Management Response:
The variance from the cost allocation is related to rounding errors as a result of the sum of the allocation percentages adding up to slightly over 100 percent. This is due to rounding errors when utilizing formula functions within Microsoft Excel. Additionally, when applying the allocation percentages to a shared expenses, the resulting amounts do not always add up to the exact amount of the expenses. Typically, the resulting cautions produce an error within less than $5 and/or less than 1% of the total expense. TXAEYC staff manually adjust the allocated expenses to add up to the total expense. To remedy this from happening in the future, if any rounding issues produce a difference in the total expenses allocated, the difference will be allocated to the organization’s operating expense class rather than a class associated with a government grant. The following language will be added to the TXAEYC Accounting Manual:
“Allocations percentages should be rounded to two decimal places (example 3.21%). If the total of percentages does not fully equal 100 percent, the difference should be added to the allocation percentage assigned to TXAEYC operating expenses. If the sum exceeds 100 percent, an equal amount should be attempted to be subtracted from each class associated with a government grant and added to the allocation percentage assigned to TXAEYC operating expenses.
When applying the indirect cost allocations, if the total of the allocations when summed do not equal the total expense amount, the difference should be added to the allocations to TXAEYC operating expenses.”
Parties Responsible and Timeline
Updates to the Accounting Manual will be approved by TXAEYC’s Finance Committee and Governing board by April 30, 2025.