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Cost Principles for Sponsored Projects
Transcript of Cost Principles for Sponsored Projects
What makes a budgeted cost to a project
My laboratory needs three laptops for internet access and e-mail. I have 3 federal awards that will benefit from the computers and I intend to allocate a share of the purchase to each award. I need these machines to perform basic, everyday communication. My research would cease if I didn't have them.
Is charging these computer purchases to my sponsored research going to be a problem?
ALLOWABLE, ALLOCABLE, REASONABLE, AND CONSISTENT COSTS
These concepts directly address the legitimacy of a cost charged against a specific sponsored research award
Compliance is Essential!
Organized fund raising
Commencement and Convocation
General public relations and alumni activities
Student activities: intramural activities, student clubs
Managing investments solely to enhance income
Can I direct charge the costs to prepare a survey that will be mailed out to 100 research subjects?
WSU and its Principal Investigators are jointly responsible for providing APPROPRIATE and COMPLIANT
stewardship of sponsored funds and must comply with sponsor guidelines in accordance with federal cost principles
FEDERAL - Office of Management and Budget (OMB) - Uniform Guidance for Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards - 2 CFR 200
STATE - May have specific guidelines; often defer to federal guidelines
PRIVATE ENTITIES - May have specific guidelines
Each financial transaction charged against a sponsored research award is evaluated against these concepts
Determination of allowability, allocability, reasonableness, and consistency of a given expense is based on specific guidelines of the sponsor and according to federal cost principles
WHAT MAKES A COST ALLOWABLE?
Allocable to a project
Consistently treated in like circumstances
Can the cost be assigned to one or more cost objectives, in reasonable and realistic proportion or other equitable relationship?
IN OTHER WORDS
: Has the cost been incurred solely in support of or to advance the work of a specific sponsored project?
Is a cost REASONABLE?
The cost must be able to withstand public scrutiny, i.e., objective individuals not affiliated with the institution would agree that a cost is appropriate on a sponsored research award
Ensuring all expenses charged to sponsored research accounts are charged appropriately greatly assists with
(a) the preparation of yearly financial statements for the University
(b) departmental-level planning and reporting
(c) project/account specific planning and reporting
(d) audit reviews and many other uses
What Costs are Specifically "Unallowable"?
Two General Conditions:
~ Costs for unallowable ACTIVITIES of functions
~ Costs for unallowable TRANSACTIONS or purchased items
Is a cost CONSISTENTLY treated?
For sponsored projects, consistency means that sponsors pay for costs either as a direct charge or as an F&A cost, not both directly and indirectly
Like expenses are treated in the same manner in like circumstances
Prosecuting claims against the federal government
Defending or prosecuting certain criminal, civil or administrative proceedings
Housing and personal living expenses of University personnel
Selling or marketing of goods and services
These types of activities may be entirely appropriate and permissible University activities
However, they are unallowable for Federal reimbursement
Likewise, certain costs are always unallowable regardless of the supported activity
Fundraising or lobbying costs
Fines and penalties
Memorabilia or promotional materials
Relocation costs if employee resigns within 12 mos
Certain recruitment costs
Certain travel costs (first class travel)
Cash donations to other parties (donation to other university)
Membership in civic, community, social organizations or clubs
Goods or services for personal use
These costs may be allowable on non-federal projects if approved by sponsor
What Trumps What?
Unallowable by WSU
NOT permitted by WSU policy
These expenses will not be paid by WSU
Unallowable by the Federal Government
University expenses that are
These expenses can be paid by WSU
Unallowable by Sponsor
Expenses that do not conform to the sponsor’s terms and conditions and OMB Circular A-21 (if applicable)
WSU may pay for the expenses
Institute expenses that are
Allowable by WSU
Unallowable for federal reimbursement
Permitted by University policy
Allowable by WSU
These expenses will not be paid for by the sponsor.
Costs unallowable for reimbursement by WSU and the federal government:
A Principal Investigator purchases a leather brief case and would like to use University funds to pay for the item. The briefcase costs $400.
Explanation: The cost is not reasonable. It is not necessary for the performance of the person’s job and is not permitted by the University policy because it is a personal item. It must be paid for by the individual.
Cost conforms to sponsor policies, the cost principles of Uniform Guidance and Wayne State University policy
Other factors affecting allowability of costs:
Why is it important to ensure a cost's allowability before including it in a proposal budget or charging it to a sponsored project?
Because WSU is spending the public's money
Responsibility for upholding public trust
Required by Uniform Guidance
PROPOSED, INCURRED AND REPORTED COSTS
Costs unallowable for reimbursement from the federal government but allowable by WSU
An important faculty member is retiring from WSU after 35 years of service to the University; a party is given in his honor.
Explanation: Although this is something the federal government should not pay for as a direct or F&A (indirect) cost, it may be an appropriate institutional expense. The expenditure must be classified in a general ledger account.
Costs allowable by WSU but unallowable by sponsor
Grant explicitly states NO TRAVEL OUTSIDE OF MICHIGAN. You would like to travel outside of the state to present a paper about your research. Since the grant has supported the research, can you charge the grant for your travel?
Travel expense is unallowable as a direct charge to the sponsor per the award terms and conditions. If you want to travel for this purpose, the expense must be charged to a source where the travel is allowable, allocable, and reasonable, i.e. an indirect cost account or other discretionary fund
Determine the allowability criteria of each proposed cost
Does each cost specifically benefit the project?
CONSIDER THE FOLLOWING WHEN CREATING A PROPOSAL OR CHARGING A COST TO A SPONSORED AWARD:
Always act prudently and in accordance with the cost principles and Wayne State University policies
When in doubt, call SPONSORED PROGRAM ADMINISTRATION!
Is Allocability is the same as allowability?
No! An otherwise allowable cost, e.g., salary or travel, may not be allocable to a particular project if the project did not benefit from the cost.
Allocation based upon
: cost of lab supplies allocated based upon the quantity used on each project
Allocation based upon
number of experiments
: Cost of syringes allocated based upon the number of experiments performed on each project
Allocation based on
number of hours
: The cost of equipment allocated based upon the number of logged hours on each project
A sheep, a llama and a coyote walk into a bar...
Appropriately charge costs
EXAMPLES, CASE STUDIES, AND QUESTIONS OH MY!
Graduate Student Attends a Conference
You have a research grant from the NIH to study changing cell signaling proteins. A graduate student in the lab would like to present her results in a meeting in Las Vegas. In order to determine whether the trip could be charged to the grant, which cost principle must be considered? How would you make this determination?
How would you make this determination?
Review funding opportunity announcement and Notice of Award terms and conditions to see if there are prohibitions against travel
Review budget to see if this trip was included and if participants are named and requisite salary charged.
The student will present her paper and interact with colleagues from other academic institutions. Can we allocate the costs of the trip to the grant?
Yes, ALLOCABILITY = any expense paid by a project must benefit that project. Presenting a paper benefits the project.
Your student was feeling rather good after her presentation and decided to celebrate in a BIG way. She brings back receipts showing that the cost of her final dinner in Las Vegas, exclusive of the wine, was $147.36 per person.
Can we charge this amount to the grant?
NO - that cost is not REASONABLE.
REASONABLENESS = PRUDENCE
Photocopying in general is not an allowable direct costs
If appropriate for non-administrative use, be sure to include in the proposed budget
Should be treated as a “technical cost,” e.g., for surveys or presentations, and the direct benefit can be clearly demonstrated
Can I charge my NIH grant the cost of photocopying journal articles to keep me current in my field?
Keep in mind:
The benefit of reading journal articles cannot be allocated as a direct cost with a reasonable degree of accuracy. These photocopying costs would be considered F&A.
What's an "Unlike Circumstance"?
In certain circumstances,
costs that are normally charged as indirect costs to sponsored agreements may be charged as direct costs
to those agreements.
of whether a particular type of cost may sometimes be charged direct and sometimes indirect
involves assessment of various factors to determine whether “unlike” circumstances may exist to justify differing treatment of a cost.
unlike circumstance is defined as
an activity/use of the cost item that is
substantively greater in amount or different in purpose
than is typical.
When costs are incurred under unlike circumstances, similar types of costs may be treated as direct under one circumstance and indirect under the differing circumstances. This does not violate the consistency requirements as long as all similar costs are treated in the same manner in like circumstances.
Proposed in budget, e.g., needs to be above and beyond time spent for account maintenance/monitoring
Unlike circumstances explained in budget justification
Approved by sponsor
Examples: Large complex projects (defined in A-21 as requiring an extensive amount of administrative or clerical support that is significantly greater than the routine level of such services, projects with extensive data accumulation, clinical trials
If unlike circumstances are requested after an award has been made
-the cost must be allowable, allocable, and reasonable
-documentation must be reviewed by SPA
-and the sponsor must allow rebudgeting.
By charging an F&A cost, such as office supplies, as a direct cost without approval of
, the project would be paying the DIRECT costs of the office supplies plus paying INDIRECT costs on those direct costs. This results in double charging and this inconsistency violates Cost Accounting Standards.
Why is this cost sometimes approved and other times not?
Computer purchases, particularly those <$5k, are sensitive under A-21 because they would be considered general office equipment. This is an area auditors routinely review.
Unlike circumstances must be documented: Care must be exercised to assure that computer purchases are properly justified and documented when charged to federal awards.
Poor documentation of unlike circumstances will cause delay in SPA process and potential removal of the charge from the grant account
Computers used to accomplish the technical scope may be charged directly to sponsored awards provided they can be specifically identified to and benefit the project, are included and justified in the budget and are not specifically disapproved by the sponsor
Keep in Mind:
What do you think?
Can these 3 laptops be purchased for general communication?
SPONSORED PROGRAM ADMINISTRATION
5057 WOODWARD AVENUE, 13TH FLOOR