"Help-Wanted" Advertising

Help-wanted advertising costs have become a sensitive audit area for Government auditors due to many restrictions placed on such activities by the FAR (Federal Acquisition Regulations).

Help-wanted advertising costs are generally allowable per FAR 31.205-1 (Advertising) so long as the advertisement complies with the requirements of FAR 31.205-34 (Recruitment Costs). Paragraph (b) of FAR 31.205-34 lists a number of conditions that would make the costs of the help-wanted advertisement to be unallowable. For example;

1. Prior to May 3, 1999, FAR 31.205-34(b)(1) stated that help-wanted advertising costs for personnel other than those required to perform obligations under a Government contract are unallowable. This provision should not be interpreted as disallowing help-wanted advertising costs applicable to indirect employees, such as accountants, internal auditors, lawyers, etc. This provision did, however, prohibit help-wanted advertising costs that are for personnel peculiar to the performance of obligations under commercial contracts. Effective May 3, 1999, this provision was removed from FAR 31.205-34 because it duplicates the allocability provisions already discussed in FAR 31.201-4.
2. Help-wanted advertising which does not describe specific positions or classes of positions is unallowable. For example, advertising aimed at building a backlog of resumes, rather than filling specific job openings would fall under the unallowable category. Auditors typically review help-wanted advertisement and contractor replies to applicants to help determine whether or not the advertisement is one for filling specific job openings. 
3. Advertising which is excessive in relation to the number and importance of the positions, or in relation to the practices of the industry, is unreasonable and therefore unallowable. Inherent in any such determination is not only the size of a particular advertisement in a publication, but also the length and frequency of recruitment advertising in all media (including radio and television). Consideration must also be given to the effectiveness of the advertising program in terms of responses by qualified personnel and the number of hires. This is a highly subjective area where auditors often request technical assistance from the administrative contracting officer.
4. Help-wanted advertising which includes material that is not relevant for recruitment purposes, such as extensive illustrations or descriptions of the company's products or capabilities, is unallowable. 

Contractors should take due care when claiming help-wanted advertising costs to avoid penalties. Allowable recruitment advertising should be limited to the following information. Pushing the boundaries much beyond these basics invites audit issues.

• Description of the position(s) being offered.
• Description of the compensation and fringe benefits.
• Qualifications of the applicant(s).
• Opportunities for advancement.
• Brief description of the company and its work.
• Pertinent illustrations, conservative in size, that do not evidence promotion of the sale of the contractor's products or fostering of its image.
• Name of the company, conservatively presented in relation to the other information in the advertisement.