The new OMB max compensation limit has been established at $487,000. The limit is for contracts entered into after June 23, 2014. As a response to the change, the National Compensation Matrix (NCM) has been updated to flag comps that are in excess of the new threshold. A footnote will appear at the bottom alerting the user that the comp limit may have been surpassed and tells the user to check the date of their contracts for possible disallowance.
As in previous years, no serious conversation was had to add a geographic adjustment to the matrix. The new limit of $487,000 can be reached by two positions (CEO/President at about $28,700,000 of top line revenue and EVP at over about $440,000,000 of top line revenue). The index was adjusted again for 2014 based on responses to executive compensation surveys. The NCM group expects to index the matrix for inflation for 2015.
Have questions about FAR cost principles or other issues impacting your A/E firm? Contact Keith Eldredge, partner, at 717.843.3804 or firstname.lastname@example.org.
Contributed by Hunter Mink, CPA, (email@example.com) a manager in RKL’s Auditing and Accounting Services Group. Hunter has extensive experience working with A/E firms and a comprehensive understanding of Federal Acquisition Regulations (FAR) and Cost Accounting Standards (CAS).