those prerequisites required by law. minimum, provide the following prerequisites: a. Social security contributions or a substitute State plan where permitted. b. Federal unemployment insurance contributions. c. unemployment compensation insurance contributions. d. Workman’s compensation insurance coverage. 8. If proposed fringe benefits are based on estimates, determine the propriety of the method used. 8. The organization must use one or a combination of the following methods for estimating fringe benefits: a. Past experience for a given type of position. b. Fringe benefits of a comparable organization. c. Anticipated organization, Federal or State regulation changes, etc. Regardless of the method used, a test of reasonableness should be made by comparing fringe benefits paid in the most recently completed fiscal year with that of total salaries paid. (This information may be contained in the organization’s certified financial statements. 9. If a fringe benefit rate is used, determine whether the organization is a nonprofit or a profitmaking entity. 9. Nonprofit – In addition to negotiating indirect cost rates, a DCA office may negotiate the establishment of fringe benefit rates if the organization uses a rate to charge and bill fringe benefits. Profit – The propriety of a fringe benefit rate for a profitmaking organization may best be determined by comparing the rate proposed with the most recent historical fringe benefit rate available, or by comparing the benefit rate with that or an organization of similar nature, type, and size. 10. If only one fringe benefit rate is proposed, determine whether two or more would be more equitable. 10. Very often where different classes of individuals are employed (e.g., professional and clerical), two or more fringe benefit rates may be appropriate.
b. Determine whether the of account maintained are adequate for and suited for the organization’s business. c. Determine whether the accounting system in use is adequate for the accumulation and segregation of on a project-by-project basis. d. Determine whether cost records are controlled by or periodically reconciled with the general books of account. e. Determine whether the accounting system provides for a reliable determination of costs. f. Determine whether the prospective awardee has an accountant to handle financial and business data. records all purchases on credit for and services of an organization. 9. General journal – This is the journal in which transactions not provided for in other specialized journals are recorded. b. Generally, any organization providing services under a Government project should have all of the accounting ledgers and journals delineated under 4.a. above. c. Organizations, which perform or expect to perform under Government projects, should have a project cost accounting system. A project cost accounting system accumulates and segregates by projects. This method of cost accounting provides cumulative information relating to costs incurred by individual projects, thereby facilitating an efficient management and control of project funds. d. Costs recorded in the job cost ledger should tie in with those recorded in the operating ledger and other accounting records. e. All attributed to a project should be supported by adequate documentation such as invoices, time or effort reports, etc. f. All organizations performing work under Government projects should have an individual(s) on their staff with the necessary educational and experience background in accounting to handle the Government project(s). Where there is no such individual(s), it is imperative that the organization be made aware of the importance of possessing such expertise, to properly provide for adequate financial management of government projects. g. It is good business policy for an organization to have outside auditors to review and evaluate management business practices and the results of operations on a periodic basis. Additionally, outside auditors possess the professional expertise to provide business management services such as (a) installation and improvements of accounting systems, (b) strengthening of internal controls, (c) prDHSration and filing of tax returns, (d) bookkeeping services, (e) auditing services, etc. Review of outside auditors’ statements-as indicated elsewhere in this