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Attachment A- FYI NA1 ON Audit Report <br />North American Infrastructure <br />A liasiness tlnil of.lacabs Engineering Croup Lu. <br />Notes to Statements of Fringe Benefit ENpeuse <br />and General & Administrative Expense <br />for the FismiI Year Ended October 2, 2015 <br />BEIM.-; Ul'Accounting and Deser'lption of Accounting Systems (continued) <br />Effective Scptember 28. 2013, the beginning of V 201-1. Jacobs exceeded the Cost Accnunlim Standard <br />ICASi 403 threslTold for requiring the use of the three -factor formula for allocating its Corporate Residual <br />Expense Pool (reference CAS 9904.103-40(c)(2)). As a result. alae accompanying Slatemenl ol'General IL <br />Administrative Expenses includes Jacobs Residual Pool allocated using the three -factor lbrnnlla (i.e.. <br />average of IrMILICS, payroll S's and net fixed assets.) <br />3. Allocation Methods <br />The Company has established two indirect rates: (l ) an At -Office Rale that is applied to work performed hi, <br />Jncobs-provided facilities, and (2) an At -Site Rale 11tnt is applied to work- performed at non -Jacobs (i.e.. <br />customer) provided ['acilides. The allocation base for the At -Site GSA rate includes all Prol'essional <br />Services and all Field Staff Direct Labor including prelniums. The allacalion base for the At -Office G. -A <br />rate includes At -Office Professional Services and At -Office Field Slaft Direcl Labor including premiums. <br />Coniracl labor is not included In the direct labor base, and it is char -ed direct to projects as an ODC. <br />The Company uses Ilse same fringe benefit rate for both its At -Office and AI-Sllc direct labor and allocates <br />fringe benefit expenses bused upon total payroll dollars (including premiums aril excluding incentive <br />compensntion.) <br />The Company receives an allocation of costs from the Parent Company chat includes salaries. related frilT_"c <br />benefits and general and administrative expenses. The GSA expenses include the costs of certain executive <br />nTI11r1gelTTent, accounlin��. treasury. infarrnslion technology. humin resources, health and safety. and <br />other corpornle functions. Time costs are allnemcd to the Company based opals a three-tier method, Mlieh <br />allocates costs that are: (1) directly attributable to the Company: (2) separately associated with the Company <br />Ihat arc allocated based upon appropriate bases titan use direct labor dollars. total payroll dollars, revenues. or <br />a combination thereof: und. (3) amounts remaining after the first Iwo tiers. allocated based upon a two -factor <br />formula that is compuled using Professional Service and Field StalTpayroll dollars and revenues. <br />The allocanions of f is Parent Company's Corporate Home Office casts have been properly adjusted to relied <br />FAR Part 31 disallowances. These amounts werc determined by Elie same multi -step process as described <br />above in Note'_. 77Te net allowable costs for each of ase Corporate Home Office Cos[ pools are Ellen allocated <br />using file melhudulugics described above. <br />Excess Cumpensalion <br />The unallmrable indirect labor adjustment ol'S416.585 includes a disallowance pl'S402.170 based till <br />application ofthe $447,000 benchnim-h- and an additional 311.355 was disallowed based on the contpenshtion <br />analysis tial Jacobs perlorms annually. As part of this analysis. senior executives were benchmarked to <br />surreys in which Jacobs participated. The overall Iesulls of the compensation analysis showed that the <br />THIS DOCUMENT -CONTAINS CONFIDENTIAL ANI) PROPRIETARY INFORMATION THAT HAS COMMERCIAL ANWOR FINANCIAL VALUE <br />SUCH INFORMATION HAS NOT BEEN PUBLICLY DISCLOSED AND I5 EXEMPT FROM DISCLOSURE UNDER THE FREEDOM Or <br />iNFOR1MATION ACT AND ALL OTHER SIMILAR LEGISLATION. JACOBS ENGINEERING GROUP INC. REQUESTS WRITTEN NOTICE BEFORE <br />ANY PUBLIC DISCLOSURE IS IAADE. <br />9of15 <br />