Office Of Sponsored Programs Allowable Costs

What is 2 CFR Chapter 1 and 2 parts 200 Subpart E (OMB Uniform Guidance)? A document that contains Principles for Determining Costs Applicable to Grants, Contracts, and Other Agreements with Educational Institutions. The cost principles in 2 CFR 200 Subpart E provide the general accounting "rules" for colleges and universities. These principles define those costs that are allowable and allocable to the Federal Government.

Applicability Anyone authorizing the expenditure of federal funds needs to understand the cost principals contained in CFR 200 Subpart E. The UI generally applies the terms & conditions contained in CFR 200 Subpart E to non-federal awards as well. Some non- federal sponsors may define allowable/unallowable costs differently.

Factors Affecting Allowability 1.Be necessary and reasonable 2.Conform to any limitations or exclusions 3.Be consistent with policies and procedures 4.Be accorded consistent treatment 5.Be determined in accordance with (GAAP)

Factors Affecting Allowability 6.Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period 7.Be adequately documented

Reasonable In relation to the nature of the goods or services and the amount involved. 1.Cost is ordinary and necessary for the operation 2.Restraints or requirements are met 3.Market prices for comparable goods or services for the geographic area were paid

Reasonable 4. Individuals concerned acted with prudence in the circumstances 5. Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.

Allocable CFR 200 Subpart E states, “A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received.”

Allocable A cost is allocable to a sponsored agreement if: (1) Is incurred specifically for the Federal award. (3) It benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods. (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart.

Allocable All activities which benefit from the non- Federal entity's indirect (F&A) cost, including unallowable activities and donated services by the non-Federal entity or third parties, will receive an appropriate allocation of indirect costs

Allocable Any cost allocable to a particular Federal award under the principles provided for in this part may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons.

Allocable If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must 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, the costs may be allocated or transferred to benefitted projects on any reasonable documented basis.

Consistency in allocating costs incurred for the same purpose Principal is intended to prevent the same classification of cost from being direct charged to an agreement and also included in the F&A rate which is charged to the agreement.

Consistency in allocating costs incurred for the same purpose “A cost may be direct with respect to some specific service or function, but indirect with respect to the Federal award or other final cost objective. Therefore, it is essential that each item of cost incurred for the same purpose be treated consistently in like circumstances either as a direct or an indirect (F&A) cost in order to avoid possible double-charging of Federal awards.”

Disclosure Statement Cost Accounting Disclosure Statement (DS- 2). –Filed with the Federal Government –Details how we manage our fiduciary responsibilities. –Public document –Will be audited!

Allowable Costs CFR 200 Subpart E’s review of selected items of costs contains both Direct costs and F&A costs. It often does not specify which a particular item should be. When designated as “unallowable” it generally means the cost is not allowed as either a Direct Cost or as part of the F&A Costs.

Allowable Costs Selected items of cost may be found in CFR 200 Subpart E § The following web address contains a searchable version of CFR 200 Subpart E. idx?node=2: &rgn=div6http:// idx?node=2: &rgn=div6 You can also search the sponsored projects expense justification tool on vandalweb at exp_codes exp_codes

Examples Examples of costs that are normally considered included in the Facilities and Administrative costs. –Clerical and administrative personnel costs. –Office Supplies –General postage –Phone line charges –Memberships & Subscriptions

Examples of Unallowable Costs ALCOHOLIC BEVERAGES ALUMNI ACTIVITIES BAD DEBTS COMMENCEMENT AND CONVOCATION CONTINGENCY PROVISIONS DONATIONS AND CONTRIBUTIONS

Examples of Unallowable Costs ENTERTAINMENT FINES AND PENALTIES GOODS OR SERVICES FOR PERSONAL USE HOUSING AND PERSONAL LIVING EXPENSES

Examples of Unallowable Costs SELLING AND MARKETING COSTS STUDENT ACTIVITY COSTS This list is not all inclusive and there may be some wiggle room on some of these costs under certain awards and conditions.

RECAP The Primary Principals for guidance in determining if a particular cost is allowable or not are: 1. Is the cost Reasonable & Appropriate? 2. Is the cost Allocable? 3. Is the cost treated the same throughout the institution?