Transcript University of Connecticut Health Center Research Finance

University of Connecticut Health
Center
Research Administration & Finance
Allowable Costs
September 24, 2007
ALLOWABLE COSTS
ALLOWABLE COSTS
OMB Circular A-21 “Cost Principles for Educational Institutions”
Contents of Circular:
Sets forth allowability principles for the reimbursement of costs
associated with Federally sponsored agreements (Direct & F&A)
Describes costs that can be included in the F&A rate
Describes the determination and application of F&A rates
DIRECT COSTS:
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 such activities relatively easily with a
high degree of accuracy
ALLOWABLE COSTS
FACILITIES AND ADMINISTRATIVE COSTS (F&A):
Costs that are incurred for common or joint objectives and therefore
cannot be identified readily and specifically with a particular
sponsored project, or other institutional activity.
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Departmental Administration
Building utility and maintenance costs
Depreciation
Library Costs
Office Supplies
Local Telephone Costs
Memberships
ALLOWABLE COSTS
FACTORS AFFECTING ALLOWABILITY:
– REASONABLE: A prudent business person would have purchased this item and
paid this price;
– ALLOCABLE: They can be assigned to the activity on some reasonable basis;
– CONSISTENTLY APPLIED: Like costs must be treated the same in like
circumstances, as either direct cost, or as F&A.
DETERMINING ALLOCABILITY
A cost can be allocable as direct or indirect (F&A)
A cost is allocable as a direct cost if the goods or services provided are
assignable in accordance with the relative benefits received:
– It is incurred solely to advance the work under the sponsored agreement;
– It benefits both the work under the sponsored agreement and other work of the
institution in proportions that can be approximated;
– If a cost benefits two or more interrelated projects in proportions that cannot be
determined the cost may be allocable on any reasonable basis
A cost is allocable as an indirect cost if it is necessary for the overall
operation of the institution
ALLOWABLE COSTS
WHAT DOES “ALLOWABLE” MEAN?
AN ALLOWABLE COST IS ONE THAT IS ELIGIBLE FOR
REIMBURSEMENT BY THE FEDERAL GOVERNMENT
CONTRAST WITH:
PERMISSIBLE BY UCHC – PER ADMINISTRATIVE POLCIES AND
PROCEDURES:
– Business Class Airfare for international flights
ALLOWABLE BY AGENCY – COSTS PERMITTED BY THE POLICIES OF
THE SPONSORING AGENCY OR TERMS OF THE AWARD
– “Major projects” – would allow administrative salaries
ALLOWABLE COSTS
ALLOWABLE COSTS
UCHC Policy 2002-5
Section J of A-21
“Failure to mention a particular item of cost is not intended to imply that
it is either allowable or unallowable; rather, determination as to
allowability in each case should be based on the treatment provided for
similar or related items of cost.”
“In case of a discrepancy between the provisions of a sponsored
agreement and the provisions listed… (in A-21)… the agreement
should govern.”
ALLOWABLE COSTS
ADVERTISING AND PUBLIC RELATIONS
UNALLOWABLE: Except for:
– The recruitment of personnel required for the
performance by the institution of obligations arising
under the sponsored agreement;
– Cost of help wanted advertising that includes color, is
excessive in size, or includes advertising material for
other than recruitment purposes is unallowable.
– Procurement of goods & services for the performance
of the sponsored agreement;
– Disposal of scrap or surplus materials acquired in the
performance of the sponsored agreement
ALLOWABLE COSTS
DONATIONS & CONTRIBUTIONS
UNALLOWABLE: However, donated services and property may be
used to meet cost-sharing or matching requirements.
DONOR COSTS
ALLOWABLE: For payment to volunteers or research subjects who
contribute bodily fluid samples or tissues that are specifically project
related.
ALLOWABLE COSTS
HONORARIA
UNALLOWABLE: when primary intent is to confer distinction on, or to
symbolize respect, esteem or admiration for the recipient of the
honorarium.
ALLOWABLE: Payment for services rendered, such as a speaker’s
fee.
1) Must relate to the project; i.e., support the grant objective;
2) Cost must be reasonable;
3) Should not be a co-collaborator, or contractor.
ALLOWABLE COSTS
MEMBERSHIPS, SUBSCRIPTIONS & PROFESSIONAL ACTVITY COSTS
UNALLOWABLE:
1) Memberships in Social, Dining or Country Clubs, Civic or Community
Organizations
ALLOWABLE:
1) Memberships in Business, Technical & Professional Organizations – as
INDIRECT ONLY
2)
Costs of Subscriptions to Business, Professional, Technical Periodicals – as
INDIRECT ONLY
CAVEAT: If the costs are incurred for the specific performance of the
sponsored program (membership dues associated with conference
registration), they may be charged directly to a sponsored project. Costs
would need to be explained and justified in the budget narrative; if modular,
explained and justified in the internal project budget that is approved by
ORSP.
ALLOWABLE COSTS
MEALS/ENTERTAINMENT
NIH POLICY MANUAL:
“Allowable for subjects and patients under study, or where specifically
approved as part of the project activity, provided such charges are not
duplicated in patients’ per diem or subsistence allowance, if any.”
ALLOWABLE:
1) As part of a planned conference (as long as they are not claimed when
provided as part of the conference):
2)
As part of a planned trip (noted in the budget justification)
UNALLOWABLE:
1)
Meal costs which do not substantiate the business purpose of the expenditure
(may be considered as entertainment, and therefore unallowable);
2)
Meal costs associated with the entertaining of guests visiting the Health Center
on official business are allowable as an indirect cost to the institution, but are
not considered direct costs to a sponsored program.
ALLOWABLE COSTS
RELOCATION COSTS
UNALLOWABLE: Relocation costs are unallowable when there is a
change in the grantee organization.
ALLOWABLE: Costs incurred incidental to the relocation of an
employee, provided the move is for the grantee’s benefit.
CAVEAT: If employee resigns for purposes within his/her control within
12 months of hire, all relocation costs must be credited back to the
grant.
SEPARATION COSTS
Starting in FY 2005, separation costs (accrued vacation/ sick pay, etc.)
for grant funded employees are UNALLOWABLE, and should be
charged to the account 4-01895.
ALLOWABLE COSTS
TAXES
As a tax exempt organization, reimbursement of sales and use taxes
for materials and equipment are UNALLOWABLE and should not be
charged to a grant.
TRAVEL
CONSISTENT – with institution’s travel policy
REASONABLE – should not exceed charges normally allowed by the
institution
COMMERCIAL AIRLINE TRAVEL
Ensure compliance with US flag carrier guidelines.
1) Fly American – to furthest interchange point; Costs in excess of
the lowest available commercial discount airfare is
generally UNALLOWABLE
2) Be aware of “Permissible by Institution” vs. “Allowable by
Agency”
ALLOWABLE COSTS
TRAVEL (cont’d.)
MILEAGE:
Reimbursable for round trip less traveler’s normal round trip
commute;
Ensure that traveler is working on the grant that will reimburse the
cost of the trip;
Define the “Home Site” for all employees;
Consult UCHC Finance website for new guidelines and mileage
reimbursement forms;
MAKE YOUR STAFF & RESEARCHERS AWARE!!
ALLOWABLE COSTS
COST TRANSFERS
NIH POLICY
“Cost transfers that represent corrections of clerical or
bookkeeping errors should be accomplished within 90 days
of when the error was discovered. The transfers must be
supported by documentation that explains how the error
occurred and a certification of the correctness of the new
charge by a responsible organizational official for the
grantee.”
ALLOWABLE COSTS
UCHC POLICY 2002-7 (Updated June 2005)
Covers both payroll and other direct costs
TRANSFERS:
Must be a direct benefit to the project account being charged;
Must be supported by documentation that contains a full explanation of how
error occurred and a certification of the correctness of the charge to the new
account;
The transfer of an overdraft or any direct cost item incurred in the conduct of
one sponsored project may not be transferred to another sponsored project
account merely for the sake of resolving a deficit or an allowability issue.
TIMING
Requests must be received in Research Finance within 120 days of the date
of the original transaction;
When a Report of Expenditures is due, transfer requests must be received
within 45 days of the grant end date.
An LDCA that corrects DIRECT COST expenditures less than $2,500 will not
be processed. Instead a transfer voucher should be prepared to transfer
these cost to a non-sponsored program account.
LDCAs and transfer vouchers to move amounts less than $1,000 into a
sponsored program will not be accepted.