Indirect Costs Application of Indirect Cost Rate Agreements

What are Indirect Costs? Accounting term used to assign or charge costs that are common to two or more of a recipient’s projects or operations Incurred for common or joint objectives and can’t be readily identified with a specific grant or activity

In order to include Indirect Costs in Agreements… All cooperators must have a current, signed, negotiated indirect cost rate agreement for indirect costs to be assessed A copy must be provided to APHIS with each award

Recognition of the ICRA OMB instructs agencies to recognize indirect cost rate agreements negotiated with other parties

Statutory Cap Section 705 of Agricultural Appropriation Bill Limits the indirect cost rate for cooperative agreements with non-profits (includes universities) to 10% Does not apply to grants

Application of Statutory Cap Example 1 Kansas State University Cooperative Agreement Total Award = $100,000 They have a NICRA of 15%, the basis for application is exclusively salaries and wages. The financial plan and SF-424A state that $50,000 will be spent on salaries and wages, the remaining $50,000 is for travel, supplies, and training. Is the correct application: A – 15% (NICRA) X $50,000 (NICRA Basis for Application) =$7,500 -or- B – 10% (Statutory Cap) X $100,000 (Total Direct Costs) = $10,000

For Example 1, the correct application is…. A – 15% (NICRA) X $50,000 (NICRA Basis for Application) = $7500 because it is less than the 10% Statutory cap amount which works out to be $10,000. Their NICRA is actually less!

Application of Statutory Cap Example 2 Yellowstone Fish and Wildlife Society (Nonprofit) Cooperative Agreement Total Award = $100,000 They have a NICRA of 30%, the basis for application is salaries, wages and fringe benefits. The financial plan and SF-424A state that $70,000 will be spent on salaries and wages, the remaining $30,000 is for travel, contracts and equipment. Is the correct application: A – 30% (NICRA) X $70,000 (NICRA Basis for Application) =$21,000 -or- B – 10% (Statutory Cap) X $100,000 (Total Direct Costs) = $10,000

For Example 2, the correct application is…. B – 10% (Statutory Cap) X $100,000 (Total Direct Costs) = $10,000 because the NICRA calculation exceeds the 10% Statutory cap.

Questions?