Section 6: Project Accounting

Overview

Although accounting tasks are performed throughout the project, specific financial elements must be considered early in the project initiation phase of the project in order to be adequately addressed during the project and avoid accounting problems when the project is completed. This section addresses several of these elements. In addition, early in the project development process the local government (LG) should also review the policies presented in the
Non-Construction Projects
,
Preliminary Engineering and Design
,
Construction
, and
Project Close-out and Maintenance
chapters of this Manual to ascertain if additional elements may need to be addressed.

Invoicing and Monitoring the Project Financial Records

The LG is allowed to submit reimbursement requests, with attached status report and schedule, no more frequently than once per month. The LG is strongly encouraged to submit invoices and back up materials on a monthly basis when work is performed. TxDOT project personnel have a responsibility to work with their LG counterparts to ensure the adequacy and accuracy of the project financial records is in compliance with all applicable federal and state requirements plus any additional requirements stated in the project’s advance funding agreement (AFA).

Inactive Project Obligations

FHWA defines an inactive project obligation as a federal-aid project with no expenditure for a year. Projects must comply with federal laws (
23 U.S.C.
) and regulations (
23 CFR §630.106(a)(5)
) governing the Federal-aid Highway Program. A project that is considered inactive is at risk of having its federal funding removed and reassigned to another project. A LG must bill in a consistent manner during the term of the project. The TxDOT Project Manager must provide consistent oversight of project progress and billing.

Collection of Funds

The TxDOT district or division that is managing an AFA is responsible for collecting the agreed-upon funding from the LG in accordance with the terms of the AFA.

Advance Payments for Direct State Costs

In most cases, the LG will make advance payments to TxDOT in accordance with the AFA for direct oversight costs by TxDOT. These costs could include covering:
  • TxDOT oversight costs;
  • right-of-way acquisition oversight;
  • engineering plans development review; or
  • project construction oversight and inspections.
As stated in the AFA, these LG advance payments are collected prior to starting the work that will be paid with the LG advance payments. The amount of funds advanced is specified in the AFA between TxDOT and the LG. More details on the procedures involved with advanced payments are contained in the
LGPM Guide
.

Interest

TxDOT does not pay interest on funds provided by an LG.

Indirect Costs

Texas Government Code §2106.001
defines indirect costs as “the cost of administering a state or federally funded program and includes a cost of providing a statewide support service. The term does not include the actual costs of the program.” “Support service” as used in the code includes accounting, auditing, budgeting, centralized purchasing and legal services.
The language used in TxDOT’s AFAs is closely aligned with the Texas Government Code by using the terms “direct” and “indirect” costs to differentiate between costs incurred by providing a statewide support service (indirect) and the actual costs of the program (direct).
When federal funding is being utilized in a project,
2 CFR §200.414
and
Appendix VII(D)(1)(b) to 2 CFR Part 200
set forth additional provisions that should be considered regarding the use of negotiated rates in determining indirect costs as well as the utilization of a de minimus rate for LGs that have received less than $35 million in federal awards.

Payment for Surveying Contracts

If payment for surveying is a responsibility of TxDOT, or if the LG is requesting reimbursement for surveying services from TxDOT, then the specified rate is the basis of payment used for surveying contracts by TxDOT. The LG may use any basis of payment allowable under State law, which includes the specified rate basis of payment.

Withdrawal from the Project

If a LG withdraws (or is terminated) from a project after an AFA has been executed, the LG is responsible for payment of all direct and indirect project costs previously incurred by TxDOT for the items of work in which the LG is participating.