DSL INFO MEMO 98-03
June 5, 1998
STATE OF WISCONSIN
Department of Health and Family Services
Division of Supportive Living
To:
Area Administrators/Assistant Area Administrators
County Aging Directors
County COP Contacts
County COP - Waiver Contacts
County Departments of Community Program Directors
County Departments of Developmental Disabilities Services Directors
County Departments of Human Services Directors
County Department of Social Services Directors
Tribal Facilitators
Tribal Chairpersons
From:
Sinikka McCabe
Administrator
Re: Depreciation and Use Allowance Waiver
The Department of Health and Family Services (DHFS) has made a change
to the Allowable Cost Policy Manual that makes it easier to expense
depreciable assets. Examples of such items include wheelchairs, ramps, and
remodeling that enable people to live independently.
In general, the Allowable Cost Policy Manual requires the cost
of equipment and other capital expenditures with an acquisition cost
exceeding $5,000 be recovered through the use of depreciation or use
allowance. However, under certain circumstances and only with a
written waiver from DHFS obtained prior to making the purchase, equipment
and other capital expenditures with an acquisition cost exceeding $5,000
can be expensed at the time of purchase.
Depreciation and/or use allowance can create a cash flow problem
because it spreads the reimbursement of the purchase out over several
years, over the assets useful life. The revision to the Department’s Allowable
Cost Policy Manual will reduce the administrative time needed to
obtain a waiver for certain long-term care capital purchases.
The Department has determined that certain long-term care capital
purchases no longer require a waiver of the depreciation requirement. The
revision to the Allowable Cost Policy Manual says that:
An expenditure on equipment or another capital item which exceeds
$5,000 and meets the following criteria does not need to be
depreciated. An expenditure can be expensed at the time of purchase if the
equipment or capital item:
a. is for the exclusive benefit of an eligible client in need of
assistance to live independently in the community;
b. is owned and controlled by the client or by the family or guardian
of the client who is intended to benefit from the purchase; and
c. does not become part of the purchasing agency’s assets.
Examples of the types of equipment or other capital expenditures over
$5,000 which can be expensed at the time of purchase include: (1) a
purchase or significant retro-fitting of a wheelchair;
(2) construction of a wheelchair ramp to allow access to a client’s
home; and (3) remodeling of a client’s kitchen or bathroom to allow
a client to live independently in the community.
For specific items for long term support clients which do not meet the
above criteria, a waiver of the depreciation requirement may be requested
from DHFS consistent with current procedure.
This change is effective calendar year 1998. The Allowable Cost
Policy Manual has been updated to include this change, and it is
on-line at www.dhfs.state.wi.us/grants. You can also get a copy of the Manual
by calling the Office of Program Review and Audit at (608) 266-2924.
Please call your area administrator If you have questions about this
policy change.
REGIONAL OFFICE CONTACT:
Area Administrator
CENTRAL OFFICE CONTACT:
Dennis Dombrowicki
Financial Supervisor
Division of Supportive Living
1 West Wilson Street, Room 550
P. O. Box 7851
Madison, WI 53707-7851
(608) 266-3057
cc:
DSL Bureau Directors/Office Directors
DSL Section Chiefs
Licensing Chiefs
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