates for our accountants, so I apologize if
my description of the problem is unclear. The accountant's exact question is
"Do I record 80% of the value as an expense toward the A-133 audit?" and to
me it is a very simple answer: yes.

But our finance people have indicated that it is difficult for them to reach
a conclusion on that question. Because the state agency could reclaim the
vehicle, our finance vp considered recording this as a non-depreciable
asset, but was advised by our auditor that this would be based on faulty
logic. I have the impression that the real concern is the impact on our
financial statement of recording this as asset and acknowledging the
liability of its accompanying operating expense. The next question I fielded
was "is it too late for us to give the van back?" (this is NOT what we will
do)

Of course all of these questions were discussed at the time we prepared the
application, but it was a LONG grant process (two years from application to
award), and revisiting the issue has generated more discussion.

-----Original Message-----
From: GSchmidt [mailto:xxxxxx@COX.NET]
Sent: Saturday, April 05, 2003 11:18 AM
To: xxxxxx@HRINET.ORG
Subject: Re: [RESADM-L] accounting for vehicle grant

Molly:

I'm not sure what the A-133 issue is that your accountant is concerned
about.  If I had to guess, I'd say it's about how to categorize the
asset federal vs state.  If this is the case, follow the source of
funding (80/20).  The lien should be immaterial unless you try to
dispose of the vehicle without proper authorization.  There is probably
some underlying agreement between the Fed and State on how to disburse
any return on assets from liquidations (either through sale, insurance
proceeds, etc.).  I'm pretty sure that if you looked at the terms or
regs governing the project, you'll see something to the effect that if
you dispose of the asset, the state is to receive all funds generated as
a result of the transaction.

Greg Schmidt

RESADM-L Member wrote:

>Good morning,
>
>I'm interested in the accounting practice for any institutions who have
>received a grant from a state/federal transportation program (generally
>referred to as the "Section 5310" program) -- the grant is in the form of a
>vehicle built to our State Dept. of Transportation specs, not in the form
of
>dollars. We have received such a grant for the express purpose of operating
>a transportation program for the Health Center's adult day care program,
and
>our organization's grant accountant has questions about the award in
>relation to tracking A-133-eligible awards.
>
>The award contract provides a stated dollar value for the vehicle, which is
>supported 80% with federal funding and 20% with state funding. The contract
>assigns title for the equipment to the Health Center with a lien assigned
to
>the State.
>
>Our accounting dept. has determined that the vehicle should be recorded as
a
>non-depreciable fixed asset, but questions remain about how to record the
>award in relation to A-133 requirements.
>
>Since my area of expertise is primarily in pre-award proposal development,
>I'm seeking the collective wisdom of RESADM-L to pass on to our accountant.
>
>(Note: We are a not-for-profit, non-university hospital and our
>organization's cost accounting standards are 45CFR74/OASC-3, not A-122 or
>A-21.)
>
>-----------------
>Molly Daniel
>Grants Specialist
>Planning Dept.
>Sarah Bush Lincoln Health Center
>1000 Health Center Drive
>Mattoon, IL 61938-0372
>tel. 217-258-2195
>fax 217-258-4135
>email: xxxxxx@sblhs.org <mailto:xxxxxx@sblhs.org>
>web: www.sarahbush.org <http://www.sarahbush.org>
>
>
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 subscription information and a web-searchable archive, are available
 via our web site at http://www.hrinet.org (click on "Listserv Lists")
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