'Help Wanted' Advertising Costs

FAR (Federal Acquisition Regulations) 31.205-34, Recruitment Costs, contains an exception to the general prohibition against advertising costs found in FAR 31.205-1. It provides that the cost of help-wanted advertising is allowable so long as the advertising

• describes specific positions or classes of positions 
• does not include material that is not relevant for recruitment purposes, such as extensive illustrations or descriptions of the company's products or capabilities.

So you see, while the first bullet is an objective criteria, the second one requires the exercise of judgment. And this is why contract auditors consider help wanted advertising to be a "sensitive audit area". DCAA (Defense Contract Audit Agency) has developed some guidelines to assist in determining whether help-wanted advertising is allowable. Here are some of those:

1. Building up a backlog of resumes would be unallowable since it is not filling specific job openings. Auditors might ask to look at company responses to job applicants to determine whether the advertising is for specific job openings.
2. 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. Auditors might review the size of the add, its length and frequency, effectiveness of the advertising in terms of responses by qualified personnel and the number of hires.
3. Help wanted advertising should be limited to the following. Anything more should be reviewed further.
• Position description
• Description of the compensation and fringe benefits
• Qualifications of the applicant
• Opportunities for advance
• Brief description of the company and its work
• Conservative illustrations that do not evidence promotion of the sale of products or fostering its image
• Name of the company, conservatively presented in relationi to the other information in the advertising.

Auditors are also instructed to review any corollary help-wanted advertising costs that might include the cost of photographs, art and design work, and radio and television tapes.The same criteria apply regardless of whether the work was outsourced or performed in-house.