Transcript The University of Texas at Arlington Office of Research and Office of Accounting and Business Services Brown Bag Training Session Two: Indirect Costs.

The University of Texas at Arlington
Office of Research
and
Office of Accounting
and Business Services
Brown Bag Training
Session Two:
Indirect Costs
Definition of Indirect Costs
“…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.”
 These are REAL COSTS
 More correct terminology is Facilities and
Administration (F&A) Costs
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Components of F&A Costs
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Facilities
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Buildings depreciation or use allowance
Equipment depreciation or use allowance
Operations and maintenance
Library
Components of F&A Costs
(cont’d)
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Administration
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General administration
Departmental administration
Sponsored projects administration
Student services
Capped at 26% (per OMB A-21)
Determination of F&A Rate
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Ratio of :
F&A Expenses
MTDC BASE
F&A expenses = actual F&A costs
 MTDC base = all sponsored program expenses
(funds from sponsor + University cost share) less
specific items excluded

Determination of F&A Rate
(cont’d)
Rate agreement negotiated with cognizant audit
agency (DHHS)
 We always get less than our actual rate
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How is F&A Rate Applied
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Percent of Modified Total Direct Cost (MTDC)

Direct Costs
 Identified specifically with a particular sponsored project,
instructional activity or other institutional activity, or
 Can be directly assigned to such activities relatively easily
and accurately
How is F&A Rate Applied
(cont’d)
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MTDC = All Direct Costs except
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Equipment
Subcontract amounts in excess of $25,000
Tuition remission
Rental costs
Scholarships/fellowships
Participant support costs
How is F&A Rate Applied
(cont’d)
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Percentage of MTDC (defined in previous slide)
Percentage of MTDC (defined in program guidelines or
contract terms and conditions)
Reduced rate applied to Total Direct Cost
Off-Campus rate of 26% can only be used if the
sponsored activity takes place in a facility for which
rent is paid as a direct costs
If the program guidelines do not specify a rate, we
use 48%
What are the Regulations
Office of Management and Budget (OMB) –
Executive Office of the President
 OMB Circulars
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OMB A-21 Cost Principles for Educational
Institutions
 OMB A-110 Uniform Administrative Requirements
for Grant and Other Agreements with Institutions of
Higher Education, Hospitals and Other Non-Profits
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http://www.whitehouse.gov/omb/circulars/index.html
OMB Circulars
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Determine if costs is allowable
Eligible for reimbursement
 Permitted by terms of sponsor
 Examples of unallowable costs are personal items,
alcohol, entertainment, promotional items
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OMB Circulars (cont’d)

Determine if costs is allocable
Assigned to one or more cost objective on some
reasonable basis
 Cost objective may be sponsored agreement or F&A
activity
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Quiz
Can the following be charged directly to a sponsored
agreement and, if so, under what circumstances?
 Telephone service and long distance calls
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 Telephone
equipment and line charges normally treated
as F&A and CANNOT be charged directly to the sponsored
agreement
 Long
distance charges should be direct charges if
allocable to the sponsored project
 Centers supported in whole by Federal Funds
Quiz (cont’d)
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Office Supplies
 Normally
treated as F&A and CANNOT be charged directly
to the sponsored agreement
 Exceptions: Some items (such as computer disks) may
be used specifically for the project and may be allowed as
direct costs
Quiz (cont’d)
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Copy Charges
 Ordinarily
CANNOT be charged directly to the sponsored
program
 Exceptions
 Specific
items (such as survey instruments,
dissemination costs) are allowed by funding agency
 These items are explicitly indicated in the proposal
budget
Quiz (cont’d)
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Memberships and Subscriptions
 Personal
memberships and subscriptions are not allowed
since they are considered personal costs
 Institutional memberships and subscriptions for
professional organizations or publications are allowable
Quiz (cont’d)

Administrative Salaries
 “The
salaries of administrative and clerical staff should
normally be treated as F&A costs. Direct charging of
these costs may be appropriate where a major project or
activity explicitly budgets for administrative or clerical
services and individuals involved can be specifically
identified with the project or activity. "Major project" is
defined as a project that requires an extensive amount of
administrative or clerical support, which is significantly
greater than the routine level of such services provided
by academic departments.” (A-21 Sect F.6.b.2)
Quiz (cont’d)
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Examples of “Major Projects”
 Large
centers that may include managing teams of
investigators
 Projects which involve extensive database management
 Projects
that require making travel and meeting
arrangements for large numbers of participants, such as
conferences and seminars
 Projects whose principal focus is the preparation and
production of manuals and large reports, books and
monographs (excluding routine progress and technical
reports)
Brown Bag Training Session
Three
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December 19th, 2002