Review of Supplemental Executive Retirement Program Costs Claimed by AdminaStar Federal, Inc. for Fiscal Years 2000 Through 2003

EXECUTIVE SUMMARY:

Our objective was to determine the allowability of Supplemental Executive Retirement Program (SERP) costs claimed by AdminaStar for Medicare reimbursement for fiscal years (FY) 2000 through 2003. We found that AdminaStar claimed $934,728 of unallowable SERP costs for FYs 2000 through 2003 because it did not claim SERP costs in accordance with the Cost Accounting Standards (CAS). During FYs 2000 through 2003, the allowable SERP costs were $220,821; however, AdminaStar claimed SERP costs of $1,155,549 for Medicare reimbursement. We recommended that AdminaStar revise its Final Administrative Cost Proposals for FYs 2000 through 2003 to reduce its claimed SERP costs by $934,728. We also recommended that AdminaStar claim future SERP costs in accordance with the CAS. AdminaStar agreed with our recommendations and stated that it had already implemented policies and procedures to ensure that future SERP costs are properly claimed.