Office of School Finance - WVDE INDIRECT COSTS Indirect Costs - Defined Costs not readily identifiable with a specific federal project Costs.
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Transcript Office of School Finance - WVDE INDIRECT COSTS Indirect Costs - Defined Costs not readily identifiable with a specific federal project Costs.
Office of School Finance - WVDE
INDIRECT COSTS
Indirect Costs - Defined
Costs not readily identifiable with a specific
federal project
Costs are incurred for the joint benefit of
more than one project
Direct costs - defined
Costs that are readily identifiable to a specific
project
Costs are charged directly to the project
Cannot be considered indirect if they are
charged directly
Unallowed costs - defined
Costs that are not allowed to be charged to a
federal project
OMB Circular A-87 provides a complete listing
of unallowed costs
Examples include:
Marketing
Losses from uncollectible accounts
Indirect Cost Plan - defined
A simplified means to determine the fair
share of indirect costs that each federal
project must bear
Obtaining an indirect cost rate
A rate must be determined each year
Plan developed by WVDE, approved by USDE
The rate is based on actual expenditures two
years earlier (FY 11 rate based on FY 09 actual)
Plan includes an adjustment between estimated
and actual indirect costs two years later
Simplified, the indirect cost rate =
indirect costs
unallowed costs + direct costs
You receive restricted and unrestricted
indirect cost rates
Process is web-based
CSBO is the contact person for determining
the rates
Two rates – which do I use?
Restricted rate – use for federal projects that
contain the “supplement but not supplant”
provision (that is MOST projects)
Unrestricted rate – use for all other federal
projects (example: child nutrition)
How do I use the rate?
For budgeting purposes:
Total amount of federal award
Approved indirect cost rate
Budgeted direct costs
$200,000
2.23%
$195,637
($200,000 / (1.0 + 0.0223))
Budgeted indirect costs
$ 4,363
($195,637 * 0.0223)
For actual expenditures:
Actual direct costs
$185,440
Approved indirect cost rate
2.23%
Indirect costs charged to the project $4,135
($185,440 x 0.0223)
Be careful when you apply the
rate
You may not apply the indirect cost rate to all
actual expenditures:
You cannot apply the rate to capital outlay
Equipment, buildings, land, building improvements
which exceed $5,000
Some grants have a limit
on total indirect cost
Title III – 2% of the grant
Carl Perkins – 5% of the
grant
Be careful about the time
period
The approved rate for FY11 is to be used for
ACTUAL expenditures from July 1, 2010
through June 30, 2011
Actual expenditures do not include
outstanding encumbrances at year end
How does the federal project
get charged?
Calculate the actual indirect costs based on
actual expenditures at least quarterly
The CSBO will make a journal entry to charge
the indirect cost amount to each federal
project as an expenditure
Which projects are charged
indirect costs?
All Federal projects are charged the
appropriate indirect cost rate, including ARRA
and SFSF
State projects are not subject to indirect costs
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