CMS-07-021/023 - Los Angeles County Department of Children and ...

5. Bad debts. Bad debts, including losses (whether actual or estimated)
arising from uncollectable accounts and other claims, related collection costs,
and related legal costs, are unallowable.
6. Bonding costs.
a. Bonding costs arise when the Federal Government requires assurance
against financial loss to itself or others by reason of the act or default of
the non-profit organization. They arise also in instances where the non-profit
organization requires similar assurance. Included are such bonds as bid,
performance, payment, advance payment, infringement, and fidelity bonds.
b. Costs of bonding required pursuant to the terms of the award are
allowable.
c. Costs of bonding required by the non-profit organization in the
general conduct of its operations are allowable to the extent that such bonding
is in accordance with sound business practice and the rates and premiums are
reasonable under the circumstances.
7. Communication costs. Costs incurred for telephone services, local and long
distance telephone calls, telegrams, postage, messenger, electronic or computer
transmittal services and the like are allowable.
8. Compensation for personal services.
a. Definition. Compensation for personal services includes all
compensation paid currently or accrued by the organization for services of
employees rendered during the period of the award (except as otherwise provided
in subparagraph h). It includes, but is not limited to, salaries, wages,
director's and executive committee member's fees, incentive awards, fringe
benefits, pension plan costs, allowances for off-site pay, incentive pay,
location allowances, hardship pay, and cost of living differentials.
b. Allowability. Except as otherwise specifically provided in this
paragraph, the costs of such compensation are allowable to the extent that:
(1) Total compensation to individual employees is reasonable for the
services rendered and conforms to the established policy of the organization
consistently applied to both Federal and non-Federal activities; and
(2) Charges to awards whether treated as direct or indirect costs
are determined and supported as required in this paragraph.
c. Reasonableness.
(1) When the organization is predominantly engaged in activities
other than those sponsored by the Federal Government, compensation for employees
on federally-sponsored work will be considered reasonable to the extent that it
is consistent with that paid for similar work in the organization's other
activities.
(2) When the organization is predominantly engaged in federallysponsored
activities and in cases where the kind of employees required for the
Federal activities are not found in the organization's other activities,
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EXHIBIT C