1. COST PRINCIPLES AT-A-GLANCE THE FOLLOWING IS PROVIDED AS A BRIEF OUTLINE THE BASIC REQUIREMENTS FOR EMORY’S COST PRINCIPLES POLICY. FOR COMPLETE INFORMATION, PLEASE READ THE FULL TEXT OF THE POLICY LOCATED ON THE FINANCE DIVISION WEB SITE UNDER POLICIES. FOR QUESTIONS ABOUT THE POLICY CONTACT OGCA.

2. PURPOSE This policy updates Emory’s implementation of OMB A-21 and the Cost Accounting Standards (as of 9/99). Most of the principles were not changed but they were clarified. The largest change is in the clarification of specific costs which should NOT be routinely charged to a sponsored agreement and the procedures for approving such costs.

3. Applicability These cost principles apply to all Federal funds at Emory, both direct awards from a Federal sponsor and pass-through funds where Emory is a subrecipient from another institution. Federal funds are 5-ledger accounts. These cost principles do not apply to non-Federal sponsored accounts. Non-Federal sponsors have their own expenditure policies. These cost principles do apply to cost share to a Federal award.

4. ALL COSTS MUST BE : Reasonable Necessary Allowable Allocable Within the award period In compliance with A-21, this policy and specific agency terms, conditions, requirements

5. UNALLOWABLE COSTS The following costs cannot be charged to sponsored projects as direct costs and cannot be recovered through the F&A cost rate. These costs cannot be used to meet cost sharing or match requirements. –General advertising, public relations and promotional costs –Alcoholic beverages

6. UNALLOWABLE COSTS CONTINUED Alumni activities Bad debts Charitable contributions, donations or gifts Commencement and convocation expenses Contingency provisions Entertainment costs Fines and penalties Food costs

7. UNALLOWABLE COSTS CONTINUED Fund raising and investment management costs First class or other non-coach class travel Honoraria Housing and personal living expenses of University officers Lobbying

8. UNALLOWABLE COSTS CONTINUED Losses (overruns) on sponsored agreements Marketing and selling of goods Personal use of goods or services Preagreement costs (not authorized) Student activity costs

9. SPECIFIC COST ISSUES The following costs should not normally be charged as a direct cost on a sponsored agreement. These types of costs should be incurred only under exceptional circumstances and in conformance with specific agency guidelines and this policy. By Federal definition they are considered normally an F&A cost (indirect).

10. NOT NORMALLY A DIRECT COST Administrative/clerical salaries/benefits General purpose equipment (includes computers, freezers, cameras, refrigerators, furniture, etc.) Local telephone, telephone equipment, pagers, cellular telephones, FAX machines Office supplies (includes general purpose equipment such as computers, furniture, etc., that do not meet the equipment/inventory threshold, i.e., less than $5,000/unit) Postage, shipping/mailing, FedEx, courier Dues and memberships

11. NOT NORMALLY A DIRECT COST Alterations and renovations Staff recruitment/relocation Subscriptions/books/periodicals General computer services/networking costs or other general ITD/MIS services Accounting/audit costs Banking fees or charges Computer Services or use fees Construction costs/architectural fees

12. NOT NORMALLY A DIRECT COST Legal costs Library costs/collections/acquisitions Recruitment and relocation expense Sabbatical leave Facilities management - building maintenance and work orders Insurance

13. SPECIFIC COST PROCEDURES The costs listed above should not be direct charged on a sponsored agreement unless specific scientific need and unique circumstances are established for the cost. These types of costs may not be routinely charged on a sponsored agreement; they must be specifically approved in conformance with the Cost Principles Policy. T

14. The following provides some excerpts from the policy, and provides examples of when some of the above costs might be approved as a direct cost, based on exceptional circumstances. Only specific costs, which have common exceptions, have been listed. It is anticipated that exceptional needs for the other normally F&A costs would be extremely rare, unusual and case-specific, so no general examples have been provided. Please contact OGCA if you have a cost-specific question.

15. EXCEPTIONAL CIRCUMSTANCES Please note, these examples are not exhaustive nor are they intended to imply that direct charging would always be appropriate for the situations illustrated. No blanket approvals should be assumed. Each award must establish a case-specific exceptional need for the costs to be approved.

16. EXCEPTIONAL CIRCUMSTANCES Administrative/Managerial/Clerical Salaries –Large complex programs such as Clinical Research Centers, Primate Centers and program projects that entail managing teams of investigators from a number of departments or institutions. –Projects which involve extensive data accumulation, analysis and entry, surveying, cataloging, etc., such as epidemiological studies, large scale clinical trials and retrospective clinical records studies.

17. EXCEPTIONAL CIRCUMSTANCES Administrative salaries continued –Projects requiring extensive 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, technical reports and scientific manuscripts). –Projects that are geographically inaccessible to normal departmental services, such as seagoing vessels or remote field sites.

18. EXCEPTIONAL CIRCUMSTANCES Administrative salaries continued –When reviewing whether or not an exception is appropriate, the level of services should be considered. –A project requiring a full-time position or multiple FTEs to perform the services, probably has a more appropriate justification than a project that only requires a minimal or part-time position. –While cost and FTE are not the only factors, they may be good indicators of whether or not a mitigating need can be established.

19. EXCEPTIONAL CIRCUMSTANCES General Purpose Equipment –When needed for the specific scientific needs of the project –When solely dedicated to the needs of the project –Examples: A computer attached to a large piece of scientific equipment or used solely to store and access a large scientific data base for one project might be allowable. A desktop used for multiple functions or multiple awards would not be allowable. A refrigerator used solely for storage of samples, for one project, might be allowable. A refrigerator used for multiple functions or multiple projects would not be allowable.

20. EXCEPTIONAL CIRCUMSTANCES Postage –Extraordinary costs for postage, related to the scientific needs of the project, might be allowable. Examples: A large epidemiological study requiring mailing of thousands of surveys; a project requiring shipping of samples to a collaborator or a laboratory; or shipping costs for a piece of equipment purchased under the agreement –Routine costs for correspondence, proposals, publications, reports, etc., would not be allowable. –While cost is not the sole determining factor, small amounts would not normally meet the requirement for exceptional, mitigating need.

21. EXCEPTIONAL CIRCUMSTANCES Telephone (local) Extraordinary costs based on scientific needs of the project may be allowable. –Examples: –Telephone surveys with dedicated staff and telephone lines or telephone lines dedicated to subjects/participants might be allowable. –Providing general telephone accessibility to staff/lab/participants would not be allowable. –Pagers for staff 100% paid on the project specifically needing to respond to multiple sites for the project might be allowable. –Pager availability for staff with multiple duties or projects would not be allowable. –A project location in an off-campus facility is not, in itself, a justification for local telephone costs.

22. APPROVALS All of the cost items previously listed as “not normally a direct cost” must be specifically authorized either through the pre-award proposal process or through a retroactive post-award process. On campus, most people refer to the approval process as a “CAS exception”.

23. PRE-AWARD PROCEDURES The costs listed as normally F&A should not be proposed as a direct cost (listed in a proposal budget) unless specific scientific/technical need and unique circumstances are established for the cost.

24. PROPOSAL EXCEPTION PROCESS In order to include these types of costs in a proposal: –The cost must be fully explained and justified as part of the proposal. –An exceptional circumstance must be approved and documented by the AE and OSP. –OSP approval must be prior to submission of the proposal.

25. AWARD NOTIFICATION If exceptional costs were included in the proposal and the award amount varies from the proposed budget: –If the reduction is across all categories (e.g., a general 10% reduction) the exception cost category remains approved as proposed

26. AWARD NOTIFICATION If the awarded amount is specifically reduced or eliminates specific exceptional costs –OSP will adjust the budget accordingly and will provide a notification on the NOA. –The PI may not request post award authorization or rebudgeting for costs specifically reduced or eliminated in the award process.

27. OSP NOTIFICATION If a proposal exceptional cost item has been approved, OSP will note the approval in the remarks section of the NOA, when the award is distributed. The cost item is “not” approved unless it is specifically listed in the remarks section; even if the proposal was submitted with the cost item listed in the budget.

28. POST-AWARD PROCEDURES Post-Award discovery of need not in the original proposal. –The PI must request an exception authorization. –The request should be reviewed by a designated departmental approver (varies by department). –The request must be approved by the School or Administrative Entity designee. –The request must be approved by OGCA.

29. SPECIFIC COST PROCEDURES The request for approval should be processed using the direct cost exception form or by a letter request outlining similar information. Authorizations will only be established for specific types of costs and dollar amounts (+25%) on specific accounts. Deviations from the original request (item or amount or account) will require new approvals.

30. SPECIFIC COST PROCEDURES Requests should normally be submitted prior to costs being incurred or as soon as the need is discovered. Requests for exceptional circumstances must be submitted within 30 days of notification from OGCA of a cost incurred. Approvals must be in place within 30 days of a budget end date or the costs may be disallowed. Financial reports or final invoices will not be submitted with unauthorized cost items nor will FSRs/invoices be revised due to “late” submission of exception requests.

31. SPECIFIC COST PROCEDURES The internal exception process only applies until the next regularly scheduled budget submission. –If there is an on-going need, the PI must outline the exceptional circumstance and the cost in the next budget submission to OSP and the sponsor. –Additional internal approvals will not be authorized if a new budget proposal has been submitted without outlining such costs.

32. SPECIFIC COST PROCEDURES If costs are incurred prior to approval and the exceptional circumstances/costs are subsequently denied by the School, OGCA or the sponsor, the costs may not be transferred to another sponsored (Federal or non-Federal) account. The costs must be transferred to an unrestricted account within 30 days of notification. The costs are treated as “disallowed” costs.

33. SIGNATURES By signing an exception request, all signatories are certifying that the transaction has been reviewed, is allowable and appropriate and is in conformance with Federal regulations, the Cost Principles Policy and other University policies. ALL signatories should carefully review each exception request to assure compliance with these requirements and to minimize potential audit issues.

34. SIGNATURE REQUIREMENTS Special signature requirements for exception requests have been established by each School/Administrative Entity. Only the designated individuals may sign/approve the request on behalf of the School/AE. School/AE signatures must be completed prior to submission of the request to OGCA.

35. AUTHORIZED SIGNATORIES The authorized signatories for Administrative Entities will change periodically, based on changing staff or other needs. For current authorized CAS signatures, contact your Departmental Administrator or your OGCA representative for signature requirements.

36. AUDIT All costs on sponsored agreements are subject to specific audit by the sponsor or by other Federal audit teams. Costs may be disallowed by the auditors, even if an exception approval is on file. The “Normally F&A” costs are of specific interest to the auditors and are subject to periodic review and explanation. PIs and departments should maintain strong documentation of the appropriateness of any costs posted to an account under an exception approval.