GAP NO. 200.320
Direct Costing on Sponsored Projects
Please note: As of June 17, 2008, this GAP is currently under revision.
Please contact Research Costing and Compliance for more information
I. GENERAL
In accepting government sponsored projects (grants, contracts, and other types of agreements) Duke University agrees to abide by government regulations regarding the use of those funds. Office of Management and Budget Circular A-21 sets forth general criteria for determining the allowability of direct costs on government sponsored projects at educational institutions. Many government agencies publish additional cost guidelines specific to those agencies, and familiarity with such regulations is also necessary.
Although generally not as stringent as government requirements, non-governmental agencies may also have cost guidelines with which Duke Faculty (principal investigators), departmental business officers, and/or grant administrators should be familiar.
This procedure summarizes pertinent overall government regulations and Duke practices used to determine whether or not a particular cost item would be considered an allowable direct cost for budgeting and/or charging on a government sponsored project. Government auditors may use the same guidelines when conducting audits of government sponsored projects awarded to Duke.
II. DIRECT COSTS: DEFINITION AND SUMMARY OF CRITERIA
Government Definition of Direct Costs:
Direct costs (see NOTE below) are those costs that can be identified specifically with a particular sponsored project, or that can be directly assigned to such activity relatively easily with a high degree of accuracy.
Summary of Criteria for Determining Allowability of Direct Costs:
For purposes of determining whether it would be appropriate to budget or charge a certain direct cost on a government sponsored project, principal investigators, departmental business officers and grant administrators should be familiar with the criteria used to define "allowable direct costs". They are:
A. The cost must conform to any limitations or exclusions stated in generally accepted accounting principles or in the sponsored agreement, i.e., the cost must be "allowable" and not specifically designated as unallowable by regulation or grant/contract specific award conditions.
B. It must be allocable to the sponsored project, i.e., the cost is incurred for the benefit of only one project or the item can be easily assigned to multiple benefiting projects. A specific project may only be charged that portion of the cost which represents the direct benefit to that project.
C. The cost must be reasonable, i.e., the cost is generally recognized as necessary for the performance of the project and is one that a prudent person would consider reasonable given the same set of circumstances.
D. The cost must be treated consistently with other similar costs incurred in like circumstances in accordance with generally accepted accounting principles; and
E. If sponsor funds are available, appropriate direct cost items should be charged to sponsor funds. Guidance for using appropriate general ledger accounts is included in section IV Proper Coding. If sponsor funds are not available and it is determined that the scope of work of the project cannot be modified to eliminate the need for the item, then the direct cost item should be charged to an appropriate cost-share account (note: internal approvals for cost sharing may be required) and reflected as a cost of the project, but one borne by Duke. GAP NO. 200.140, Cost Sharing on Sponsored Projects will assist you with cost sharing.
NOTE: Direct Costs should be net of applicable credits.
In accordance with Office of Management and Budget Circular A-21, Section C.5., the term "applicable credits" refers to those receipts or negative expenditures that offset or reduce direct cost items. "Typical examples of such transactions are: purchase discounts, rebates, or allowances; recoveries or indemnities on losses; and adjustments of overpayments or erroneous charges. This term also includes 'educational discounts' on products or services provided specifically to educational institutions, such as discounts on computer equipment, except where the arrangement is clearly and explicitly identified as a gift by the vendor."
III. CRITERIA
Per government regulation (OMB Circular A-21) the costs listed below have been specifically identified by the Government as unallowable on Government grants and contracts.
However, individual agencies and programs have authority to approve certain of these costs. For example, it may be appropriate to budget "alcoholic beverages" as a direct cost of a sponsored project to study effects of alcohol on reflex movement. To budget or charge such a cost, one must fully disclose such items in the budget narrative or have written approval by the sponsoring agency grant/contract management officer (if approval was not obtained in the original proposal and award document).
The list below is not all inclusive. Individual agency and program requirements may list other "unallowable" costs.
- Advertising for general promotion of the University, including printed materials, promotional items, memorabilia, gifts, and souvenirs
- Advertising for recruitment purposes that includes color or is excessive in size
- Alcoholic beverages
- Alumni or fund-raising activities
- Antiques
- Bad debt write-offs
- Donations or Contributions
- Commencement expenses
- Cost Overruns; any costs allocable to a particular sponsored agreement may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience.
- Costs on Industry, Foreign Government or Other Non-Government Grants/Contracts; any costs allocable to activities sponsored by industry, foreign governments or other sponsors may not be shifted to federally-sponsored agreements.
- Decorative objects for private offices
- Entertainment
- Fine/original art
- Fines and penalties
- First-class/business-class air travel differentials
- Flowers
- Gifts, prizes, and awards
- Goods or services for personal use
- Lobbying
- Memberships in airline travel clubs
- Memberships in civic, social, community organizations or country clubs
- Faculty and exempt staff salary in excess of base rates paid by the institution. Refer to 25 below for additional guidance.
- Selling or marketing products or services of the University
- Social events
- Other limitations may apply, such as the Public Health Service salary cap.
[See below full text of government regulation concerning allowable rates of pay for faculty.]Allowable Rates of Pay for Faculty, Office of Management and Budget circular A-21, Section J.8.d.: Reprint
J.8.d. Salary rates for faculty members.
- Salary rates for academic year.
Charges for work performed on sponsored agreements by faculty members during the academic year will be based on the individual faculty member's regular compensation for the continuous period which, under the policy of the institution concerned, constitutes the basis of his salary. Charges for work performed on sponsored agreements during all or any portion of such period are allowable at the base salary rate. In no event will charges to sponsored agreements, irrespective of the basis of computation, exceed the proportionate share of the base salary for that period. This principle applies to all members of the faculty at an institution. Since intra- University consulting is assumed to be undertaken as a University obligation requiring no compensation in addition to full-time base salary, the principle also applies to faculty members who function as consultants or otherwise contribute to a sponsored agreement conducted by another faculty member of the same institution. However, in unusual cases where consultation is across departmental lines or involves a separate or remote operation, and the work performed by the consultant is in addition to his regular departmental load, any charges for such work representing extra compensation above the base salary are allowable provided that such consulting arrangements are specifically provided for in the agreement or approved in writing by the sponsoring agency.
- Periods outside the academic year (i.e., Summer Salary).
a. Except as otherwise specified for teaching activity in subsection (b) below, charges for work performed by faculty members on sponsored agreements during the summer months or other period not included in the base salary period will be determined for each faculty member at a rate not in excess of the base salary divided by the period to which the base salary relates, and will be limited to charges made in accordance with other parts of this section. The base salary period used in computing charges for work performed during the summer months will be the number of months covered by the faculty member's official academic year appointment.
b. Charges for teaching activities performed by faculty members on sponsored agreements during the summer months or other periods not included in the base salary period will be based on the normal policy of the institution governing compensation to faculty members for teaching assignments during such periods.
- Part-time faculty.
Charges for work performed on sponsored agreements by faculty members having only part-time appointments will be determined at a rate not in excess of that regularly paid for the part-time assignments. For example, an institution pays $5,000 to a faculty member for half-time teaching during the academic year. He devoted one-half of his remaining time to a sponsored agreement. Thus, his additional compensation, chargeable by the institution to the agreement, would be one-half of $5,000, or $2,500.NOTE: Section J.8.d. as reprinted above discusses sponsoring agency approvals for payroll/consulting transactions. The appropriate Duke University internal approvals are also required.
Per government regulation (OMB Circular A-21 section C.4.a.) the general rule for allocability is that a cost is allocable to a particular sponsored project if the goods or services involved are chargeable or assignable to the sponsored project in accordance with relative benefits received or other equitable relationship. Subject to the foregoing, a cost is allocable to a sponsored agreement if:
- It is incurred solely to advance the work under the sponsored agreement. Or
- It benefits both the sponsored agreement and other work of the institution, in proportions that can be approximated through use of reasonable methods. [Per Circular A-21 section D.1 … costs that can be identified specifically with a particular sponsored project,… or that can be directly assigned to such activities relatively easily with a high degree of accuracy. In accordance with this, pro-rating of expenses is not considered a reasonable method of allocation.]
Exception to General Allocability Rule:
Capital Equipment
Where the purchase of equipment or other capital items is specifically authorized by the sponsor [note: "authorized" means approved by the sponsor (or internally approved, if such internal approvals are allowed by the sponsor)], the amounts thus authorized for purchase are assignable to the sponsored agreement regardless of the use that may subsequently be made of the equipment or other capital items involved.Cost Benefits Two or More Projects
If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefited projects on any reasonable basis. However, this allocation cannot be used to eliminate cost overruns.
Per government regulation (OMB Circular A-21 section C.3.) a cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved therefore, reflect the action that a prudent person would have taken under circumstances prevailing at the time the decision to incur the cost was made. Major considerations involved in the determination of the reasonableness of a cost are:
- Whether or not the cost is of a type generally recognized as necessary for the performance of the sponsored agreement.
- The restraints or requirements imposed by such factors as arm's-length bargaining, Federal and State laws and regulations, and sponsored agreement terms and conditions.
- Whether or not the individuals concerned acted with due prudence in the circumstances, considering their responsibilities to the institution, its employees, its students, the Federal Government, and the public at large. And
- The extent to which the actions taken with respect to the incurrence of the cost are consistent with established institutional policies and practices applicable to the work of the institution generally, including sponsored agreements.
Per government regulation (OMB Circular A-21 section D) costs incurred for the same purpose in like circumstances must be treated consistently as either direct or Facilities and Administrative (F&A) costs. Where an institution treats a particular type of cost as a direct cost of sponsored agreements, all costs incurred for the same purpose in like circumstances shall be treated as direct costs of all activities of the institution (see Treatment of Direct Costs below).
Identification with the sponsored work rather than the nature of the goods and services involved is the determining factor in distinguishing direct from F&A or indirect costs of sponsored agreements.
Typical costs charged directly to a sponsored agreement are the compensation of employees for performance of work under the sponsored agreement, including related fringe benefit costs to the extent they are consistently treated, in like circumstances, by the institution as direct rather than F&A or indirect costs; the costs of materials consumed or expended in the performance of the work; and other items of expense incurred for the sponsored agreement, including extraordinary utility consumption.
The cost of materials supplied from stock or services rendered by specialized facilities or other institutional service operations may be included as direct costs of sponsored agreements, provided such items are consistently treated, in like circumstances, by the institution as direct rather than F&A or indirect costs (see Treatment of Direct Costs below), and are charged under a recognized method of computing actual costs, and conform to generally accepted cost accounting practices consistently followed by the institution.
1. Treatment of Direct Costs The government requires that the major research colleges and universities disclose in writing their general practices regarding classification of costs as direct costs or indirect costs because practices may vary between universities (e.g., University X may routinely budget and charge as direct costs long distance telephone expenses, while University Y does not). Costs that are classified the same as the general practices are considered "like circumstances". Costs that are different from the general practice because of their specific nature as part of the sponsored project are considered "unlike circumstances".
Identification with the sponsored work (i.e., the scope of work) rather than the nature of the goods or services is the determining factor in determining direct costs.
a. Examples of Costs that are NOT Normally Considered as Direct Costs at Duke University: (sections c and d provide some "unlike circumstance" examples for the listed costs)
Salaries of individuals engaged in routine departmental or administrative work that benefits all activities of the department (instruction, research, training, public service, etc.), i.e., there is no direct relationship to a specific sponsored project's scope of work.Meal or refreshment expenses that are not an integral part of a business meeting that is necessary for the completion of the specific scope of work i.e. there is no direct relationship or benefit to a specific sponsored project's scope of work.
Supplies and materials for routine departmental or administrative activities of the department that benefit all activities of the department (instruction, research, training, public service, etc.), i.e., there is no direct relationship to a specific sponsored project's scope of work.
Other costs such as travel, repairs, fees and services, local and long distance telephone expenses, copying and postage that are for routine departmental or administrative use, and do not have a direct relationship to a specific sponsored project's scope of work.
General office items with multi-functional use such as computers, fax machines, answering machines, staplers, hole punches, filing cabinets, chairs, desks, calculators, waste baskets, etc.), that do not have a direct relationship to a specific sponsored project's scope of work.
b. Examples of Costs that ARE Normally Considered as Direct Costs at Duke University, the common element is that the cost is necessary to perform the project's stated scope of work.
Salaries and fringe benefits of faculty, technicians, post docs, graduate research assistants and other staff engaged in performing sponsored project's scope of work
Supplies and materials necessary for performing sponsored project's scope of work
Other costs such as travel, subcontracts, repairs, maintenance, fees and services, telephone expenses, copying, postage, etc., necessary for performing sponsored project's scope of work
Capital equipment that is approved by the sponsor (or internally approved if allowed by the sponsor)
Service/maintenance agreements on capital equipment approved by the sponsor (or internally approved if allowed by the sponsor)
Identification with the sponsored work (i.e., the scope of work) rather than the nature of the goods or services is the determining factor in determining direct costs.
c. Clerical Salaries
Clerical salaries CAN be budgeted and charged as direct costs under certain circumstances. Simply knowing the "nature of the good or service", e.g., clerical salary, is not sufficient to determine whether the cost is an appropriate direct charge to a sponsored project. In order to make the determination, one must know the cost's relationship to the sponsored work. For example:
Clerical salaries that are paid to individuals entering data from a survey that is part of the sponsored project's scope of work may be appropriately charged as direct costs. This would be considered an unlike circumstance.
Clerical salaries that are paid to individuals for routine administrative work such as processing purchase requisitions, reviewing monthly ledgers, processing new proposals, etc., and that benefit all aspects of a department, including research, are normally NOT appropriate direct cost charges. [note: An exception may exist for program/project or "center" sponsored agreements where routine administrative work has been described in the scope of work and approved/funded by the sponsoring agency.]
Section V.B. has additional information regarding the handling of Clerical salaries.
d. Business Meetings, meals and refreshment expense Business meetings that are necessary for the completion of the sponsored project’s scope of work are allowed, if they have either been approved by the sponsor (as indicated in the approved budget or by special sponsor approval) or approved through Duke’s internal rebudgeting process. In addition, expenses incurred during a business meeting must be properly documented to assure that any questions that may arise in an audit can be easily answered.
Documentation required for Business Meeting expenses (G/L account 696000):
- Purpose, place, and date of meeting
- agenda (only meals and refreshments that are an integral part of the meeting as indicated on the agenda, are allowable)
- Certification that the costs for the business meeting are included in the approved budget, have been specifically approved by the Sponsor (provide a copy of Sponsor’s approval), or have been approved through Duke’s internal rebudgeting process.
The required documentation may be provided by either entering it in Paris , if a procurement card charge, or by sending the required documentation to the Office of Sponsored Programs. Do not send copies of receipts to the Office of Sponsored Programs. If sending documentation to the Office of Sponsored Programs, the WBS element, document number and amount of the Business Meeting expense must be referenced.
Failure to provide the proper documentation will result in the business meeting being considered unallowable and the Office of Sponsored Programs will move the charge to a departmental discretionary code.
e. Other Examples
Following are other examples of costs and the circumstances under which they may be incurred. For each cost/circumstance, it is indicated whether the cost would be budgeted and charged as a direct cost under Duke direct charge guidelines.
Salary expense incurred under the following circumstances:
1) Processing purchase orders on a sponsored project - No
2) Processing purchase orders on a sponsored project (admin effort documented in proposal as part of scope of work) - Yes
3) Proposal development (writing, editing, copying and mailing proposals) - No
4) Principal investigator effort to write annual project report (may include next budget year's proposal) - Yes
5) Data entry (data collected under project scope of work) - Yes
6) Data entry--financial transactions for a sponsored project are entered into financial shadow system - No (note: may be considered a direct cost if part of the administrative budget on the sponsored project AND approved by the sponsor.)
Supplies and/or services expense incurred under the following circumstances:
1) Copying costs for copying purchase orders, monthly ledgers - No
2) Copying costs for annual progress reports - Yes
3) Mailing costs for shipment of research materials and deliverables if necessary to perform the project's scope of work -Yes (This would be considered an unlike circumstance.)
4) Copying costs for copying forms to mail out to survey recipients (survey is part of project scope of work) - Yes (This would be considered an unlike circumstance.)
5) Manila folders for general office use - No
6) Manila folders for filing survey responses, lab results - Yes (This would be considered an unlike circumstance.)
7) Local phone service, pager, modem line or fax line for normal activities - No
8) Dedicated fax line or local phone service for a specific project - Yes (This would be considered an unlike circumstance.)
Identification with the sponsored work (i.e., the scope of work) rather than the nature of the goods or services is the determining factor in determining direct costs. 2. Justification required in proposals that budget certain costs as direct costs:
For the following cost items (and for any others that a layperson may consider routine and administrative in nature), specific written justification as to the relationship between the cost and the proposed project's scope of work should be completed and submitted to the Office of Research Support or the Office of Research Administration as a part of the proposal to the sponsoring agency.
The documentation should explain the direct benefit relationship between these cost items and the proposed scope of work.
- Clerical and administrative salaries
- Office Supplies
- Postage
- Local telephone charges, modem lines, fax lines, internet access fees
- Memberships
- Subscriptions
- Answering machine, pager, cell phone
- Items generally thought of as having multi-functional use (staplers, hole punches, filing cabinets, chairs, desks, computers, printers, fax machines, calculators, waste baskets, etc.)
If sponsor funds are available, appropriate direct cost items should be charged to sponsor funds in accordance with the account coding instructions in section IV.
If funds are NOT available and it is determined that the scope of work of the sponsored project cannot be modified to eliminate the need for the item, then the direct cost item should be charged to an appropriate cost share account and reflected as a cost of the project, but one borne by Duke. GAP No. 200.140, Cost Sharing on Sponsored Projects provides guidance on how to do this.
IV. PROPER CODING
At Duke, budget line items and individual expense transactions are identified by a 6 digit G/L Account. The G/L account classifies the transaction as salaries, fringes, supplies, travel, etc. To select the correct account for sponsored project budget line items or expense transactions, the principal investigator and/or grant administrator should be familiar with Duke's account structure.
A complete listing of the G/L accounts is maintained on the web. Each grant administrator should be familiar with the accounts available for use on sponsored projects and other centers.
Why the emphasis on proper account coding?
One of the elements most critical to successful financial administration of sponsored projects is the assignment of appropriate accounts to budget line items and expense transactions, for the following reasons.
- Miscoded expenses can result in incorrect F&A cost charges. The coding determines whether or not the cost will be included in "modified total direct cost" and therefore subject to F&A or indirect cost.
- Failure to identify capital equipment purchases can result in noncompliance with internal and external property management regulations. Federal regulations require that all capital equipment purchases be added to the central inventory system. The account used on the capital equipment requisition is one method used by Plant Accounting to identify capital equipment purchases to be added to central inventories.
- Errors in account coding can result in inappropriate conclusions by the principal investigator and/or sponsor regarding financial status.
- Improperly coded expenses can result in inappropriate conclusions by auditors and can adversely impact Duke's ability to effectively monitor for compliance with federal regulations regarding allowability. In an internal or external review or audit, the account determines the type of review or audit procedure to which the expense is subjected, and whether the expense is viewed initially as allowable or unallowable.
- The account distinguishes between costs funded by the agency and those cost-shared by Duke. Failure to use a cost sharing account on cost-shared expenditures will understate Duke's contribution to the project.
Do all proposal budgets need to be detailed at the account level?
No, not all proposal budgets need to be prepared at the account level. However, funded proposals must have budgets at the account level per OMB Circular A-21, Section C.10.:
"Section C. 10. Consistency in estimating, accumulating and reporting costs.
a. An educational institution's practices used in estimating costs in pricing a proposal shall be consistent with the educational institution's cost accounting practices used in accumulating and reporting costs. b. An educational institution's cost accounting practices used in accumulating and reporting actual costs for a sponsored agreement shall be consistent with the educational institution's practices used in estimating costs in pricing the related proposal or application. c. The grouping of homogeneous costs in estimates prepared for proposal purposes shall not per se be deemed an inconsistent application of cost accounting practices under subsection a when such costs are accumulated and reported in greater detail on an actual cost basis during performance of the sponsored agreement."
What are some of the special circumstances related to account coding?
In many situations, there are several accounts that could appropriately be used, and it is up to the grant administrator, based on guidance from the appropriate Dean, Director, or Department Head, to choose the account that best describes the good or service being acquired. Following are general comments on selected expense areas.
Personnel Costs: 60xxxx-61xxxx
Salaries and wages and related fringe benefit accounts, 60xxxx - 61xxxx, are used for individuals hired and paid through the Duke Payroll system and the accounts used are determined by the job code assigned to the position. Rewards and Recognition will assist you in determining the appropriate job code for new positions or in reclassifying existing positions.
Payments for services to an individual outside the Duke Payroll system should be charged to the appropriate account in the Professional Services 62xxxx range.
Supplies and Materials: 64xxxx
For allowability reasons discussed later, proper distinction between office supplies and lab/research supplies is critical, particularly on government-funded projects.
Meetings - Business Related: 696000
Meeting, meal or refreshment expenses that are not specifically approved by the funding agency are unallowable.
Travel:
Travel for the purpose of development, fund raising, public relations, alumni meetings, and student recruitment must be coded to either 699000 (domestic) or 699100(foreign). Travel for these purposes is specifically unallowable.
Trainee Travel 698900: is to record costs for travel necessary to a trainee's training and incurred during the period of grant supported training. This G/L account should be used only to record payments made under training grants (3x2 WBS elements).
All other travel is coded to 698600 (domestic) or 698700 (foreign).
Any alcoholic beverages or entertainment costs to be reimbursed to a traveler must be charged to 693200.
Experimental Subjects: 622500
All experimental subject payments should be charged to account 622500.
Subcontracts: 691600/697100
The first $25,000 in payments to a subcontractor on a sponsored project should be charged to 691600. Payments in excess of $25,000 should be charged to 697100.
Capital Equipment: 66xxxx
Capital equipment funded by the sponsor should be charged to accounts in the 66xxxx range.
- All capital purchases funded by the sponsor must also follow GAP No 200.080, Equipment Screening & Shared Use on Federal Grants & Contracts.
- Cost-shared capital equipment should be charged in accordance with GAP No 200.140, Cost Sharing on Sponsored Projects.
- For definitions and the Capitalization Policy see GAP No. 200.050, Plant & Equipment Capitalization.
V. ADDITIONAL INFORMATION
The following examples are not all-inclusive. They are intended to be illustrative of certain practices that can result in direct cost disallowance during audits of sponsored agreements.
- Purchasing goods, supplies, or equipment at the end of the project simply to use up unspent funds. [For example, the Public Health Service Grants Policy Statement, section 8-16 states that "If for any reason equipment that has been ordered in good faith will not be received until after a project has terminated or will be received too late in the project for effective use, all reasonable effort must be made to cancel the order or to charge the equipment to other funds."]
- Charging 100% of a direct cost item to a sponsored project if part of the item will be used by other projects or non-sponsored activities [capital equipment approved by the sponsor (or approved internally if allowed by the sponsor) is excluded from this requirement].
- Replenishing departmental office supplies with grant funds.
- "Rotating" charges among sponsored projects by month without establishing that the rotation schedule credibly reflects the relative benefit to each grant.
- Assigning charges to the sponsored project with the largest remaining balance.
- Identifying a cost as something other than what it actually is by using an incorrect account code.
In order to be allowable, direct charges must be assignable to a sponsored project "in accordance with benefits received". If the sponsored project could not have reasonably benefited from the items purchased, then the cost would not be allocable to the sponsored project.
B. OMB Guidance on Treatment of Administrative and Clerical Salaries
Complete Text of Office of Management and Budget (OMB) clarification of Circular A-21, Section F.6.b.:
OMB CIRCULAR A-21
TREATMENT OF ADMINISTRATIVE AND CLERICAL SALARIESQuestion
Circular A-21, Section F.6.b. says: 'the salaries of administrative and clerical staff should normally be treated as Facilities and Administrative (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."What is the intent of this provision and under what circumstances may these costs be directly charged to sponsored agreements?
Answer
This provision is intended to establish the principle that the salaries of administrative and clerical staff should usually be treated as F&A costs, but that direct charging of these costs may be appropriate where the nature of the work performed under a particular project requires an extensive amount of administrative or clerical support which is significantly greater than the routine level of such services provided by academic departments. The costs would need to meet the general criteria for direct charging in Section D.1. [of Circular A-21] - i.e., "be identified specifically with a particular sponsored project...relatively easily with a high degree of accuracy," and the special circumstances requiring direct charging of the services would need to be justified to the satisfaction of the awarding agency in the grant application or contract proposal.The following examples are illustrative of circumstances where direct charging the salaries of administrative of clerical staff may be appropriate.
- Large, complex programs, such as General Clinical Research Centers, Primate Centers, Program Projects, environmental research centers, engineering research centers, and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions.
- Projects which involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting, such as epidemiological studies, clinical trials, and retrospective clinical records studies.
- 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).
- Projects that are geographically inaccessible to normal departmental administrative services, such as seagoing research vessels, radio astronomy projects, and other research field sites that are remote from the campus.
- Individual projects requiring project-specific database management; individualized graphics or manuscript preparation; human or animal protocol, IRB preparations and/or other project-specific regulatory protocols; and multiple project-related investigator coordination and communications.
These examples are not exhaustive nor are they intended to imply that direct charging of administrative or clerical salaries would always be appropriate for the situations illustrated in the examples. Where direct charges for administrative and clerical salaries are made, care must be exercised to assure that costs incurred for the same purpose in like circumstances are consistently treated as direct costs for all activities.
VI. REVIEW AND AUDIT
The Office of Sponsored Programs will periodically perform transactional reviews to ensure that the direct costing procedures are being consistently applied.
On an annual basis external auditors perform an OMB Circular A-133 audit.
VII. RESOURCES
For Pre-Award administration contact either:
- Office of Research Support (684-3030)
- Office of Research Administration (684-5175)
For Post-Award administration contact:
- Office of Sponsored Programs (684-5442)
For questions regarding selection of a G/L Account contact:
- Accounting Systems and Procedures (684-2752)
| GAP History | |
| Issued: | April 2002 |
| Revised: | October 2002 |
| Revised: | February 2003 |
| Revised: | June 2004 |