Policies and Procedures
DIRECT AND INDIRECT COSTS OF SPONSORED AGREEMENTS
(Grants, Contracts, and Other Agreements)
Effective: June 1, 2000
Approved By: Vice President for Research
Contact: Director, Sponsored Projects Services
I. Purpose
Federal regulations (OMB Circular A-21 and
the Federal Cost Accounting Standards) require that the same type of costs be treated
consistently as direct or indirect costs.
This policy statement provides guidance to
University staff to assure compliance with the Federal requirements.
II. Applicability
This policy applies to all Federal and
non-federal sponsored agreements (grants, contracts, and other agreements). However, costs
normally treated as indirect, such as administrative/clerical salaries, may be charged
directly to non-federal sponsored agreements if permitted by the sponsor.
III. Effective Date
This policy is effective on June 1, 2000.
The policy applies to all costs incurred on or after that date.
IV. Definitions
OMB Circular A-21 provides the following
definitions of Direct and Indirect Costs (Facilities and Administrative Costs)
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Direct Costs |
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Costs that
can be identified specifically with a particular sponsored project, an instructional
activity or any other institutional activity, or that can be directly assigned to
activities relatively easily with a high degree of accuracy. |
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(OMB Circular A-21, Section D.1.) |
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Indirect Costs (Facilities and
Administrative Costs) |
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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. |
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(OMB Circular A-21, Section E.1). |
V. Consistent Treatment of Costs
Consistent treatment of costs is a basic
cost accounting principle and is specifically required by OMB Circular A-21 to assure that
the same type of costs are not charged to Federally sponsored agreements both as direct
costs and as indirect costs. This concept is reinforced and emphasized in a Cost
Accounting Standard (referred to as "CAS 502") that educational institutions are
required to follow.
Consistency, in this context, means that
costs incurred for the same purpose, in like circumstances, must be treated uniformly as
either directs costs or as indirect costs. Thus, since certain types of costs, such as the
salaries of administrative/ clerical staff, office supplies, and postage are normally
treated as indirect costs, the same types of costs cannot be charged directly to sponsored
agreements, unless the circumstances related to a particular project are clearly different
from the normal operations of the institution. For example, although postage is normally
treated as an indirect cost, a particular project may have a special need for postage
because of the mailing of hundreds of survey questionnaires. In this case, it would be
appropriate to charge the project directly for the postage to mail the questionnaires,
since this would constitute "unlike circumstances" compared to routine postage
requirements.
VI. Direct Costs
The following types of costs should be
directly charged to sponsored agreements where they can be specifically identified to the
work performed under the agreements.
- Salaries, Wages, Fringe Benefits
| Faculty |
Engineers |
| Research Associates |
Scientific Professionals |
| Postdoctoral Fellows |
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| Technicians |
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| Lab Assistants |
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| Students Performing Scientific or
Technical Work |
| Chemicals |
Computer Software and Supplies |
| Glassware |
Research Supplies |
| Compressed Gases and Liquids |
| Travel |
Subject/Participant Costs |
| Consulting Services |
Student Support (training grants) |
| Printing/Photocopying |
Animal Care |
| Equipment |
Sub-Awards |
| Long Distance Telephone Charges |
VII. Normal Indirect Costs
ADMINISTRATIVE/CLERICAL SALARIES AND FRINGE BENEFITS
| 1. As required by Circular A-21, the salaries of
administrative/clerical staff shall normally be treated as indirect costs. They may be
charged directly only under exceptional circumstances. |
(OMB Circular A-21, Section
F.6.b) |
2. Direct charging of
administrative/clerical salaries may be appropriate where a major project explicitly
budgets for administrative/clerical services and the individuals involved can be
specifically identified to the project. Circular A-21 defines "major project" as
a project that requires an extensive amount of administrative/clerical support which is
significantly greater than the routine level of such services provided by academic
departments.
3. Examples of "major project"
where direct charging of administrative/clerical staff salaries may be appropriate are
given in Exhibit C of OMB Circular A-21, as listed below. These examples are not
exhaustive nor are they intended to imply that direct charging of administrative costs
would always be appropriate for the situations illustrated in the examples.
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Large,
complex programs such as General Clinical Research Centers, Primate Centers, Program
Projects, environmental research centers, engineering research centers, and other grants
and contracts that entail assembling and managing teams of investigators from a number of
institutions. |
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Projects
that involve extensive data accumulation, analysis and entry, surveying, tabulation,
cataloging, searching literature, and reporting (such as epidemiological studies, clinical
trials, and retrospective clinical records studies). |
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Projects
that require making travel and meeting arrangements for large numbers of participants,
such as conferences and seminars. |
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Projects
whose principal focus is the preparation and production of manuals and large reports,
books and monographs (excluding routine progress and technical reports). |
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Projects
that are geographically inaccessible to normal departmental administrative services, such
as research vessels, radio astronomy projects, and other research field sites that are
remote from campus. |
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Individual
projects requiring project-specific database management; individualized graphics or
manuscript preparation; human or animal protocols; and multiple project-related
investigator coordination and communications. |
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Institutional
allowance for training grants (example added by University) |
4.
"Major projects" do not have carte blanche approval for charging
administrative costs. Administrative/clerical salaries may be charged directly to the
agreement only if they meet all of the following conditions:
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They
fall within the special circumstances described in Circular A-21. |
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The
individuals have responsibilities specifically related to the work of the project and the
effort devoted to the project is documented and certified in the University’s payroll
system. |
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The
title(s), percent of effort, and salary amount(s) for the administrative/clerical
position(s) are included in the proposed budget of the sponsored agreement, and the
special circumstances requiring direct charging of the services are justified in the
proposal. A designated official in the academic unit will review the proposal for
appropriateness of the administrative/clerical salaries. Department head approval on the
University’s proposal routing sheet will serve as documentation that this review has
taken place. |
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The
sponsoring agency accepts the cost as part of the project’s direct cost budget (i.e.,
does not specifically disapprove the cost in the award or other notification to the
University). For programs that do not require submission of a project budget to the
sponsoring agency, e.g., NIH modular grants, the cost must be justified and approved by a
designated official in the academic unit. A copy of the approved justification should be
forwarded to Sponsored Projects Services with the proposal. |
5. If an
administrative/clerical salary meets the first two (2) conditions as listed in item 4
above but was not included in the approved budget of the sponsored agreement, the salary
may be charged directly to the agreement only where the University has rebudgeting
authority under Federal regulations or the terms of the sponsored agreement (please see
specific award document or contact Sponsored Projects Services for rebudgeting
requirements). The rebudgeting request must be in writing and the justification must
include the same information that would have been provided in the proposed project budget
and must explain why the salary was not in the original budget. A designated official in
the academic unit will approve these requests if the designated official is satisfied that
the costs are appropriate and that the sponsoring agency would have approved the cost had
it been in the original budget.
OTHER NORMAL INDIRECT COSTS
- The following costs are
normally indirect. They may be charged directly only under special circumstances:
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Office Supplies |
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Postage |
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Local Telephone Services |
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Memberships |
- These
costs may be directly charged only where they meet all of the following requirements.
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The project
has a special need for the item or service that is beyond the level of services normally
provided by departmental administration. |
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The cost can
be specifically identified to the technical scope of work conducted under the project and
is appropriately documented. |
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The cost is
specified in the proposed budget of the sponsored agreement, and the special circumstances
requiring direct charging are justified in the proposal. |
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The
sponsoring agency accepts the cost as part of the project’s direct cost budget (i.e.,
does not specifically disapprove the cost in the award or other notification to the
University). For programs that do not require submission of a project budget to the
sponsoring agency, e.g., NIH modular grants, the cost must be justified and approved by
the designated official of the academic unit. A copy of the approved justification should
be forwarded to Sponsored Projects Services with the proposal. |
- If
the cost meets the first two (2) conditions listed in item 2 above but was not included in
the approved budget of the sponsored agreement, it may be charged directly to the
agreement only where the University has rebudgeting authority under federal regulations or
the terms of the sponsored agreement (please see specific award document or contact
Sponsored Projects Services for rebudgeting requirements). The rebudgeting request must be
in writing and the justification must include the same information that would have been
provided in the proposed project budget and must explain why the cost was not in the
original budget. The designated official of the academic unit will approve these requests
if the designated official is satisfied that the costs are appropriate and that the
sponsoring agency would have approved the cost had it been in the original proposal.
- Examples of "unlike
circumstances" where the costs may be directly charged to the agreement are:
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membership
fee required in order to attend a conference, where the conference is part of the
agreement |
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membership
fee required in order to subscribe to a journal, where the subscription is necessary for
the agreement |
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postage
for reprints, only in unusual circumstances, e.g., very large volume of reprints |
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express
mail |
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shipping
costs |
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lab
notebooks, pens, and other office-type supplies stored and used only in the laboratory or
field for the technical work |
VIII. Quality Control Assurance Program
- Administrative/Clerical Salaries and Fringe Benefits
Sponsored Projects Services will
periodically review all administrative/clerical salaries charged to Federal agreements.
Charges will be transferred to departmental funds if not supported by an approved budget
and adequate budget justification. In cases where the administrative/clerical salaries are
not included in the approved budget, charges will be transferred to departmental funds if
not subsequently supported by an adequate justification and approval by the designated
official of the academic unit.
- Other Normal Indirect Costs
Sponsored Projects Services will
periodically select a judgment sample of transactions charged to Federal agreements for
postage, memberships, local telephone, and office supplies. Charges will be transferred to
departmental funds if not supported by an approved budget and adequate budget
justification. In cases where the other normal indirect costs are not included in the
approved budget, charges will be transferred to departmental funds if not subsequently
supported by an adequate justification and approval by the designated official of the
academic unit.
Contact:
If you have any questions about this
policy, how to treat a specific cost, or need information, please contact Sherry Esham,
Director of Sponsored Projects Services at 626-6000.
| Rebudgeting Forms |
Word Doc |
PDF Form |
| Request for Approval to Rebudget Administrative/
Clerical Salaries |
Word02 Form |
pdf-form |
| Request for Approval to Rebudget Administrative
Operating Costs Other than Administrative/Clerical Sararies |
Word02 Form |
pdf-form |
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