Summary

CONTRACTOR'S PENSION COSTS WHICH WERE ACCRUED BUT NOT FUNDED ARE NOT ALLOWABLE FOR REIMBURSEMENT UNDER APPLICABLE FPR COST PRINCIPLE. COSTS WHICH ARE NOT FUNDED ARE UNALLOWABLE SINCE REIMBURSEMENT FOR SUCH COSTS WOULD BE IN NATURE OF ADVANCE PAYMENT. NO AUDIT OF NCCD'S OVERHEAD RATES WAS MADE. DURING THE COURSE OF LEAA'S AUDIT OF THE 1972 AND 1973 OVERHEAD RATES (WE ARE INFORMED THAT THE COST PRINCIPLES SET FORTH IN FPR 1-15.2 WERE APPLICABLE TO ALL OF NCCD'S CONTRACTS AND GRANTS) IT WAS DISCOVERED THAT PENSION COSTS FOR NCCD HAD BEEN ACCRUED BUT THAT NOT ALL OF THESE EXPENSES HAD BEEN LIQUIDATED (FUNDED). LEAA QUESTIONED THE ALLOWANCE OF THESE UNFUNDED AMOUNTS FOR 1972 AND 1973 CITING FPR 1-15.205-6(F)(2)(III) (MARCH 1975) WHICH PROVIDES AS FOLLOWS: "(III) PENSION COSTS OF PREVIOUS YEARS WHICH HAVE NOT BEEN FUNDED AS OF THE EFFECTIVE DATE OF THIS PARAGRAPH ARE ALLOWABLE TO THE EXTENT THEY ARE SYSTEMATICALLY FUNDED OVER NOT LESS THAN 10 YEARS.