Q. We have two business units that have separate tax ID numbers.  Our disclosed practices states we calculate G&A for both units but can we consolidate the units into one?

A. It largely depends on whether the two units meet the definition of a business segment and whether the combined unit does.  Take a look at the definitions of business segments in various cost accounting standards (we have also written about it – use our key word search) e.g. separate management, reporting relationships, control by corporate headquarters or intermediate group. Three options come to mind: (1) one consolidated business segment (2) two separate segments where G&A costs for both are pooled and allocated to the two units consistent with CAS 403 requirements or (3) continue doing what you are doing.  

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