Identifying Issues in Audited FAR Indirect Cost Rate

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Identifying Issues in Audited FAR Indirect Cost Rate Schedules 2015 AASHTO Audit Conference Portland,

Identifying Issues in Audited FAR Indirect Cost Rate Schedules 2015 AASHTO Audit Conference Portland, Oregon July 21, 2015 2

Victor W. Vaccaro, Jr. , CPA/ABV, CFF, CDA, Partner Ø Provides auditing, accounting and

Victor W. Vaccaro, Jr. , CPA/ABV, CFF, CDA, Partner Ø Provides auditing, accounting and consulting services to A/E Firms on a national basis. Ø Specializes in FAR Overhead Rate audits and advises A/E Firms on their overhead rate calculations. Ø Performs valuations of A/E Firms and assists with ownership transition.

Who is Dannible & Mc. Kee, LLP? Ø Dannible & Mc. Kee, LLP is

Who is Dannible & Mc. Kee, LLP? Ø Dannible & Mc. Kee, LLP is a New York-based firm of Certified Public Accountants and Consultants. Ø Experience working with hundreds of professional architecture, engineering, planning, and environmental consulting firms across the country. Ø We handle financial analysis and tax planning for architecture and engineering (A/E) firms in addition to providing FAR audits, reviews, and compilations for clients who contract with dozens of Federal and state agencies nationwide. Ø We provide outsourced contract closeout audits, FAR overhead rate review and other services to the New York State Department of Transportation (NYSDOT). 4

Overview Ø Why is it important that state DOTs perform a critical review of

Overview Ø Why is it important that state DOTs perform a critical review of Audited FAR Indirect Cost Rate Schedules? Ø When should this critical review be performed? Ø How can these review procedures be performed most effectively and efficiently? Ø What are common and uncommon issues that might be identified in a FAR audit report? 5

Why Perform a Critical Review of FAR Audits? Ø Save the state money! o

Why Perform a Critical Review of FAR Audits? Ø Save the state money! o Overhead often represents more than half of total contract costs. o The FAR Audit determines the overhead rate that can be billed on current and future contracts. o Overhead can be one of the easiest costs to control and reduce, including retroactive adjustments if allowed for in the contract. Ø Reviewing the results of the FAR Audit can also help to determine if the Consultant’s financial system is sufficient to account for direct and indirect costs. Ø Significant concerns identified in a critical review of the FAR Audit could lead to questions about awarding future contracts to the Consultant. 6

Assess the Capabilities of the CPA Firm Ø Just because the FAR Overhead Rate

Assess the Capabilities of the CPA Firm Ø Just because the FAR Overhead Rate is audited, that does not mean it is always accurate! Ø Assess the capabilities of the CPA firm performing the audit. o Do they specialize in working with A/E firms and in performing FAR audits? o What is your past experience with them? o What is their relationship with the Consultant? o Are they the Consultant’s regular CPA or do they just perform the FAR audit? o How much assistance do they provide Management with the overhead calculation? 7

Assess the Capabilities of the CPA Firm Ø The AASHTO Guide believes this matter

Assess the Capabilities of the CPA Firm Ø The AASHTO Guide believes this matter to be so critical that it has a section providing specific criteria to consider in selecting a CPA. Ø Among other factors, the Guide indicates that the CPA should: o Meet all GAGAS requirements, including requirements for adequate continuing professional education (CPE) credits in governmental auditing, o Have received favorable peer review reports, o Be well versed in GAGAS, the provisions of FAR Part 31, Cost Accounting Standards, related laws and regulations, and the guidelines and recommendations set forth in the Guide, and o Have a working knowledge of the A/E industry, including common operating practices, trends, and risk factors. 8

When Should FAR Audits Be Reviewed Ø Overhead rates should be submitted annually by

When Should FAR Audits Be Reviewed Ø Overhead rates should be submitted annually by a specific deadline and in a standardized format, along with supporting information, including the executive compensation analysis. Ø States should establish requirements for when overhead rates must be audited and when separate field and office rates must be determined. o Thresholds can be set based on a consultant’s gross or net revenue, the value of contracts, or other such factors, either for the most recent year or possibly the last few years. o There should be no grey area! Requirements must be specific and consistently applied. 9

When Should FAR Audits Be Reviewed Ø For FAR audits, the CPA should be

When Should FAR Audits Be Reviewed Ø For FAR audits, the CPA should be required to submit specific workpapers to verify that the audit was performed in accordance with AASHTO Audit & Accounting Guide and that the CPA understands FAR. Ø A schedule of approved overhead rates by year for each consultant should be maintained, including information such as: o When the rate was submitted and when it was approved. o Whether it was prepared internally or audited. o If audited, name of CPA firm that performed the audit. Ø When overhead calculations and FAR audits are not submitted as required, specific penalties should result such as no further contract awards or an adjustment to a lower overhead rate until filings are brought up to date. 10

What if the Overhead Schedule is Unaudited Ø Based on some threshold, a FAR

What if the Overhead Schedule is Unaudited Ø Based on some threshold, a FAR Overhead audit might not be required. o Revenue size for the Consultant. o Dollar amount of contracts. Ø Consider how this impacts the level of risk related to the Consultant’s FAR overhead rate. o Risk is higher since overhead rate is unaudited. o However, impact is lower due to smaller size of firm and/or contracts. 11

What if the Overhead Schedule is Unaudited Ø In addition to the potential concerns

What if the Overhead Schedule is Unaudited Ø In addition to the potential concerns found in Audited FAR Overhead Rate Statements, there could be more basic issues that impact the overall calculation. Ø Consider the format of the schedule provided by Management. Ø What are the capabilities of Management and what is their level of understanding of FAR. Ø Request supporting documentation for Management’s calculation similar to workpaper requests when there is an audit. Ø Consider some level of CPA service, such as a compilation or review of the FAR Overhead Rate Statement. 12

Effectively and Efficiently Reviewing FAR Audit Reports Ø State DOTs have limited manpower, how

Effectively and Efficiently Reviewing FAR Audit Reports Ø State DOTs have limited manpower, how can these resources be used most effectively and efficiently? Ø Challenging the Firm’s overhead rate could in itself be the best way to achieve meaningful cost reductions. Ø In critically reviewing the Firm’s overhead rate, a systematic approach is needed. o Risk should be assessed based on the Firm’s past audit history, changes in recent years, and the size of current and future contracts. o Based on level of risk and potential concerns identified, specific procedures should be performed. Ø A paperless audit file should be maintained, including work programs, supporting documentation, and conclusions. 13

Common and Uncommon Issues in FAR Audit Reports Ø There are some issues that,

Common and Uncommon Issues in FAR Audit Reports Ø There are some issues that, by their nature, we tend to see in many FAR audits. Ø Other issues relate to more unique situations that may only apply to certain Consulting firms. Ø Analyzing each individual firm will help to determine which issues could apply. o Obtain the Firm’s financial statements and perform an analytical review. o Utilize the AASHTO Internal Control Questionnaire and make additional inquiries as needed. Ø Remember that looking into 10% of the information often uncovers 90% of the problems! 14

Analytical Review Ø Analyzing the Consultant’s financial statements can identify when there is greater

Analytical Review Ø Analyzing the Consultant’s financial statements can identify when there is greater risk. o Are the Consultant’s annual financial statements audited, reviewed or compiled by a CPA? o Has the FAR auditor reconciled the FAR statement to the financial statements? Ø Key industry ratios from the financial statements, such as the Net Multiplier, Utilization Rate, and Profit as a Percentage of Net Revenue, can provide important information. Ø Financial statements should support that the Consultant is financially stable so that there is confidence that they will have the ability to fulfill their obligations under the contract. Ø However, if a Consultant is too profitable, this could be an indication that they are billing more than allowed under cost plus fee contracts. 15

Expenses Without Proper Documentation Ø The Burden of Proof rests with the Consultant! o

Expenses Without Proper Documentation Ø The Burden of Proof rests with the Consultant! o Costs must be supported. o Per FAR 31. 201 -2(d), Consultants must maintain adequate records, including supporting documentation, to demonstrate that the costs comply with applicable FAR cost principles. Ø As firms pay bills electronically and use credit cards for expenses, we are seeing more instances where original invoices are not maintained to support expenses. Ø This could result in additional disallowed expenses if available documentation is not sufficient to support that expenses are allowable under FAR. 16

Personal Use of Company Vehicles Ø The cost of personal use of vehicles is

Personal Use of Company Vehicles Ø The cost of personal use of vehicles is unallowable. o This includes the portion of cost related to commuting to and from work. o As indicated in FAR 31. 205 -6(m)(2), costs are unallowable regardless of whether the cost is reported as taxable income to the employees! Ø If the Consultant owns and/or leases vehicles, there will almost always be some disallowance. A disallowance can only be completely avoided if: o Vehicles are not available for personal use and are not used to commute to work (i. e. they are left at the Consultant’s office!). o Employees reimburse the company for any personal use. Ø If there are luxury vehicles, costs must also be reviewed to ensure they are reasonable in accordance with FAR 31. 201 -3. 17

Personal Use of Company Vehicles Ø Mileage logs must be maintained to support the

Personal Use of Company Vehicles Ø Mileage logs must be maintained to support the business and personal use of vehicles. o Remember that the Consultant bears the burden of proof to provide support that costs are allowable! o In addition, mileage logs must support whether vehicle costs are direct or indirect costs. Ø We still see firms using some basic estimates for the disallowance of personal vehicle usage. o Such estimates are not sufficient and are often inaccurate! o An example is saying that 2/7 ths of vehicle costs are disallowed for weekend usage. This significantly understates the disallowance as it ignores commuting time and other personal use on week days. 18

Meals and Entertainment Ø Taken together, the cost principles at FAR 31. 205 -13,

Meals and Entertainment Ø Taken together, the cost principles at FAR 31. 205 -13, Employee Morale, and FAR 31. 205 -14, Entertainment, expressly disallow certain costs, including: o Entertainment provided as part of public relations, employee relations, or company celebrations, o Costs of amusement, diversions, social activities, and any directly associated costs, including tickets, meals, and lodging, and o Employee social events, including company picnics, theme and holiday parties. Ø Consultants often do not disallow all of the costs that should be disallowed for meals and entertainment. 19

Meals and Entertainment Ø Since many of the costs in this area are expressly

Meals and Entertainment Ø Since many of the costs in this area are expressly unallowable, auditors should ask the Consultant to justify which costs are allowable, rather than trying to identify those costs that should specifically be disallowed. Ø Costs for meals would generally be allowable when traveling on official company business in accordance with FAR 31. 205 -46, Travel Costs, subject to the limitations of this cost principle. o Costs for meals may be based on per diem, actual expenses, or a combination thereof, provided the method used results in a reasonable charge. o Meals for travel related to specific projects should be included in direct costs, therefore, only meals related to travel for administrative purposes (i. e. training) would be included in overhead. 20

Depreciation Ø The allowability of depreciation expense is very straight forward, yet we still

Depreciation Ø The allowability of depreciation expense is very straight forward, yet we still see errors made by Consultants that are not corrected in FAR Overhead Audits. Ø Per FAR 31. 205 -11, depreciation is allowable if it does not exceed the amount used for financial reporting purposes, is reasonable, and is allocable to assets used in the Consultant’s primary business activities. Ø Asset costs should be amortized over the estimated useful life of the fixed assets using depreciation methods acceptable for financial purposes (e. g. , straight-line, double-declining balance, or sum-of-the -years’-digits). 21

Depreciation Ø Consultants can use income tax depreciation if it is: o Reflected in

Depreciation Ø Consultants can use income tax depreciation if it is: o Reflected in the Consultant’s books of accounts and financial statements. o Consistently followed in the same cost center for business other than Government. Ø However, depreciation claimed on the indirect cost rate schedule should not be based on accelerated cost recovery methods that may be used for IRS tax purposes (e. g. , IRC Section 179 write-offs or bonus depreciation). Ø Depreciation on vehicles must be included when considering the disallowance for personal use of vehicles. Ø Per FAR 31. 205 -16, gains on disposition of fixed assets must be offset against depreciation expense in the year they occur. 22

Rent Paid to Related Parties Ø Per FAR 31. 205 -36(b)(3), charges in the

Rent Paid to Related Parties Ø Per FAR 31. 205 -36(b)(3), charges in the nature of rent for property between any divisions, subsidiaries, or organizations under common control, are allowable to the extent that they do not exceed the normal costs of ownership, such as depreciation, taxes, insurance, facilities capital cost of money, and maintenance. Ø This requirement is very straight forward, but we still see that this is misunderstood or “overlooked” by Consultants and FAR auditors! Ø A Consultant might argue that the rent expense paid to a related party is at the market rate and even offer supporting documentation – But this does not matter! Ø One easy way to analyze and adjust for related party rent is to see if the related party rental company shows any profit. If all of their activity is with the Consultant, the disallowance can be determined by the amount of this profit. 23

Rent Paid to Related Parties 24

Rent Paid to Related Parties 24

Executive Compensation Analysis Ø This is a common issue impacting all firms. However, while

Executive Compensation Analysis Ø This is a common issue impacting all firms. However, while it is a common issue, there are many complexities that lead to inconsistencies and mistakes in properly following the applicable requirements of FAR. Ø The Consultant is responsible for preparing an analysis to support the reasonableness of claimed compensation costs in accordance with FAR 31. 205 -6. Ø Typically, the compensation analysis focuses on executive positions because those positions comprise the highest compensation levels and the most significant area of audit risk. 25

Executive Compensation Analysis Ø It is important to consider both the allowability of compensation

Executive Compensation Analysis Ø It is important to consider both the allowability of compensation and the reasonableness of compensation in accordance with FAR 31. 205 -6. o For an element of compensation to be allowable, it must meet the FAR requirements specific to that element. o The total of allowable compensation elements must be reasonable for the work performed. Ø Chapter 7 of the AASHTO Guide provides a step by step approach for performing a compensation analysis. Ø Factors to consider include compensation for similar executive positions and considering firms: o Of the same size, o In the same industry, o In the same geographic area. 26

Executive Compensation Analysis Ø A compensation analysis is generally performed using multiple nationally published

Executive Compensation Analysis Ø A compensation analysis is generally performed using multiple nationally published surveys. Ø Alternatively, transportation contractors can evaluate the reasonableness of executive compensation using the National Compensation Matrix (NCM), first released on May 8, 2012. Ø Common errors in analyzing and determining the amount of allowable compensation include: o Not including all elements of compensation, such as profit sharing contributions, o Failing to disallow specifically unallowable forms of compensation, o Using industry compensation data that is not from published surveys, and o Improperly adjusting surveys for regional differences and other factors. 27

Executive Compensation Analysis Ø Special consideration must be given to the new $487, 000

Executive Compensation Analysis Ø Special consideration must be given to the new $487, 000 statutory compensation cap that was implemented through the Bipartisan Budget Act of 2013. o This cap is applicable to contracts executed on or after June 24, 2014, and may cause some firms to have two overhead rates, depending on the execution date of the contract. o The NCM instructions and Q&A’s have been updated to reflect this change. 28

Bonuses and Incentive Compensation Ø In accordance with FAR 31. 205 -6(t), bonuses and

Bonuses and Incentive Compensation Ø In accordance with FAR 31. 205 -6(t), bonuses and incentive compensation are allowable provided that: o Awards are paid or accrued under an agreement entered into in good faith between the contractor and the employees before the services are rendered or pursuant to an established plan or policy followed by the contractor so consistently as to imply, in effect, an agreement to make such payment; and o The basis of the award is supported. Ø AASHTO Uniform Audit & Accounting Guide Section 7. 11, Bonus and Incentive Pay Plans, specifies that consultants should maintain written bonus plans that identify eligibility requirements and provide details regarding how bonus payments are determined. 29

Bonuses and Incentive Compensation Ø For closely-held firms, special care must be taken in

Bonuses and Incentive Compensation Ø For closely-held firms, special care must be taken in analyzing bonus payments to owners to make certain that they are a true bonus based on stated objectives and not a distribution of profits that must be disallowed. Ø For executive employees that have some direct labor, another concern is “planned bonuses” that are excluded from base compensation. o This is a common strategy when direct labor rates are capped as these bonuses are included entirely in overhead. o Conversely, if they were included in base pay, they would be split between direct and indirect labor, thus lowering the overhead rate. 30

Use of Cash Basis Financial Statements Ø FAR does not specifically preclude use of

Use of Cash Basis Financial Statements Ø FAR does not specifically preclude use of cash basis financial statements. Ø Rather, FAR 31. 201 -1, Composition of Total Cost, indicates that: “in ascertaining what constitutes a cost, any generally accepted method of determining or estimating costs that is equitable and is consistently applied may be used. ” Ø However, in describing what should be included as part of indirect costs, FAR 31. 203(g) specifies that “a base period for allocating indirect costs is the cost accounting period during which such costs are incurred and accumulated for allocation to work performed in that period. ” 31

Use of Cash Basis Financial Statements Ø Significant costs not related to current year

Use of Cash Basis Financial Statements Ø Significant costs not related to current year must be disallowed - Otherwise firms could “manage” there overhead rate by choosing to pay or defer payment of expenses between years. Ø Cash basis financial statements should only be the starting point for a FAR Overhead Statement in the case of very small firms. Ø If a FAR Overhead Statement is derived from cash basis financial statements, care should be taken to review for significant expenses not related to the current year. o The FAR auditor should perform additional cutoff testing. o State DOTs may also want to request and review this cutoff testing. 32

Charging Time to Fixed Fee Jobs Ø Consultants can boost their FAR Overhead Rate

Charging Time to Fixed Fee Jobs Ø Consultants can boost their FAR Overhead Rate by “encouraging” employees to charge less time to lump sum or fixed fee jobs. Ø The recording of less hours to these jobs will not reduce revenue since they have a fixed fee. Ø However, by instead charging more time to overhead, this will increase the Firm’s overhead rate and thus increase the billings on cost plus jobs. Ø This can be difficult to identify even in an overhead rate audit. Ways to evaluate this include: o Perform analytical review on the Consultant’s financial statements, o Consider extended procedures in labor testing, o Analyze the job cost ledger and billings for a selection of contracts, and o Interview employees. 33

Charging Time to Fixed Fee Jobs 34

Charging Time to Fixed Fee Jobs 34

Inconsistencies In Charging Project Management Time Ø Consultants may have some cost plus contracts

Inconsistencies In Charging Project Management Time Ø Consultants may have some cost plus contracts that include project management time as a direct cost of the project, while other contracts may indicate such project management costs are not chargeable and are a part of overhead. Ø Such inconsistencies must be identified as they can create significant problems. o If the Consultant properly follows FAR and consistently includes all project management costs as part of direct labor, they will not get reimbursed for these project management costs on contracts where they are not billable. o Conversely, if non-billable project management costs are charged to overhead, contracts where project management costs are billable will bear an additional burden for these costs. 35

Inconsistencies In Charging Project Management Time 36

Inconsistencies In Charging Project Management Time 36

Inconsistencies In Charging Project Management Time 37

Inconsistencies In Charging Project Management Time 37

Accounting for Overtime Ø Uncompensated overtime for salaried employees must be accounted for by

Accounting for Overtime Ø Uncompensated overtime for salaried employees must be accounted for by either: o The effective rate method, or o The salary variance method. Ø Specific guidance also applies to overtime premium. o Consultants must maintain records that segregate overtime premium amounts and classify them as direct or indirect costs. o Consultants must establish overtime policies that are applied consistently and result in equitable cost allocations. o Consultants must treat overtime premium costs consistently for all contracts, regardless of the customer (government versus commercial) or type of contract involved. 38

Separate Business Units Ø If the Audited FAR Overhead Statement includes a combination or

Separate Business Units Ø If the Audited FAR Overhead Statement includes a combination or consolidation of separate business units, locations, subsidiaries, etc. , consideration must be given as to whether costs are allocable to the overall group in accordance with FAR 31. 201 -4. Ø If a combined or consolidated overhead rate is determined, this overhead rate must be used consistently. Ø If individual overhead rates are used in any instances, this could result in additional reimbursement of costs! 39

Separate Business Units Ø Conversely, if the Consultant consistently uses separates instead of a

Separate Business Units Ø Conversely, if the Consultant consistently uses separates instead of a combined rate, the allocation of corporate overhead is always a challenging issue. Ø If the Consultant has service units such a laboratory division or IT division, the impact on the overhead rate must be evaluated and challenged. o Do these service units bill for their services such that a direct cost credit is needed? o Is project time charged to direct labor or is all time accumulated as a direct or indirect cost? 40

Separate Business Units 41

Separate Business Units 41

Separate Business Units 42

Separate Business Units 42

Field Versus Office Allocations Ø FAR 31. 203(f) indicates that “Separate cost groupings for

Field Versus Office Allocations Ø FAR 31. 203(f) indicates that “Separate cost groupings for costs allocable to offsite locations may be necessary to permit equitable distribution of costs on the basis of the benefits accruing to the several cost objectives. ” Ø For projects where the Consultant’s employees do not work out of their own offices and do not receive office support in their day-to-day activities, the hours billed for them may not qualify for the Consultant’s full overhead rate. Ø The purpose of the field rate is to pay the Consultant for the fringe benefits, project employee management, and home office administrative support they do provide to their field employees. 43

Field Versus Office Allocations Ø Types of field offices include: o Construction Contract Administration/Construction

Field Versus Office Allocations Ø Types of field offices include: o Construction Contract Administration/Construction Inspection (Field Office) o Project Office o “On Call” Engineers o Contract Employees Ø Consultants must be consistent in the development and application of field rates. Accordingly, if a Consultant has computed a field rate, this rate must be consistently applied across all business segments and disciplines. Ø Direct field labor is based on actual labor hours multiplied by actual labor rates for field assigned employees. 44

Field Versus Office Allocations Ø Where possible, the allocation of overhead costs between field

Field Versus Office Allocations Ø Where possible, the allocation of overhead costs between field and office should be based on actual amounts applicable to each category. Ø Many overhead costs are predominantly related to office operations, while there are some costs that specifically relate to field jobs. Ø Other costs must be allocated by some relevant factor. o Direct labor or total labor in each category is often used to allocate employee benefits. o An allocation is also made to the field category for the office costs related to home office support. Ø A common error that we see in the field versus office allocation involves using an estimate to allocate all indirect labor, where actual data might be available to allocate non-chargeable technical labor between field and office. 45

Field Versus Office Allocations 46

Field Versus Office Allocations 46

Field Versus Office Allocations 47

Field Versus Office Allocations 47

Field Versus Office Allocations 48

Field Versus Office Allocations 48

Internal Control Deficiencies not Identified Ø In accordance with GAGAS, the Audited FAR Overhead

Internal Control Deficiencies not Identified Ø In accordance with GAGAS, the Audited FAR Overhead Rate statement must be accompanied by the CPA’s report on internal controls over financial reporting and compliance. Ø In nearly every FAR Audit report that we review, the internal control and compliance report is included. Ø However, in most circumstances, this report indicates that there are no material weaknesses or control deficiencies. Ø But for many Consultants, there probably are deficiencies, they are just not being reported!!! 49

Internal Control Deficiencies not Identified Ø If the FAR audit found additional disallowances, then

Internal Control Deficiencies not Identified Ø If the FAR audit found additional disallowances, then the FAR statement prepared by Management was not materially accurate – This is a material weakness that should be reported in the internal control letter! Ø Other common internal control comments in a FAR audit might include: o Not maintaining mileage logs. o Inadequate support for expenses. o Lack of an accounting procedures manual. o Executive compensation analysis not properly prepared by Management. 50

Conclusion Ø A critical review of FAR Overhead Rate Audits will identify issues that

Conclusion Ø A critical review of FAR Overhead Rate Audits will identify issues that can lead to lower overhead rates and cost savings. Ø In addition to the FAR Audit Report, supporting data should be obtained from the Consultant and from the CPAs workpapers. Ø Establish a process for assessing risk and determining procedures to most effectively and efficiently review and approve FAR overhead rates in a timely manner. Ø Remember the common and uncommon issues that we discussed today. 51

Contact Information Victor W. Vaccaro, Jr. CPA/ABV, CFF, CDA, Partner Email – vvaccaro@dmcpas. com

Contact Information Victor W. Vaccaro, Jr. CPA/ABV, CFF, CDA, Partner Email – vvaccaro@dmcpas. com Web – www. dmcpas. com and www. dmconsulting. com Address Financial Plaza 221 S. Warren St. Syracuse, New York 13202 -2687 Phone – 315 -472 -9127 . 52

Circular 230 Any tax advice contained herein was not intended or written to be

Circular 230 Any tax advice contained herein was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. 53

Disclaimer This presentation is © 2014 Dannible & Mc. Kee, LLP. All rights reserved.

Disclaimer This presentation is © 2014 Dannible & Mc. Kee, LLP. All rights reserved. No part of this document may be reproduced, transmitted or otherwise distributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Dannible & Mc. Kee, LLP. Any reproduction, transmission or distribution of this form or any material herein is prohibited and is in violation of U. S. law. Dannible & Mc. Kee, LLP expressly disclaims any liability in connection with the use of this presentation or its contents by any third party. 54