July 2001
State’s Cost Allocation Attestation Out of Sync with Professional Standards
By Robert H. Colson, CPA
Members of the New York State Society of CPAs’ Not-for-Profit Organizations Committee have entered into a dialogue with the New York State Division of the Budget in regards to a cost allocation attestation form that independent CPAs are being asked to sign. David Ashenfarb of Schall & Ashenfarb CPAs P.C. chairs a subcommittee that has proposed alternative language to the division of the budget.
Ashenfarb summarized the problem with the form recently at a committee meeting: “During the fall of 2000, numerous not-for-profit organizations that currently receive grants from the state of New York, or that were applying for new grants, were asked to furnish their funding source agencies with attestations signed by independent CPAs about the organizations’ cost allocations. The required form, which was devised by the New York State Division of the Budget, was a means for New York state to comply with federal requirements to monitor subrecipients of TANF money. Many CPAs believed they could not sign the form because its language did not conform to professional standards.”
Ashenfarb’s subcommittee has discussed the problem with the division of the budget and has provided alternative wording for the form that would make it compatible with professional standards. That proposal is now being considered by the state.
In a June 6 meeting of the Not-for-Profit Organizations Committee, Ashenfarb said the division of the budget had informed him that numerous CPAs have been signing the form and returning it to the funding agencies on behalf of their clients. However, CPA firms with membership in the committee have been sending a letter that describes the cost allocation methods instead of signing the form. Committee members indicate that the current wording presumes an attestation engagement, which the funding agencies have been unwilling to pay for. The alternative wording suggested by the committee would remove the report from the attestation standards.
In the meantime, Ashenfarb suggests that CPA firms review closely the wording contained on the form and find alternative means of communicating what the form asks for unless they have actually performed the procedures required to satisfy the attestation standards.
