The University is responsible for compliance with rules and regulations established by federal agencies. Those agencies include the Office of Management and Budget (OMB) and the Cost Accounting Standards Board (CASB). There are also numerous individual agencies that award contracts and grants to the University, such as the National Science Foundation and the Public Health Service, which have their own agency-specific regulations.
The OMB issued a statement in 1993 that encouraged increased enforcement of regulations related to spending federal funds. The CASB issued regulations in 1994 to promote consistent treatment of costs, as well as the identification and exclusion of unallowable costs.
It is the responsibility of project directors, department heads and other administrators to understand and comply with federal regulations. Many of these regulations are common sense statements, i.e., charging only expenses that benefit the project. However, there are other issues that are not well-defined, such as whether specific items should be charged directly to a sponsored project, or included in the indirect cost pool. This policy will serve as a framework to assist those responsible individuals in making decisions.
Direct costs are those costs that can be identified specifically with a sponsored project, or assigned to the project with a high degree of accuracy. Costs incurred for the same purposes in like circumstances must be treated consistently as either direct costs or Facilities & Administrative (F&A) costs. Only costs allowable by OMB Circular A-21 may be charged to a federal project. Circular A-21 states that allowable direct costs must be reasonable, allocable, consistently treated as direct charges, and not specifically identified as unallowable. Therefore, the cost must meet all the following conditions:
Although there are exceptions, the following types of costs are typically allowable as direct charges:
Project directors have ultimate responsibility for defending all costs charged to their sponsored projects. However, project directors may contact the Contracts and Grants Office in advance of charging an item if there is a question or concern about the appropriateness of the charge.
In order to comply with OMB Circular A-21 and the CASB's cost accounting standards, the University's policy is to charge the following types of costs as follows:
Non-administrative Salaries, Wages and Fringe Benefits:
Administrative Salaries, Wages and Fringe Benefits:
Secretarial & Clerical
|Travel - for employees paid or cost sharing on project funds||Travel - employees not working directly on the project|
|Long Distance Telephone Charges||Telephone Line Charges and Local Fees|
|Cellular Telephone Charges|
|Laboratory and Scientific Supplies||Office Supplies & Printing|
|Repair & Maintenance - on equipment purchased with project funds|
|Service/Recharge Center Charges|
|Animal Care Charges|
|Research Equipment Identified Specifically to a Project||Departmental Equipment - Typewriters, Computers, etc.|
OMB A-21 allows the direct charging of F&A costs in certain situations where major projects or programs place substantial administrative burdens on the University. Therefore, project budgets may include direct charges of F&A costs as long as ALL the following conditions are met:
OMB A-21 offers the following examples of situations where direct charging may be appropriate:
When requesting an exception to the University's basic policy, under one of the circumstances cited above, the project director must submit an explanation with the project budget to the Office of Research. The Office of Research, with input from the Accounting Office, will make recommendations of whether reasonable justification exists to charge an F&A item as a direct charge. The explanation submitted by the project director will be maintained by the department as justification for audit purposes. However, project directors and department heads should be prepared to provide additional documentation that may be requested during an audit. It is ultimately the responsibility of the charging department to justify these charges and pay back funds due to audit disallowances. The Office of Research may choose to not sign a proposal if the budget obviously does not comply with University policies.