Anyone know how they divie up incurred costs and settlements between portfolios?
This question keeps coming up....and I honestly don't understand why. While on the surface it seems a reasonable question, with a little thought it hardly seems worthy of the concern some place. It's like people see this as a unique situation while, in reality, this general situation is most prominent in the business world. Contractors/professionals in all realms work more than one project at a time in a work day/week/month, using similar/common resources in each project. Using normal Cost Accounting Standards, costs incurred are segregated to the greatest extent practicable, and indescrete/unseverable costs are appropriately apportioned.
People ask "who's auditing". Well, there are two very simple answers to this question. One is that the participants/interested affected parties are monitoring (especially if they are part owners/beneficiaries of the business). Gloria, an apparently astute CPA, has recently assured proper monitoring. The second answer is so simple that it amazes me that it's consistently overlooked. There's this Gov't entity called the IRS (not to mention the CA Franchise Tax Board). At any time they could perform an indepth audit if there is any suspicion of wrongdoing. This threat, beyond the obvious standard review of tax return info, assures that the correct entities are paying the correct taxes on the correctly determined income/expense for each entity. And there is the obvious threat of accusations of fraud by participating entities, having free access to the "books", if they can prove intentional fraudulent charging of costs or distribution of proceeds. And, IMO, with so few participants in Alliacense, any impropriaties would stick out like a sore thumb. And the accounting would be relatively simple (more like extremely simple).
So how do they segregate costs for labor expended? Probably through the use of something as simple as a time card or other time recording mechanism. When you work with your CPA in preparing your taxes, he/she probably records the time expended and charges the hourly rate (which includes OH expense). When you contact your lawyer, he/she likely records the time expended on your issues and bills you at his/her hourly rate (which includes overhead). When your mechanic works on your car, he/she typically records the time expended and bills accordingly. And a large number of employees in a multitude of businesses utilize time cards with separate charge numbers for separately accounted activities.
People talk like there's some big mystery here. There isn't, IMHO. It's questioning something so basic..... And if you question this supposed issue here, then you must question this issue everywhere. Do you? Why not? When was the last time you accused your CPA or your lawyer or your mechanic of charging you for time expended on someone else's taxes/legal issues/car troubles? And do they not typically disclose their time expend in their bill?
JMHOs,
SGE
