Policy on Allowable Costs and Cost Principles ORS

The contractor shall accumulate indirect costs by logical cost groupings with due consideration of the reasons for incurring such costs. The contractor shall determine each grouping so as to permit use of an allocation base that is common to all cost objectives to which the grouping is to be allocated. The base selected shall allocate the grouping on the basis of the benefits accruing to intermediate and final cost objectives. When substantially the same results can be achieved through less precise methods, the number and composition of cost groupings should be governed by practical considerations and should not unduly complicate the allocation. The Office of Management and Budget developed the Uniform Guidance to describe the treatment of costs on sponsored project activities that can be billed to the federal government. The Uniform Guidance applies to all federally funded projects including federal funding through a non-federal agency.

• Understandably, many local officials have been focused on identifying eligible projects.
• Job means a homogeneous cluster of work tasks, the completion of which serves an enduring purpose for the organization.
• “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.”
• For contracts subject to full CAS coverage, allocation of indirect costs shall be based on the applicable provisions.
• Identification with a Federal award rather than the nature of the goods and services involved is the determining factor in distinguishing direct from indirect (F&A) costs of Federal awards.
• Excess amounts paid in the aggregate by the Federal Government under Federal awards due to a noncompliant cost accounting practice used to estimate, accumulate, or report costs must be credited or refunded, as deemed appropriate by the cognizant agency for indirect costs.
• Consult the grant staff and the notice of grant award regarding additional requirements attached to particular grants.

All activities which benefit from the non-Federal entity’s indirect (F&A) cost, including unallowable activities and donated services by the non-Federal entity or third parties, will receive an appropriate allocation of indirect costs. It is crucial to code and categorize expenses correctly to comply with Stanford’s obligation to the federal government for both direct and indirect cost recovery. Our ability to obtain federal grants and contracts is dependent upon our performance in meeting federal requirements.

General Provisions for Selected Items of Cost

The benefits related to salaries and wages treated as direct costs shall also be treated as direct costs; the benefits related to salaries and wages treated as F&A costs shall be treated as F&A costs. Charges for work performed on sponsored agreements by faculty members during the academic year will be based on the individual faculty member’s regular compensation for the continuous period which, under the policy of the institution concerned, constitutes the basis of his salary. Charges for work performed on sponsored agreements during all or any portion of such period are allowable at the base salary rate. In no event will charges to sponsored agreements, irrespective of the basis of computation, exceed the proportionate share of the base salary for that period. This principle applies to all members of the faculty at an institution.

• When such costs cannot be so determined, the contracting agency may specify the use of a particular schedule of predetermined rates or any part thereof to determine ownership and operating costs of construction equipment (see subdivisions and of this section).
• Examples include the cost of utilities, maintenance and operation, building and equipment use expenses, administrative costs, library costs, and student service costs.
• Medical liability insurance is an allowable cost of research programs only to the extent that the research involves human subjects.
• If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit.

Effective January 2, 1999, the five most highly compensated https://intuit-payroll.org/ in management positions at each home office and each segment of the contractor, whether or not the home office or segment reports directly to the contractor’s headquarters. If the contractor has intermediate home offices or segments that report directly to the contractor’s headquarters, the five most highly compensated employees in management positions at each such intermediate home office or segment. The Government shall receive an equitable share of any amount of previously funded PRB costs which revert or inure to the contractor. Such equitable share shall reflect the Government’s previous participation in PRB costs through those contracts for which certified cost or pricing data were required or which were subject to subpart 31.2. Recognize as a prepayment credit the market value of assets that were accumulated by deposits or contributions that were not used to fund costs assigned to previous periods for contract accounting purposes. Calculate the unfunded actuarial liability using the market value of assets that have been accumulated by funding costs assigned to prior periods for contract accounting purposes. Eliminate from costs of current and future periods the accumulated value of any prior period costs that were unallowable in accordance with paragraph of this section, adjusted for interest under paragraph of this section.

Cost Sharing/Matching

The budget justification for graduate students should include the number of graduate students; their level of experience, whether it is an academic year or calendar year appointment, and how many hours will be spent on the project per week (20 hours a week for a quarter-time Graduate Assistant). Refer to theGraduate School website.for detailed information on graduate education, tuition costs and levels of experiences. Detailed costing information can be found on the SPSBudgeting and Costing Guide. This written justification requirement does not apply to capital expenditures in the necessary water, wastewater, and broadband category or the revenue replacement category.

When the rate is negotiated before the carry forward adjustment is determined, the carry forward amount may be applied to the next subsequent rate negotiation. When such adjustments are to be made, each fixed rate negotiated in advance for a given period will be computed by applying the expected F&A costs allocable to sponsored agreements for the forecast period plus or minus the carry forward adjustment from the prior period, to the forecast distribution base. Unrecovered amounts under lump sum agreements or cost sharing provisions of prior years shall not be carried forward for consideration in the new rate negotiation. There must, however, be an advance understanding in each case between the institution and the cognizant Federal agency as to whether these differences will be considered in the rate negotiation rather than making the determination after the differences are known.

Tufts Facilities & Technologies

Allowable expenses are reasonable and necessary to carry out the aims and goals of the project. Allowable expenses must be treated consistently and conform to any limitations or exclusions set forth in the relevant federal regulations , the sponsored agreement, and the University policy. F&A costs are costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity or any other institutional activity. Consistency– Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or facilities and administrative (F&A) costs, and the method used to estimate, record, and report costs must be consistent as well.

Or an F&A cost Necessary costs incurred by a recipient for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. F&A cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived.. The fact that a proposed cost is awarded as requested by an applicant does not indicate a determination of allowability. Identification with the Federal award rather than the nature of the goods and services involved is the determining factor in distinguishing direct from indirect (F&A) costs of Federal awards. Typical costs charged directly to a Federal award are the compensation of employees who work on that award, their related fringe benefit costs, the costs of materials and other items of expense incurred for the Federal award. If directly related to a specific award, certain costs that otherwise would be treated as indirect costs may also be considered direct costs. Examples include extraordinary utility consumption, the cost of materials supplied from stock or services rendered by specialized facilities, program evaluation costs, or other institutional service operations.

Sponsored Research

Cost Principles And Allowable Expenses costs of the current accounting period of both successful and unsuccessful bids and proposals normally should be treated as F&A costs and allocated currently to all activities of the institution, and no proposal costs of past accounting periods will be allocable to the current period. However, the institution’s established practices may be to treat proposal costs by some other recognized method. Regardless of the method used, the results obtained may be accepted only if found to be reasonable and equitable.

• Publication costs also include page charges in professional publications.
• Consistency is achieved when everyone follows University policy.
• Unrecovered amounts under lump sum agreements or cost sharing provisions of prior years shall not be carried forward for consideration in the new rate negotiation.
• The contractor makes all reasonable efforts to terminate, assign, settle, or otherwise reduce the cost of such lease.
• Departmental administration expenses are subject to the following limitations.

In developing the departmental administration cost pool, special care should be exercised to ensure that costs incurred for the same purpose in like circumstances are treated consistently as either direct or F&A costs. For example, salaries of technical staff, laboratory supplies (e.g., chemicals), telephone toll charges, animals, animal care costs, computer costs, travel costs, and specialized shop costs shall be treated as direct cost wherever identifiable to a particular cost objective. Direct charging of these costs may be accomplished through specific identification of individual costs to benefiting cost objectives, or through recharge centers or specialized service facilities, as appropriate under the circumstances. For contracts other than those subject to paragraph of this section, the base period for allocating indirect costs shall be the contractor’s fiscal year used for financial reporting purposes in accordance with generally accepted accounting principles.

PROCUREMENT POLICY BOARD

There are certain departmental costs which are included as F&A, and therefore, should not be included as a direct cost. PIs should work closely with the Research Administrator to ensure that costs normally considered F&A are not included as direct costs in a proposal, unless there is a compelling reason to do so. See RA21 – Development of Proposal Budget for additional guidance. In other words, costs which are truly allocable to an award may be transferred or shifted if allowable under the award to which it is being transferred, but cost overruns may not be transferred to another federal award. Costs cannot be included as a cost or used to meet cost sharing or matching requirements for any other federally-financed program. The federal government will not reimburse certain items of cost as well as expenses supporting specific activities. Allowability, allocability, and reasonableness are defined and determined by the Office of Management and Budget , the sponsor’s requirements and/or College policy.