Florida Regulations 65E-14.016: Transactions Resulting in Additional Cost to the Program
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(1) Transactions between a SAMH-Funded Entity and a related party that appear to result, as determined by the department on the basis of the standards in subsection (3), of this rule, in additional cost to the program shall be reimbursed to the SAMH-Funded Entity in an amount equal to the eligible cost which would have been allowed had no related party been involved. Any cost in excess of what would have been allowable by the department shall be disallowed.
(2) If the department determines on the basis of the standards in subsection (3), of this rule, related party involvement has caused an increase in cost, the department shall have access to the financial records of the related party in order to determine the allowable cost of the transaction. If the department is not allowed full and unrestricted access to the records of the related party, all payments to the related party questioned by the department shall be disallowed.
(3) The following related party transactions shall be reviewed by the department for compliance with Generally Accepted Accounting Principles:
(a) Transactions between a SAMH-Funded Entity and related party who have common ownership or control.
(b) The existence of a related party primarily for the benefit or purpose of a SAMH-Funded Entity. Primary benefit or purpose is defined to be when fifty percent or more of the gross revenues of the related party are received from or for the SAMH-Funded Entity or fifty percent of the expenditures of the related party are made to or for the benefit of the SAMH-Funded Entity. The department shall carefully review the documentation provided in all such situations before making a decision. The final determination shall rest with the department.
(c) If real or personal property has ever been transferred between a related party and a SAMH-Funded Entity, reimbursement for the use of the property transferred shall not exceed the lower of fair market value or actual cost to the transferor.
(d) If a related party leases property to a SAMH-Funded Entity and subsequently makes a cash or in-kind donation to the lessee, the department shall disallow any amount that exceeds the lower of the market value lease cost or the ownership costs of the related party.
(e) A SAMH-Funded Entity which leases property or delivers services to another SAMH-Funded Entity shall do so at cost. The cost incurred shall be reasonable and delivered at the lowest available cost for the service. The lowest available cost shall be documented by evidence that the SAMH-Funded Entity solicited services from other entities and selected the lowest cost available. Documentation for the decision shall be maintained by the SAMH-Funded Entity for review by the department.
(f) If a SAMH-Funded Entity loans money to any other party and subsequently leases property or buys services from the same party, the SAMH-Funded Entity and the second party shall be deemed to be related parties.
(g) If a SAMH-Funded Entity leases property from a related party, any cost in excess of fair market value shall be considered an unallowable cost.
(h) Space donated by a related party in a building previously owned by a SAMH-Funded Entity or by a related party who exists primarily for the benefit of the SAMH-Funded entity shall be valued for match and reimbursable cost purposes at the fair market value of the space.
Rulemaking Authority Florida Statutes § 394.78(1), 394.9082(3) FS. Law Implemented 394.78(3), 394.9082 FS. History-New 2-23-83, Amended 2-25-85, Formerly 10E-14.16, 10E-14.016, Amended 7-1-03, 7-27-14.
Terms Used In Florida Regulations 65E-14.016
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Personal property: All property that is not real property.
(3) The following related party transactions shall be reviewed by the department for compliance with Generally Accepted Accounting Principles:
(a) Transactions between a SAMH-Funded Entity and related party who have common ownership or control.
(b) The existence of a related party primarily for the benefit or purpose of a SAMH-Funded Entity. Primary benefit or purpose is defined to be when fifty percent or more of the gross revenues of the related party are received from or for the SAMH-Funded Entity or fifty percent of the expenditures of the related party are made to or for the benefit of the SAMH-Funded Entity. The department shall carefully review the documentation provided in all such situations before making a decision. The final determination shall rest with the department.
(c) If real or personal property has ever been transferred between a related party and a SAMH-Funded Entity, reimbursement for the use of the property transferred shall not exceed the lower of fair market value or actual cost to the transferor.
(d) If a related party leases property to a SAMH-Funded Entity and subsequently makes a cash or in-kind donation to the lessee, the department shall disallow any amount that exceeds the lower of the market value lease cost or the ownership costs of the related party.
(e) A SAMH-Funded Entity which leases property or delivers services to another SAMH-Funded Entity shall do so at cost. The cost incurred shall be reasonable and delivered at the lowest available cost for the service. The lowest available cost shall be documented by evidence that the SAMH-Funded Entity solicited services from other entities and selected the lowest cost available. Documentation for the decision shall be maintained by the SAMH-Funded Entity for review by the department.
(f) If a SAMH-Funded Entity loans money to any other party and subsequently leases property or buys services from the same party, the SAMH-Funded Entity and the second party shall be deemed to be related parties.
(g) If a SAMH-Funded Entity leases property from a related party, any cost in excess of fair market value shall be considered an unallowable cost.
(h) Space donated by a related party in a building previously owned by a SAMH-Funded Entity or by a related party who exists primarily for the benefit of the SAMH-Funded entity shall be valued for match and reimbursable cost purposes at the fair market value of the space.
Rulemaking Authority Florida Statutes § 394.78(1), 394.9082(3) FS. Law Implemented 394.78(3), 394.9082 FS. History-New 2-23-83, Amended 2-25-85, Formerly 10E-14.16, 10E-14.016, Amended 7-1-03, 7-27-14.