Reference no: EM131589122

Problem -

In early 20X5, a program manager and Lee worked together to prepare a grant application to provide funding for a new counselling service for persons with developmental disabilities who reside with their families or in MILA's group homes. The goal of the program is to provide the participants with greater independent living skills. The service would also be available to residential clients of other agencies. Participants, their families, or the other sponsoring agency would contribute a per-user fee to participate, which is expected to cover approximately 14% of total costs. Exhibit A below provides the two-year program budget that was submitted with the application.

The initial application is for a two-year pilot project, beginning in October 20X5. If the pilot is successful, MILA will seek permanent funding. To evaluate the project, interim reports must be provided to the funder at the end of six and 18 months, and a final report at 24 months. The six-month report includes an internally prepared financial report (actual costs compared to budget).

The grant application was approved in May 20X5, with an October program start date. MILA's year end is March 31. The startup costs in Exhibit A were incurred between July 1, 20X5, and September 30, 20X5, and include the first month's rent on the required space, design and printing of program materials, and staff time needed to finalize planning for the program and engage the professional counsellors. This startup phase is not considered to be part of the two-year program life, but these costs are to be reported in the first six-month report, which is due March 31, 20X6, even though they were paid before the official start date of the contract.

The salaries represent the salaries and benefits of one current employee who will be assigned on a half-time basis to co-ordinate the program, and 25% of the program manager's salary and benefits. Any excess revenue over expenses for the program must be returned to the funder at the end of the program.

Exhibit B provides the interim six-month report that was prepared by Lee, approved by the program manager, and submitted to the funding agency

Exhibit C provides the draft March 31, 20X7, (18-month) report prepared by Lee for submission to the funder. After Lee prepared the report, the MFA reviewed it, then submitted it to the program manager and CEO for their review.

After the program manager and the CEO reviewed the report, the MFA called Lee into her office to suggest the following changes to the report:

Based on the time sheets of the program co-ordinator and manager, their actual time on the program was 60% and 27.5% respectively, not the 50% and 25% reported by the accounting system. Therefore, the amount of salary allocated should be increased to reflect their actual time, not the budgeted time.

The budget approved by the funder included only $12,500 for allocated administrative costs, which is equal to 5% of the grant amount, the maximum permitted by the contract terms. However, the MFA informs Lee that the CEO and program manager have found that the program is much more complicated to run than had been predicted and a fairer estimate to reflect the actual administrative cost would be $22,000. However, there is a maximum on administrative costs. The MFA suggests that to reflect the true administrative costs, one-quarter of the participant fees collected should be assigned to MILA's general revenues, and the fee revenue line for the program should be reduced by the same amount.

The MFA also asks Lee to increase the rent expense for the program, which currently covers only the actual rent on the off-site room used for the counselling, by 1/25th of the rent on MILA's administrative offices because the program manager and co-ordinator do most of their work from this office. This will increase the rent for the 18 months by $2,880.

Beginning April 1, 20X7, and for the final six months of the program, Lee is instructed to base the salaries allocated to the program on time sheets rather than on a simple calculation, and to include the 1/25th calculation of the rent for MILA's administrative offices.

Required: Assume that the changes in the 18-month report are made and the changes requested for the final six months are also made. Include supporting calculations to show how the anticipated effect was estimated. Assume that service levels and therefore monthly costs in recurring categories are relatively stable. Use the Excel template Asgn-Template to answer this part.

Attachment:- Assignment Files.rar