The fee that I charged Timothy’s firm was somewhat higher than what he originally expected to pay; nevertheless it was reasonable given the nature of the engagement.
I worked until fairly late that evening (about 11 pm) and the entire next day on the project. Timothy called me every few hours the next day to check on my progress. He was concerned that I wouldn’t complete the engagement by the deadline for submitting the certification to the Treasury Department online, which was between 3:00 and shortly after 5:00. Fortunately, after applying every ounce of intense concentration I had at my disposal, I completed the
Agreed-Upon Procedures Report and Statement of Findings by shortly after 5:00. Some documents were still needed to provide substantiation for the project’s cost basis. Timothy said he’d provide those.
Briefly, the procedures that I performed were these:
- Tested cost eligibility, e.g. verified project location, determined 1) that the mark-up over cost, 18%, was reasonable according to Treasury Dept. benchmarks, 2) compliance with Sec. 1603 guidelines, and 3) that the cost basis was in accordance with the cost basis for Federal Income Tax purposes.
- Tested costs – for accuracy, completeness and reasonableness. Essentially I agreed the invoices as listed in the accounting records to transaction source documents, and then agreed the invoices to the NJ client’s “detailed calculation of cost basis”, taking into account material invoices.
- Concluded that there were no material potential discrepancies.
- Obtained a representation letter signed by Timothy regarding information I obtained and oral representations he made during the engagement.
My report on Procedures and Findings accompanied the
Agreed-Upon Procedures Report.
Timothy paid me the balance of my fee within a week. I followed up with the client’s Controller within two weeks and performed testing on the remaining items needed for substantiation of the project’s cost basis. The results were consistent with the findings in my report.
Please be aware that this program expired at the end of 2011 and hasn’t been renewed. For more information:
The U.S. Treasury Department’s Section 1603 Program
