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NCURA Regional Meeting April 5, 2011
Allowable Costs – Proposal Development to Project Closeout
Presented by: Ralph L. BrownDirector of Research AdministrationColorado School of Mines
Gale YamadaDirector of Administrative ServicesUniversity of Hawaii at Manoa
Goals for this session
Guiding principles Research award cycle Best practices Roles and Responsibilities
INTRODUCTION TO OMB CIRCULAR A-21
DEFINES AN "ALLOWABLE COST"
INSTRUCTIONS FOR THE UNIVERSITY TO ALLOCATE FACILITIES AND ADMINISTRATIVE COSTS PROPERLY AND TO CALCULATE THE FACILITIES AND ADMIN RATE
APPLIES TO PROJECT COSTS REIMBURSED BY THE GOVERNMENT AND TO COST SHARING OR MATCHING FUNDS
GENERAL REQUIREMENTS: REASONABLE: ALLOCABLE TO (BENEFITS) THE PROJECT SUPPORTED BY THE
GRANT OR CONTRACT TREATED CONSISTENTLY (INCLUDING CONSISTENT
TREATMENT AS EITHER A DIRECT OR INDIRECT COST
http://www.whitehouse.gov/omb/circulars/a021/a21_2004.html
EXAMPLES OF COSTS NOT USUALLY ALLOWABLE
Travel Fly America Act (handout)
First Class Travel
General Purpose Equipment
Paper Towels
UNALLOWABLE COSTS
Section J of A-21 specifically lists and defines categories of allowable and unallowable costs
OMB Circular A-21 website
UNALLOWABLE COSTS
Section J, specific expenses identified as unallowable: Advertising and public relations costs Alcoholic beverages Alumni activities Bad debts Institution-furnished automobiles Donations or contributions Entertainment Lobbying Fines and penalties Goods and services for personal use
UNALLOWABLE COSTS (cont’d)
Housing and personal living expenses Interest, fund raising and investment
management costs Membership in social, dining, country clubs, or
civic organizations Selling and marketing Student activities Airfare costs in excess of the lowest available
commercial discount airfare (with specific exceptions)
Flowers, gifts Parking tickets
DIRECT vs. INDIRECT COSTS
What are direct costs? Identified specifically with a particular
sponsored agreement and incurred to advance the work under that agreement
Assigned to a sponsored agreement relatively easily and with a high degree of accuracy
DIRECT vs. INDIRECT COSTS
What are F&A costs (Indirect costs)? Benefit common or joint activities Benefit numerous projects
Cannot readily be identified with a particular sponsored project
Cannot be proportioned to benefit a group of sponsored projects with relative ease or with a high degree of accuracy
(Handout)
NORMALLY Indirect costs
Administrative and Clerical Salaries Office supplies, postage, dues and
memberships, local telephones(telephone equipment)
Computers – General Purpose Equipment
A-21 Exhibit C provides for exceptions for charging normally indirect costs if the project is a major project
THE COST ACCOUNTING STANDARDS
Originally created as an Act of Congress
Applicable to the Department of Defense
Added to A-21 in 1994 DOD subject to 19 CAS, only 4 were
added to A-21
CAS 501
Consistency in estimating, accumulating and reporting costs by educational institutions – all institutions must consistently follow established cost accounting practices when estimating (budgeting), accumulating, (accounting), and reporting. Collecting and classifying cost data in an
organized and consistent manner Does not prescribe the amount of detail
required, but must be able to accumulate and report actual cost at a level which permits meaningful comparison with budgeted estimates, i.e. proposal budgets “chemicals”, but accounting system charges “materials & supplies”.
CAS 502
Consistency in allocating costs incurred for the same purpose by educational institutions – requires that each type of cost be allocated only once and on only one basis to any sponsored agreement.
Double counting occurs when the same cost is charged both indirectly and directly if it is incurred for the same purpose.
Telephone equipment costs “normally” charged as indirect charged directly to project
CAS 505
Accounting for Unallowable Costs – unallowable costs must be identified and excluded from all claims for reimbursement. Unallowable costs must not be included as either Direct or Indirect costs in the F&A calculation – OR be used as cost-sharing!
CAS 506
Cost Accounting Period – institutions must consistently use the same cost accounting period for estimating, accumulating and reporting costs.
COST ACCOUNTING STANDARDS EXCEPTIONS
Per OMB A-21 the following three criteria must be met for F&A costs to be directly charged: 1. The costs must be specifically and readily
identifiable to a specific project with a high degree of accuracy.
2. The costs are required by the project scope, due to the project’s special purpose or circumstances.
3. The costs must be specifically budgeted as a line item in the proposal budget and justified in the proposal narrative.
COST TRANSFERS
Reassignment of costs to a sponsored project from another source of funds can be allowable when: Correcting errors Allocating costs that benefit more than
one project Removing over-expenditures to another non-restricted source of funding
COST TRANSFERS
RED FLAGS Transfers older
than 90 days Transfers in the
last month of the award or after the award has expired
Round numbers!
Explanations that raise more questions than answers
COST SHARING The portion of project costs not borne by the Sponsor. CRITERIA:
The contributions to be cost shared are verifiable by University records.
Allowable, allocable, reasonable, and necessary for proper and efficient accomplishment of specific project or program objectives.
Federal funds, directly or indirectly, are not used for cost sharing on other federally funded projects, except where authorized by federal statute.
Not included as contributions for any other project.
Directly identifiable with the sponsored project as outlined in the proposal and be included in the award notice
Best Practices
Be familiar with the regulations or at least know where to look for the answer.
Anticipate areas of vulnerability and develop management controls and/or monitoring strategies
Document, Document and Document any exceptions to the Cost Accounting Standards.(Handout)
Tough questions – seek out advice from other colleagues. NCURA, COGR etc.
Responsibilities: PI
Prep of programmatic proposal Development of project budget Monitor programmatic and financial
performance Adhere to terms and conditions of
award Final progress report Financial responsibility and audit
Responsibilities: Dept Administrator
Assists and advises PI in the prep of proposal in accordance with sponsor terms, applicable regulations, institutional policies.
Assists PI in compliance with award terms and conditions, regulations, institutional policies
Monitors expenditure of award funds Coordinates with central offices on reporting Assists central administration with closeout and
audit activities Disclose apparent area(s) of noncompliance to an
appropriate responsible official
Responsibilities – Sponsored Programs Office
Review of Proposals for Regulatory and Policy Issues,
Notify post-award administrators of award terms in advance of spending.(handout)
Review accounting transactions based on allowability criteria, terms and conditions and agency guidelines.
Prepare final financial reports in compliance with award terms and conditions.
Closeout Responsibilities
Costs must be allowable, reasonable, allocable, and consistent with the terms of the agreement
Departmental Administrator and PI must ensure that all costs are necessary for performance of the project, incurred within the period of performance and charged to the project within the specified period.
Thank You!
Ralph L. Brown – [email protected]
Gale Yamada- [email protected] Web site:
http://inside.mines.edu/administrative_departments