university of connecticut health center research administration & finance allowable costs...

University of Connecticut Health University of Connecticut Health CenterCenter

Research Administration & FinanceResearch Administration & Finance

Allowable CostsAllowable Costs

September 24, 2007September 24, 2007

ALLOWABLE COSTSALLOWABLE COSTS

ALLOWABLE COSTS ALLOWABLE COSTS OMB Circular A-21 “Cost Principles for Educational Institutions”OMB Circular A-21 “Cost Principles for Educational Institutions”

Contents of CircularContents of Circular::Sets forth allowability principles for the reimbursement of costs Sets forth allowability principles for the reimbursement of costs associated with Federally sponsored agreements (Direct & F&A)associated with Federally sponsored agreements (Direct & F&A)Describes costs that can be included in the F&A rateDescribes costs that can be included in the F&A rateDescribes the determination and application of F&A ratesDescribes the determination and application of F&A rates

DIRECT COSTS:DIRECT COSTS:Costs that can be identified specifically with a particular sponsored Costs that can be identified specifically with a particular sponsored project, an instructional activity or any other institutional activity; or project, an instructional activity or any other institutional activity; or that can be directly assigned to such activities relatively easily with a that can be directly assigned to such activities relatively easily with a high degree of accuracyhigh degree of accuracy


FACILITIES AND ADMINISTRATIVE COSTS (F&A):FACILITIES AND ADMINISTRATIVE COSTS (F&A):

Costs that are incurred for common or joint objectives and therefore Costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular cannot be identified readily and specifically with a particular sponsored project, or other institutional activity.sponsored project, or other institutional activity.– Departmental AdministrationDepartmental Administration

– Building utility and maintenance costsBuilding utility and maintenance costs

– DepreciationDepreciation

– Library CostsLibrary Costs

– Office SuppliesOffice Supplies

– Local Telephone CostsLocal Telephone Costs

– MembershipsMemberships


FACTORS AFFECTING ALLOWABILITY: FACTORS AFFECTING ALLOWABILITY: – REASONABLE: A prudent business person would have purchased this item and REASONABLE: A prudent business person would have purchased this item and

paid this price;paid this price;– ALLOCABLE: They can be assigned to the activity on some reasonable basis;ALLOCABLE: They can be assigned to the activity on some reasonable basis;– CONSISTENTLY APPLIED: Like costs must be treated the same in like CONSISTENTLY APPLIED: Like costs must be treated the same in like

circumstances, as either direct cost, or as F&A.circumstances, as either direct cost, or as F&A.

DETERMINING ALLOCABILITYDETERMINING ALLOCABILITYA cost can be allocable as direct or indirect (F&A)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 A cost is allocable as a direct cost if the goods or services provided are assignable in accordance with the relative benefits received:assignable in accordance with the relative benefits received:– It is incurred solely to advance the work under the sponsored agreement;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 It benefits both the work under the sponsored agreement and other work of the

institution in proportions that can be approximated;institution in proportions that can be approximated;– If a cost benefits two or more interrelated projects in proportions that cannot be If a cost benefits two or more interrelated projects in proportions that cannot be

determined the cost may be allocable on any reasonable basisdetermined the cost may be allocable on any reasonable basisA cost is allocable as an indirect cost if it is necessary for the overall A cost is allocable as an indirect cost if it is necessary for the overall operation of the institution operation of the institution


WHAT DOES “ALLOWABLE” MEAN?WHAT DOES “ALLOWABLE” MEAN?

AN ALLOWABLE COST IS ONE THAT IS ELIGIBLE FOR AN ALLOWABLE COST IS ONE THAT IS ELIGIBLE FOR REIMBURSEMENT BY THE FEDERAL GOVERNMENTREIMBURSEMENT BY THE FEDERAL GOVERNMENT

CONTRAST WITH:CONTRAST WITH:

PERMISSIBLE BY UCHC – PER ADMINISTRATIVE POLCIES AND PERMISSIBLE BY UCHC – PER ADMINISTRATIVE POLCIES AND PROCEDURES:PROCEDURES:– Business Class Airfare for international flightsBusiness Class Airfare for international flights

ALLOWABLE BY AGENCY – COSTS PERMITTED BY THE POLICIES OF ALLOWABLE BY AGENCY – COSTS PERMITTED BY THE POLICIES OF THE SPONSORING AGENCY OR TERMS OF THE AWARDTHE SPONSORING AGENCY OR TERMS OF THE AWARD– ““Major projects” – would allow administrative salariesMajor projects” – would allow administrative salaries


ALLOWABLE COSTSALLOWABLE COSTSUCHC Policy 2002-5UCHC Policy 2002-5

Section J of A-21 Section J of A-21

““Failure to mention a particular item of cost is not intended to imply thatFailure to mention a particular item of cost is not intended to imply thatit is either allowable or unallowable; rather, determination as toit is either allowable or unallowable; rather, determination as toallowability in each case should be based on the treatment provided forallowability in each case should be based on the treatment provided forsimilar or related items of cost.”similar or related items of cost.”

““In case of a discrepancy between the provisions of a sponsoredIn case of a discrepancy between the provisions of a sponsoredagreement and the provisions listed… (in A-21)… the agreementagreement and the provisions listed… (in A-21)… the agreementshould govern.”should govern.”

ALLOWABLE COSTS ALLOWABLE COSTS

ADVERTISING AND PUBLIC RELATIONSADVERTISING AND PUBLIC RELATIONS

UNALLOWABLE: Except for:UNALLOWABLE: Except for:– The recruitment of personnel required for the The recruitment of personnel required for the

performance by the institution of obligations arising performance by the institution of obligations arising under the sponsored agreement;under the sponsored agreement;

– Cost of help wanted advertising that includes color, is Cost of help wanted advertising that includes color, is excessive in size, or includes advertising material for excessive in size, or includes advertising material for other than recruitment purposes is unallowable.other than recruitment purposes is unallowable.

– Procurement of goods & services for the performance Procurement of goods & services for the performance of the sponsored agreement;of the sponsored agreement;

– Disposal of scrap or surplus materials acquired in the Disposal of scrap or surplus materials acquired in the performance of the sponsored agreementperformance of the sponsored agreement


DONATIONS & CONTRIBUTIONSDONATIONS & CONTRIBUTIONSUNALLOWABLE: However, donated services and property may be UNALLOWABLE: However, donated services and property may be

used to meet cost-sharing or matching requirements.used to meet cost-sharing or matching requirements.

DONOR COSTSDONOR COSTSALLOWABLE: For payment to volunteers or research subjects who ALLOWABLE: For payment to volunteers or research subjects who

contribute bodily fluid samples or tissues that are specifically project contribute bodily fluid samples or tissues that are specifically project related.related.


HONORARIAHONORARIAUNALLOWABLE: when primary intent is to confer distinction on, or to UNALLOWABLE: when primary intent is to confer distinction on, or to

symbolize respect, esteem or admiration for the recipient of the symbolize respect, esteem or admiration for the recipient of the honorarium.honorarium.

ALLOWABLE: Payment for services rendered, such as a speaker’s ALLOWABLE: Payment for services rendered, such as a speaker’s fee.fee.

1)1) Must relate to the project; i.e., support the grant objective;Must relate to the project; i.e., support the grant objective;

2)2) Cost must be reasonable;Cost must be reasonable;

3) Should not be a co-collaborator, or contractor.3) Should not be a co-collaborator, or contractor.


MEMBERSHIPS, SUBSCRIPTIONS & PROFESSIONAL ACTVITY COSTSMEMBERSHIPS, SUBSCRIPTIONS & PROFESSIONAL ACTVITY COSTS

UNALLOWABLE: UNALLOWABLE: 1)1) Memberships in Social, Dining or Country Clubs, Civic or Community Memberships in Social, Dining or Country Clubs, Civic or Community

OrganizationsOrganizations

ALLOWABLE:ALLOWABLE: 1)1) Memberships in Business, Technical & Professional Organizations – as Memberships in Business, Technical & Professional Organizations – as

INDIRECT ONLYINDIRECT ONLY2)2) Costs of Subscriptions to Business, Professional, Costs of Subscriptions to Business, Professional, Technical Periodicals – Technical Periodicals – as as INDIRECT ONLYINDIRECT ONLY

CAVEAT: If the costs are incurred for the specific performance of the CAVEAT: If the costs are incurred for the specific performance of the sponsored program (membership dues associated with conference sponsored program (membership dues associated with conference registration), they may be charged directly to a sponsored project. Costs registration), they may be charged directly to a sponsored project. Costs would need to be explained and justified in the budget narrative; if modular, 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 explained and justified in the internal project budget that is approved by ORSP.ORSP.

ALLOWABLE COSTS ALLOWABLE COSTS

MEALS/ENTERTAINMENTMEALS/ENTERTAINMENT

NIH POLICY MANUAL:NIH POLICY MANUAL:““Allowable for subjects and patients under study, or where specifically Allowable for subjects and patients under study, or where specifically

approved as part of the project activity, provided such charges are not approved as part of the project activity, provided such charges are not duplicated in patients’ per diem or subsistence allowance, if any.”duplicated in patients’ per diem or subsistence allowance, if any.”

ALLOWABLE:ALLOWABLE:1) As part of a planned conference (as long as they are not claimed when 1) As part of a planned conference (as long as they are not claimed when

provided as part of the conference):provided as part of the conference):2)2) As part of a planned trip (noted in the budget justification)As part of a planned trip (noted in the budget justification)

UNALLOWABLE:UNALLOWABLE: 1) 1) Meal costs which do not substantiate the business purpose of the Meal costs which do not substantiate the business purpose of the

expenditure expenditure (may be considered as entertainment, and therefore (may be considered as entertainment, and therefore unallowable);unallowable);

2) 2) Meal costs associated with the entertaining of guests visiting the Health Meal costs associated with the entertaining of guests visiting the Health Center Center on official business are allowable as an indirect cost to the institution, on official business are allowable as an indirect cost to the institution, but are but are not considered direct costs to a sponsored program. not considered direct costs to a sponsored program.


RELOCATION COSTSRELOCATION COSTSUNALLOWABLE: Relocation costs are unallowable when there is aUNALLOWABLE: Relocation costs are unallowable when there is achange in the grantee organization.change in the grantee organization.

ALLOWABLE: Costs incurred incidental to the relocation of anALLOWABLE: Costs incurred incidental to the relocation of anemployee, provided the move is for the grantee’s benefit.employee, provided the move is for the grantee’s benefit.

CAVEAT: If employee resigns for purposes within his/her control withinCAVEAT: If employee resigns for purposes within his/her control within12 months of hire, all relocation costs must be credited back to the12 months of hire, all relocation costs must be credited back to thegrant.grant.

SEPARATION COSTSSEPARATION COSTSStarting in FY 2005, separation costs (accrued vacation/ sick pay, etc.)Starting in FY 2005, separation costs (accrued vacation/ sick pay, etc.)for grant funded employees are UNALLOWABLE, and should befor grant funded employees are UNALLOWABLE, and should becharged to the account 4-01895.charged to the account 4-01895.


TAXESTAXESAs a tax exempt organization, reimbursement of sales and use taxesAs a tax exempt organization, reimbursement of sales and use taxesfor materials and equipment are UNALLOWABLE and should not befor materials and equipment are UNALLOWABLE and should not becharged to a grant.charged to a grant.

TRAVELTRAVELCONSISTENT – with institution’s travel policyCONSISTENT – with institution’s travel policyREASONABLE – should not exceed charges normally allowed by theREASONABLE – should not exceed charges normally allowed by theinstitutioninstitutionCOMMERCIAL AIRLINE TRAVELCOMMERCIAL AIRLINE TRAVELEnsure compliance with US flag carrier guidelines.Ensure compliance with US flag carrier guidelines.

1)1) Fly American – to furthest interchange point; Costs in Fly American – to furthest interchange point; Costs in excess of excess of the lowest available commercial discount airfare is the lowest available commercial discount airfare is

generally UNALLOWABLEgenerally UNALLOWABLE2) Be aware of “Permissible by Institution” vs. “Allowable by2) Be aware of “Permissible by Institution” vs. “Allowable by

Agency”Agency”


TRAVEL (cont’d.)TRAVEL (cont’d.)

MILEAGE: MILEAGE:

Reimbursable for round trip less traveler’s normal round trip Reimbursable for round trip less traveler’s normal round trip commute;commute;

Ensure that traveler is working on the grant that will reimburse the Ensure that traveler is working on the grant that will reimburse the cost of the trip;cost of the trip;

Define the “Home Site” for all employees;Define the “Home Site” for all employees;

Consult UCHC Finance website for new guidelines and mileage Consult UCHC Finance website for new guidelines and mileage reimbursement forms;reimbursement forms;

MAKE YOUR STAFF & RESEARCHERS AWARE!!MAKE YOUR STAFF & RESEARCHERS AWARE!!

ALLOWABLE COSTSALLOWABLE COSTSCOST TRANSFERSCOST TRANSFERSNIH POLICYNIH POLICY

““Cost transfers that represent corrections of clerical orCost transfers that represent corrections of clerical orbookkeeping errors should be accomplished within 90 daysbookkeeping errors should be accomplished within 90 daysof when the error was discovered. The transfers must beof when the error was discovered. The transfers must besupported by documentation that explains how the errorsupported by documentation that explains how the erroroccurred and a certification of the correctness of the newoccurred and a certification of the correctness of the newcharge by a responsible organizational official for thecharge by a responsible organizational official for thegrantee.”grantee.”

ALLOWABLE COSTSALLOWABLE COSTSUCHC POLICY 2002-7 (Updated June 2005) UCHC POLICY 2002-7 (Updated June 2005) Covers both payroll and other direct costsCovers both payroll and other direct costsTRANSFERS:TRANSFERS:

Must be a direct benefit to the project account being charged;Must be a direct benefit to the project account being charged;Must be supported by documentation that contains a full explanation of how 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 error occurred and a certification of the correctness of the charge to the new account;account;The transfer of an overdraft or any direct cost item incurred in the conduct of 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 one sponsored project may not be transferred to another sponsored project account merely for the sake of resolving a deficit or an allowability issue.account merely for the sake of resolving a deficit or an allowability issue.

TIMINGTIMINGRequests must be received in Research Finance within 120 days of the date Requests must be received in Research Finance within 120 days of the date of the original transaction;of the original transaction;When a Report of Expenditures is due, transfer requests must be received When a Report of Expenditures is due, transfer requests must be received within 45 days of the grant end date.within 45 days of the grant end date.An LDCA that corrects DIRECT COST expenditures less than $2,500 will not An LDCA that corrects DIRECT COST expenditures less than $2,500 will not be processed. Instead a transfer voucher should be prepared to transfer be processed. Instead a transfer voucher should be prepared to transfer these cost to a non-sponsored program account.these cost to a non-sponsored program account.LDCAs and transfer vouchers to move amounts less than $1,000 LDCAs and transfer vouchers to move amounts less than $1,000 intointo a a sponsored program will not be accepted.sponsored program will not be accepted.

university of connecticut health center research administration & finance allowable costs...

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