Adefemi introduced the audit team and thanked AHRC officials for sending the general ledger for the affiliates. Adefemi asked about the AHRC officials’ expectations for the update meeting.
Amy replied that we would like to provide enough information, so OSC does not disallow full amount of agency admin. We are also working to provide the response to the second preliminary report.
Adefemi mentioned that if you need any further clarification for Preliminary II, we would be happy to provide you more information. Regarding Prelim I, we tried to explain the ratio value in our last meeting. He provided the excerpt from the CFR manual explaining ratio value. Adefemi added that ratio value is for the allocation of agency admin cost and not for allocating …show more content…
Adefemi said that primary support for the allocated cost is time studies. AHRC officials told us that they do not have the time studies. At this point, we are trying to develop a reasonable method to allocate the joint cost.
Amy said that management fee is a negotiated amount; in our method of using the ratio value, we tried to show that 10% is a reasonable value based on the operating expenses of the affiliates. In addition, we also provide the example from other city agencies. We sent you the data for the backup of operating expenses.
Al Kaplan asked, do the audit team think it should be higher? We are saying, since we provided the management services, we are reducing the cost of the management fee. If you think the number should be higher, we can argue about it, but we think that the management fee removed from the total expenses is more than the actual cost.
Adefemi replied that we cannot decide the specifics of any contracts on behalf of the management. We are looking at the reasonableness of the cost of providing the management services. The CFR software calculates the ratio value. Management services expenses should be reported in CFR2 column 7. AHRC did not provide us the CFR 2 columns 7 details. Agency admin cost is based on the ratio value while CFR2 column 7 cost is not based on ration