TN 30 (03-02)
DI 39506.201 When to Establish an Obligation for Reporting Purposes
A. Policy - reporting obligations
Obligations must be promptly recorded in the financial records of the agency. Once recorded, obligations may and should be adjusted, as necessary, to reflect differences between the amount recorded for the obligation and the actual amount of the disbursement required to liquidate that obligation.
At the close of each quarter, the State must submit to SSA reports of its cumulative fiscal year expenditures using Forms SSA-4513 and SSA-4513 Addendum (State Agency Report of Obligations for SSA Disability Programs). The State must report current expenditures and any past adjustments on Form SSA-4513 as appropriate. Adjustments for open fiscal years must be made on the next quarterly Form SSA-4513 for that year, on the appropriate line as an increase or decrease in obligations and disbursements. Pertinent information to explain any adjustment should be stated as succinctly as possible in the “remarks” section of the form or on an attachment. Adjustments must never result in additional obligations for which there is no obligational authority (Form SSA-872).
The cost categories contained on the Form SSA-4513 and guidelines regarding when to obligate these costs follow.
B. Policy - personnel costs and related benefits
Personnel service costs consist of direct salaries and wages, and fringe benefits related to direct salaries and wages. Direct salaries and wages are those paid directly to personnel for time devoted exclusively to the SSA disability program--and the charge to the disability program is not derived through apportionment with another agency or component.
Report salaries and wages based on the reporting period and the year earned--regardless of when payment is made. Do not establish an obligation for accrued annual or sick leave until it becomes due or payable as terminal leave.
1. Retroactive salary adjustments
Salary adjustments approved retroactively are to be obligated in the period in which the adjustments are authorized by the legislature or controlling agency. The DDS should report the status of anticipated retroactive salary adjustments via the annual and quarterly Spending Plan requests when possible. Agencies should contact the SSA regional office at once if these adjustments will result in exceeding the approved cumulative obligational authority.
2. Fringe Benefits
The inclusion of fringe benefits applicable to direct salaries and wages--as an integral part of the cost of those salaries and wages--is basic to the concept of total direct personnel services cost. This is a generally accepted accounting principle and is the basis for the procedure followed by many States in their own record keeping.
The DDS must report all fringe benefits on direct salaries and wages under "Personnel Services" on line 1 of the SSA-4513 (State Agency Report of Obligations for SSA Disability Programs). Examples of fringe benefits would include the employer's contributions to:
Other charges based on salaries and wages, such as the employer's share of contributions to the State retirement fund or FICA taxes, generally should be recorded as obligations at the time the related salaries and wages are earned. Where such charges are billed to the State agency after the end of the accounting period, the amount of the obligation should be estimated as a percentage of the total payroll--on the basis of the latest billing or other basis applied consistently each period--and should be reported for the same period as the related payroll expenses. Such estimates should be adjusted to actual expenses when that information becomes available.
C. Policy - medical costs
The following policy covers consultative examinations (CE) and medical evidence of record (MER).
Obligations for CE and MER should be recorded as of the date the authorizations (e.g., vouchers, purchase orders, letters of authorization) are issued. The amounts should represent, in the following order of preference:
fees indicated on the authorization,
fees payable for the services requested, as stipulated in the State agency fee schedule; or
estimate of fees for services requested based on past experience or future projections. Obligations for these authorizations should be cancelled as soon as the State agency becomes aware that the services will not be received.
Do not include applicant travel but do include the costs of services and travel of consulting physicians who testify at hearings.
D. Policy - indirect costs
Indirect costs include obligations for expenses incurred under a written Indirect Cost Negotiation Agreement (ICNA) approval, or an approved State-wide Cost Allocation Plan (SWCAP)—also known as Central Services Cost Allocation Plan (CSCAP). (See DI 39506.300 for additional instructions regarding State Indirect Cost Agreements.)
E. Policy - other non-personnel costs
1. Applicant travel
Obligations for applicant travel may be estimated as a percentage of CE obligations, or on another basis applied consistently each period, and should be recorded in the same period as the related CE obligations. Such estimates should be adjusted to reflect actual reimbursements to applicants for travel expenses incurred, when that information becomes available.
2. DDS travel
Obligations for DDS personnel travel may be tentatively recorded on the basis of travel orders or other estimates, provided the estimates are later adjusted to show actual expenses of travel performed.
3. Communications, office space, and rental of equipment
In cases where communications bills are normally rendered for an established period beginning in one month and ending in the following month, the obligation should be established at the beginning of the month at the estimated amount to be paid during the month. The monthly rental obligation should be obligated at the beginning of each month on the basis of average monthly cost of the lease agreement, even though the rent is not paid until a subsequent period.
4. Supplies, equipment, and other contractual services
Obligations for supplies, equipment, and other contractual services--including orders placed and contracts awarded--should be supported by a valid purchase order or other binding agreement to pay for goods or services. Orders (and requisitions) should not be regarded as issued if they have not been released by the State agency.
5. Services from other State agencies
The monthly obligations for services rendered by other entities of the State--if treated as indirect costs--should be based upon plans submitted and approved in accordance with OMB Circular A-87. If such services are treated as direct costs (charged directly to the State agency), the monthly obligation should be estimated based upon recent billings, or other basis applied consistently each period. Such estimates should be adjusted to reflect actual costs when the billing for the month has been received. (See DI 39506.300 for additional instructions regarding State Indirect Cost Agreements.)