Cost Accounting Issues

One hindrance to the creation of an NEMT costing model is the fact that transportation cost accounting, particularly among human service agencies that may be transporting clients for other program purposes, have not historically developed the requisite accounting tools to accurately report transportation costs. A Transit Cooperative Research Program (TCRP) report on cost-sharing cited the following problems:

Transportation costs often are combined with generalized accounting categories that do not allow transportation costs to be reported as a separate and distinct cost category. Partially as a result of the practice of combining transportation costs with more general accounting categories, overall transportation expenses tend to be significantly underreported. Payments for transportation services may or may not have any direct relationship to the costs of providing services. The costs of administering transportation services may not be reported accurately; transportation-related expenses such as administrative salaries, office rent, accounting services, and other administrative overhead items have been both understated and overstated in various communities.

Staff travel to transport clients often is not reported as a transportation expense but as an administrative or case-management cost.

Identifying the specific Federal or state program dollars used for funding transportation services may be difficult because of the blending of state and Federal funding sources at the local level.²

One of the reasons behind these issues is the lack of a standardized chart of accounts focused on transportation within the human services community; such a product would facilitate more accurate cost accounting. This hindrance exists despite the fact the U.S. Departments of Transportation and Health and Human Services jointly sponsored research in the 1980s that resulted in a standardized chart of accounts. The resulting report noted:

While a standard chart of accounts and definitions is a major step in obtaining uniform accounting results, standard accounting practices must also be used. This means that an identical transaction should be recorded the same way each time the transaction occurs and the same way by every transit system. Accounting for rural and specialized transportation providers will be uniform when a uniform chart of accounts with uniform definitions and uniform accounting practices are used.³

The Transportation Accounting Consortium, a voluntary alliance of eight states, disbanded shortly before the publication of this final report. Issued before the formation of the CCAM, the report had no “champion” at the Federal or state levels to encourage the use of the standardized chart of accounts.