(A) Each CFSA and WIA area shall develop a written policy for the reimbursement of the costs of CFSA and WIA area assets that complies with state, federal, and local requirements. The CFSA and WIA area shall follow the state and federal requirements unless local requirements are more restrictive. The policy shall:
(1) Include asset classification standards and a useful life schedule;
(2) Be consistent with the practices:
(a) Reflected in capital asset accounting policies used in preparing financial statements under generally accepted accounting principles (GAAP); or
(b) For entities producing cash-basis or other types of financial statements, the GAAP-based accounting policies used in establishing a reasonable useful life schedule for capital assets for use in establishing federal reimbursement claims; and
(c) That meet requirements for reasonableness, allowability, and allocability as outlined in office of management and budget (OMB) 2 C.F.R. part 200, "Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards."
(B) A CFSA or a WIA area may adopt the written policy of the county auditor when the county auditor's policy is, at a minimum, as restrictive as the federal requirements. When a WIA area is composed of workforce development agencies from multiple counties, the WIA area shall follow the most restrictive of state, federal, and local requirements when seeking federal or state reimbursement for an asset.
(C) Expensing and depreciation are the methods of asset reimbursement that CFSAs and WIA areas can utilize for claiming federal financial participation. A CFSA or WIA area's claim for reimbursement of capital assets must be based upon useful life and relative benefit to the federal program(s). Assets which are not capital assets may be expensed.
(1) Capital asset means tangible or intangible assets used in operations having a useful life of more than one year which are capitalized at five thousand dollars, unless the local area has a more restrictive capitalization threshold. Capital assets include:
(a) Land, buildings (facilities), equipment, and intellectual property,including software, whether acquired by purchase, construction, manufacture, lease-purchase, exchange, or through capital leases; and
(b) Additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations or alterations to capital assets that materially increase their value or useful life, not ordinary repairs and maintenance.
(2) Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which are capitalized at five thousand dollars, unless the local area has a more restrictive capitalization threshold.
(3) Supplies mean all tangible personal property other than those defined as equipment. A computing device is a supply if the acquisition cost is less than five thousand dollars or the local area's more restrictive capitalization threshold, regardless of the length of its useful life.
(1) An item with an acquisition cost of less than five thousand dollars is considered a supply and may be claimed as a direct or indirect cost (expense) and expensed during the accounting period. Unless local requirements are more restrictive, when seeking federal reimbursement for the costs of an asset with an acquisition cost of five thousand dollars or more, the cost shall be recovered through depreciation as an indirect cost. The only exception to the capitalization threshold is established in paragraph (D)(2) of this rule and applies to equipment that will only benefit programs supported solely by United States department of labor (DOL) funds in WIA areas that are not covered by more restrictive local requirements.
(2) A local WIA area may direct charge equipment with an acquisition cost of more than five thousand dollars as an expense with prior written approval from the Ohio department of job and family services (ODJFS).
(a) A local area shall request such approval by submitting a completed JFS 01994 "Request for Approval to Direct Charge Workforce Investment Act (WIA) Area Funds for Equipment" (3/2009). The ODJFS review criteria include the following items:
(i) The existence of any local requirements, either at the WIA area or at the county level if the WIA area is acting on behalf of a county workforce development agency.
(ii) The purchase of the equipment must meet the standard federal guidelines of reasonableness and allowability.
(iii) The proposed methodology of allocating the costs between the adult, dislocated, and youth grants, and any administration costs must ensure the grants are charged in accordance with relative benefits received.
(iv) All supporting documentation required on the JFS 01994.
(3) ODJFS will provide additional guidance on a case-by-case basis for approved requests to expense and direct charge the cost of equipment, including timing of the direct charge and reporting of the expenditure.
Depreciation is the method for allocating the cost of fixed assets to periods benefitting from asset use. The CFSA or WIA area may be reimbursed for the use of its buildings, capital improvements, equipment, and software projects capitalized in accordance with generally accepted accounting principles (GAAP) provided they are used for allowable activities and properly allocated to the proper federal awards according to the ODJFS cost allocation plan (CAP) and federal cost principles established in 2 CFR 200. Actual reimbursement costs must be determined by calculating depreciation by applying the following rules.
(1) The calculation of depreciation must be based on the acquisition cost of the assets involved. Acquisition cost means the cost of the asset including the cost to ready the asset for its intended use. For an asset donated to the CFSA or WIA area by a third party, its fair market value at the time of the donation must be considered as the acquisition cost. Such assets may be depreciated or claimed as matching, where allowable, but not both. The calculation of depreciation shall exclude:
(a) The cost of land;
(b) Any portion of the cost of buildings and equipment borne or donated by the federal government irrespective of where the title was originally vested or where it is presently located;
(c) Any portion of the cost of buildings and equipment contributed by or for the CFSA or WIA area or where law or agreement prohibits recovery; and
(d) Any asset acquired solely for the performance of a non-federal award.
(2) In addition to the provisions in paragraph (A)(2) of this rule, in determining the useful life of assets that may be claimed for federal reimbursement, the following factors must be considered:
(a) Type of construction;
(b) Nature of the equipment used;
(c) Technological developments in the particular area;
(d) Historical usage data; and
(e) The renewal and replacement policies followed for the individual items or classes of assets involved.
(3) The straight-line method of depreciation is presumed to be the appropriate method of depreciation unless the CFSA or WIA area presents clear evidence indicating that the expected consumption of the asset will be significantly greater in the early portions than in the later portions of its useful life.
(4) The CFSA or WIA area may not change depreciation methods unless approved in advance by ODJFS. The CFSA or WIA area may not change an accounting estimate to shorten the useful life of a building being claimed for federal reimbursement unless approved in advance by ODJFS. The CFSA or WIA area shall submit all requests to change the method of depreciation to the ODJFS fiscal supervisor. All requests shall include no less than the following information:
(a) The useful life of the item;
(b) The history of the method of costing that has been used for the life of the asset; and
(c) The reasoning behind the request to change the asset reimbursement method.
(5) The CFSA or WIA area has two options for cost recovery when the depreciation method is used for buildings.
(a) The entire building (i.e., the shell and all components) may be treated as a single asset and depreciated over a single useful life; or
(b) The building may be divided into multiple components and each component depreciated over its estimated useful life. The building components must be grouped into three general components of a building:
(i) Building shell, including construction and design costs;
(ii) Building services systems (e.g., elevators, HVAC and plumbing); and
(iii) Fixed equipment (e.g. casework, fume hoods, etc.).
(6) The CFSA or WIA area may not depreciate any assets that have outlived their depreciable lives. However, other related costs such as maintenance and insurance may be allowable.
(7) The CFSA or WIA area must ensure that charges for depreciation are supported by adequate property records. The agency must:
(a) Perform a physical inventory of assets at least once every two years to ensure that the assets exist and are usable, used, and needed; and
(b) Maintain depreciation records indicating the amount of depreciation taken each period.
(8) When the CFSA or WIA area is converting to the depreciation method from the use allowance method, depreciation must be computed as if the asset had been depreciated over its entire life (i.e., from the date the asset was acquired and ready for use to the date of disposal or withdrawal from service). The total amount of use allowance and depreciation for an asset (including imputed depreciation applicable to periods prior to the conversion from the use allowance method as well as depreciation after the conversion) may not exceed the total acquisition cost of the asset.
(9) The CFSA or the WIA area shall report the appropriate amount in accordance with rule 5101:9-7-29 of the Administrative Code in order to receive reimbursement for assets by using the depreciation method.
Promulgated Under: 111.15
Statutory Authority: 5101.02
Rule Amplifies: 329.04
Prior Effective Dates: 8/24/81, 7/15/84, 2/2/85, 1/1/86 (Emer), 4/1/86, 7/11/88, 9/5/97, 1/31/08, 6/5/09