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-(End of month)—Continued

U.S. Canada Total share share share

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giving the pilot's name and amount. The travel expenses recorded in this account are only those provided for under paragraph 4(c) of the CanadaUnited States Memorandum of Arrangements and which are recoverable from operators of vessels.

Account 5415 Employees' Salaries and Wages, Payroll Taxes Etc. will be supported by list showing employees' name, title and salary. (Only employees directly engaged in dispatching and accounting activities are included.)

Account 5420 Rents and Leases will include agreed amount of rental for office space and necessary equipment.

Account 5430 Heat, Light, and Power will be supported by listing of utilities and amounts.

Account 5465 Telephone, Telegraph, and Teletype will be supported by listing of supplier and amounts.

Accounts 5445, 5450, 5460, 5470, 5475, 5490, 5495, and 5540 do not require supporting data.

The following entries will be made upon receipt of settlement statement:

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To record receipt of settlement from Canadian pool for month ended




5540.. 4100

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To record Association's share of revenue and expenses transferred from other Associations. (The debits and

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terly with the Director the following financial statements:

a. Balance Sheet

b. Profit and Loss Statement

2. The financial statements will list each active account, including subsidiary accounts, prescribed in the Uniform System of Accounts.

3. The financial statements will be prepared for the calendar quarters ending March 31, June 30, September 30, and December 31, unless otherwise authorized in writing by the Director.

4. Each Association will furnish Director with one copy of all settlement statements whether issued or received. 5. The financial statements, together with any other required statistical data, shall be submitted to the Director within 30 days unless otherwise approved by the Director.

6. Each association holding a Certificate of Authorization shall furnish the Coast Guard by April 1 of each year with an unqualified long form audit report for the preceding year prepared by an Independent Certified Public Accountant, performed in accordance with Generally Accepted Auditing Standards promulgated by the American Institute of Certified Public Accountants.

[27 FR 8617, Aug. 29, 1962, as amended at 32 FR 14223, Oct. 13, 1967; CGD 88-111, 55 FR 17582, Apr. 25, 1990]



Each association holding a Certificate of Authorization is required to maintain a fidelity bond to indemnify against loss of money or other property through fraudulent or dishonest acts by employees.

The board of directors of each association shall annually fix the amount and character of fidelity bonds required of those persons handling or having custody of funds or other liquid assets.

The Director shall be advised of the amount and period of coverage.

[27 FR 8617, Aug. 29, 1962, as amended at 32 FR 14223, Oct. 13, 1967]

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13. OPERATing BudgetS

Each association holding a Certificate of Authorization is required to prepare and submit to the Administrator, by the 31st day of January of each year, an estimated operating budget for the forthcoming operating season.

Estimates of revenue shall be itemized to reflect the principal sources of income, with pilotage income segregated from other classes of income.

Estimates of expenses shall be on a calendar year basis, with adequate explanation of any unusual or nonrecurring item.

Those items of expense includable in Inter-Association settlement state

ments as outlined in section 10 of the Uniform Accounting System Manual shall be segregated and supported by required detail.

Estimates submitted shall be approved by the Association's Board of Directors.

[27 FR 8617, Aug. 29, 1962, as amended at 32 FR 14223, Oct. 13, 1967]

Accounting Records

14. UNIFORM PILOT'S SOURCE FORM The "Pilot's Source Form-Great Lakes Pilotage” is approved for use by pilots in Great Lakes Districts Nos. 1, 2, and 3. This form is to be issued to pilots by authorized United States pilotage pools and changes shall not be made in the format thereof unless authorized by the Director.

Pilots shall complete forms in detail as soon as possible after completion of assignment and return entire set to dispatching office, together with adequate support for reimbursable travel expense.

Upon receipt by the pilot association the forms shall be completed by insertion of rates and charges as specified in the Great Lakes Pilotage Regulations (46 CFR Part 401). The discount for Canadian pilots due to exchange differential shall be reflected as a separate item. The amount of discount shall be based on the United States dollar parity rate as may be estab

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The following is a listing of the principal general guidelines to be followed in the ratemaking process:

(a) Each expense item shall be governed by a test of reasonableness in determining if a given cost is to be included in the rate base.

(b) Each expense item included in the rate base shall be uniform for all three pilot associations to the extent possible. For example, costs associated with pilot travel and training shall be measured against a common standard.

(c) No expense item may be justified on the basis of past years' expendi

tures, and each expense item shall be evaluated to determine if it is necessary, and if so, at what dollar amount. (d) An expense item associated solely with the corporate structure of a pilot organization shall be examined to determine if it is necessary for the provision of pilotage services.

(e) Each expense item must be reasonable, and to the extent possible, measured against comparable or similar expenses in other industries, or by criteria used by the U.S. Internal Revenue Service.

(f) An expense item must be supported by adequate financial or other statistical data, and must be clearly shown to be a direct cost of providing pilotage services.

(g) If additional detailed analytic criteria are found to be necessary to determine the reasonableness of expenses, they may be utilized, and additional guidelines may also be developed and utilized.

§ 404.10 Procedures.

The following is a general description of the types of analyses performed and the general methodology followed in the development of most Great Lakes pilotage rate adjustments. This methodology may not always be followed because of agreements with Canada or for other reasons. Additional or other types of analyses may also be performed as circumstances admit. The general guidelines contained in § 404.05 are applied in the analyses identified here.

(a) Revenues earned by all authorized U.S. Great Lakes pilot associations are analyzed and projected for the selected future period.

(b) Expenses incurred by all authorized U.S. Great Lakes pilot associa

tions as well as proposed or expected new items of expenses, are analyzed and projected for the selected future period. This analysis includes the application of various guidelines, including those in § 404.05.

(c) All projected expenses are segregated into the following categories: (1) Administration (2) Dispatching (3) Pilot Boats (4) Pilot Travel (5) Pilot Training

(6) Target Pilot Compensation.

(d) Target Pilot Compensation for ratemaking purposes is based on comparability with licensed counterparts on U.S. Great Lakes Vessels, and whether the services are provided in designated or undesignated waters. Target compensation for pilots providing services in designated waters (46 CFR 401.405) should be comparable to masters on U.S. Great Lakes vessels, and target compensation for pilots providing services in undesignated waters (46 CFR 401.410) should be comparable to first mates on U.S. Great Lakes vessels.

(e) The number of pilots used for ratemaking purposes is based on pilot workload standards of 1,000 hours per pilot per season in designated waters, and 1,800 hours per pilot per season in undesignated waters. However, these bridge time work standards are not the only factors considered in determining the number of pilots in the rate base.

(f) Estimated vessel traffic is projected by reviewing traffic trends, and obtaining the views of knowledgeable interested persons.


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