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Attachment A- FYI NAI OH Audit Report <br />Nortli American Infrastructure <br />A Itusiness link of.lavmhs Engineering Groep Inc. <br />Notes to Statements of Fringe Benefit Expeu-w <br />.incl General & Administrative Expense <br />for the Fiscal Year Ended October 2, 2015 <br />2. Bltxis ol'Accaunting and Description of Accounting Systems (continued) <br />F_Mrlive September 38- 20 B. the beginning of F1' 201-1, Jacobs exceeded the Cost Accounting Standard <br />(CAS 1 iO3 threshold ror requiring the use of the three-lacior farmulu for allocating its Ccrporale Residual <br />Expense Pool (reference CAS 9904.403-40(c)(2)). As a result. theaccontpanyini, Statement ol'General & <br />Administrative Expenses includes Jacobs' Residual Pool allocated using the three -factor tornado 6.e.. <br />average of revenues, payroll S's and net fixed assets.) <br />3. Allocation Methods <br />The Company has established two indirect rates: (I) an AI -Office Rate that is applied to worts performed in <br />Jacobs -provided facilities, and (2) tilt At -Site Rate that is applied to wodi; performed at non -Jacobs (i.e_ <br />customer) provided facilities. The allocation base for 111e At -Site GSA rate includes all Professional <br />Services and all Field Stall Direct Labor inclndim_ premiums. The allocation base for the At -Office G&A <br />rale includes At -Office Proressional Services and A: -Office Field Sinfl'Direcl Labor including prentiunls. <br />C:ontlacl labor is not included in the direct labor base, and it is charged direct to projects as an ODC. <br />Tile Company uses the same fringe benefit rate for both its At -Office and Ai -Site direct labor and nflocnles <br />firinue benefit expenses based upon total payroil dollars (including premiums and excluding incentive <br />compensation.) <br />T he C'ompanv receives an allocation oncosts from tate Parent Company that includes salaries. related firinile <br />benefits and general and administrative expenses. Tltc G&A expenses include the costs of ccrinin executive <br />management. legal. accounting. Ireasury. inrurntntion technolog3 . lltlnlan resourcm health and s:slcly. and <br />other corporate functions. these costs are allocated to the Company based upon n three-tier method, whirl) <br />allocates costs that are: (1) directly attl•ibulable to the Company: (2) separately associated with the Company <br />that are allocated based upon appropriate bases that use direct labor dollars. total payral I dollars. revenues. or <br />a combination thereo!: -Ind. (3) nmotutts remaining after the first itt•o tiers. allocated basal upon a nvo-!actor <br />formula Ili -,%I is computed usitt.- Proressionai Service and Ficld 5lafrpayfal! dollars and revenues. <br />The allocations or the Parent Company's Corporate Home Office costs have been properly acfjusled to reflect <br />FA R Part 31 disallowances. These amounts were determined by the same midi -step process as described <br />nhnve Ifs 1`ale ', lite net al[mvable msls far each of the Cbrllnrate I lcmile Orfice cost pools :u a then allocated <br />Using Ilse metlwdolugies described above. <br />-f. E.l'CeSS Compensnfian <br />The unallowable indirect labor tldjusuncnl of S41G.58.5 incluCles a disallowance of$ 10'.170 based oil <br />application of tlic S497.000 brnchmatk and an additional 311.335 was disallowed based on the compensation <br />aral)'SiS 01111 Jacobs performs annually. As part of this analysis. senior exeCLlliV S well bcnchm;n>ted in <br />surveys in [which Jacobs particfpnled. -I I1C overall I•CSLIIIS Of the ccinpellsalion analysis shiltt'L'Ct Mat Ilio <br />THIS DOCUMEIJT'CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMA-ADN THAT HAS COMMERCIAL ANDrOR FINANCIAL VALUE. <br />SUCH INFORMATION HAS NQ. BEEN PUBLICLY DISCLOSED AND 15 EXEMPT FROM DISCLCSURE UNDER THE FREEDOM Or <br />INFORMATION ACT AND ALL OTHER SIMILAR LEGISLATION. JACOBS ENGINEERING GROUP INC. REQUESTS WRITTEN NOTICE BEFORE <br />ANY PUBLIC DISCLOSURE IS MADE. <br />9of-15 <br />