UCSF COST ACCOUNTING STANDARDS (CAS) GUIDELINES (Charging Practices for Sponsored Projects)

TABLE OF CONTENTS

 

APPENDIX A:  Unallowable Costs
APPENDIX B:  Frequently Asked Questions

I.  INTRODUCTION

In response to federal Cost Accounting Standards (CAS) regulations, the University of California, San Francisco (UCSF) developed charging practice guidelines for sponsored projects.  Federal regulations mandate that universities establish consistent practices for defining and charging costs either directly or indirectly.  Office of Management and Budget (OMB) Circular A-21 (formally Title 2 Code of Federal Regulations Part 220, aka 2 CFR Part 220), Cost Principles for Educational Institutions, sets forth the principles for determining the costs – direct vs. Facilities & Administrative (F&A), allowable vs. unallowable, etc. – applicable to federally sponsored projects and acceptable allocation methodologies.

As a recipient of federal awards, UCSF is required to periodically prepare Facilities & Administrative Cost Rate Proposals that comply with the guidelines set forth in OMB Circular A-21.  In addition, UCSF is required to file a CAS Disclosure Statement (DS-2) identifying accounting practices, policies, and procedures for assigning costs to federally sponsored programs, and to attest to the consistent treatment of those practices.

It is the responsibility of principal investigators, department heads and administrators to understand and comply with this guidance in order to prevent disallowance of costs by the federal government.
This document sets forth guidelines for the following:

The allowability of a particular charge to a particular DPA-Fund always depends on specific facts, circumstances, terms, conditions, restrictions, and policies in effect at the time of the charge.  Therefore, this document is intended to provide general guidelines for charging.  More detailed information is contained in Appendix A, Unallowable Costs, and Appendix B, Frequently Asked Questions.

Note:  The term "project" as used in these guidelines does not refer to PeopleSoft's "Project" field as used in the Research Administration System; it refers to any sponsored project in general.

Also see these related documents:

            Cost Sharing: http://www.acctg.ucsf.edu/extramural_funds/policies/Cost_Sharing_Proc.pdf
            Program Income:  http://policies.ucsf.edu/400/40018.htm
            After-the-fact verification review under SAS 112:
            http://acctg.ucsf.edu/internal_controls/sas112/key_controls/UCSF_Verification_Review_Process.pdf

Any questions or suggestions on these guidelines, and related appendices, should be directed to Charles Taylor (ctaylor@finance.ucsf.edu) or Matt Suelzle (msuelzle@finance.ucsf.edu) in Budget and Resource Management.

II. DEFINITION OF COSTS

III. PRINCIPLES FOR CHARGING COSTS TO SPONSORED PROJECTS

In order for an expense to be considered allowable as a direct cost, the cost must be:

Allowable – The cost must be allowable under the terms and conditions of the sponsored award, under applicable sponsor regulations (OMB Circular A-21, C2), and under University policies.

Reasonable– The cost may be considered reasonable if the nature of the goods or services acquired, and the amount involved therefore, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made. (OMB Circular A-21, C3)

Allocable – The cost must benefit the project and be directly attributable to the project or activity being performed.  The cost can only be assigned and allocated to the project(s) based on that portion of the expense that represents the direct benefit to the project. (OMB Circular A-21, C4)

Consistently treated – Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or F&A costs.   (OMB Circular A-21, C10) and (OMB Circular A-21, C11)

IV. GUIDELINES FOR DIRECT-CHARGING ADMINISTRATIVE COSTS TO
      FEDERAL PROJECTS

A. Treatment of Administrative Salaries and Benefits on Extramural Funds

In accordance with OMB Circular A-21 and this document, salaries and benefits of persons doing routine administrative and clerical activities should generally be treated as F&A costs and charged to appropriate department funds.  The portion of time spent by administrative and clerical staff providing core support to the department should always be treated as department administration. (OMB Circular A-21, F6)

The following departmental activities are considered routine administrative and clerical activities.  As such, these costs should not normally be charged directly to a federal project:

*Note: “contracts and grants administration" in the above list includes the development of grant or contract proposals and associated activities such as word-processing, copying, mailing, and electronic proposal submission.

2. Non-Standard Treatment of Administrative Salaries and Benefits

OMB Circular A-21 F.6.b. (2) provides that, “The salaries of administrative and clerical staff should normally be treated as 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. "Major project" is defined as a project that 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 following are examples of “major projects” for which direct charging of administrative or clerical staff salaries may be appropriate:

http://grants2.nih.gov/grants/policy/nihgps_2003/NIHGPS_Part11.htm

 

3. Qualifying Questions for Preparing Budget Justifications for Non-Standard Treatment of Administrative Salaries

When justifying administrative/clerical salaries (or before charging such expenses to a sponsored project), it is helpful to address the issues listed below.

B.  Treatment of Non-Salary Administrative Expenses

       See Appendix B  for related Frequently Asked Questions.

In accordance with OMB Circular A-21, the following examples of non-salary expenses are normally F&A costs and should not normally be budgeted in proposals or charged to extramural projects as direct expenses.

In accordance with OMB Circular A-21, non-salary administrative expenses may be budgeted and charged as a direct cost if special circumstances exist, where they are incurred at a level significantly greater than what is routinely provided to every UCSF sponsored project. To treat such non-salary administrative expense as a direct cost, the administering unit must maintain documentation that explains and supports the following conditions:

The following examples illustrate circumstances for which direct charging of non-salary administrative expenses may be appropriate:

Sponsored project-related office supplies required to conduct, tabulate and store the results of a survey identified in the scope of work of a sponsored award.   See Appendix B, Office Supplies

When justifying non-salary administrative expenses (or before charging such expenses to a sponsored project), it is helpful to address the following issues:

V. UNALLOWABLE CATEGORY OF EXPENSES 

Unallowable expenditures are costs for activities that may not be directly charged to a federal contract or grant, and which also must be excluded from federal F&A rate calculations. Unallowable expenditures are excluded from F&A rate calculations through the use of appropriate unallowable Natural Class Accounts (NCAs - see Appendix A These NCAs must be used to charge unallowable expenditures, regardless of the DPA-Fund charged.

VI.  GUIDELINES FOR DIRECT-CHARGING NON-FEDERAL PROJECTS

Under UCSF policy, it is permissible to charge normally department administration costs to any non-federal sponsored project fund that benefits from the costs and that are allowed by the sponsor.  When this occurs, such costs will then be treated as direct costs of the sponsored project charged, not as F&A costs.

VII.  EFFORT REPORTING

Effort reporting is required by OMB Circular A-21, section J.10, and is designed to substantiate effort spent by all employees whose salaries are charged directly to federal funds (including federal flow-through funds).  UCSF utilizes the Effort Reporting System (ERS) to report on and certify the effort for each employee who works on a federally sponsored agreement.

The ERS reflects after-the-fact reporting of the percentage distribution of employee activity.  Charges may be made initially on the basis of estimates made before the services are performed, provided that such charges are promptly adjusted if significant differences are found. 

ERS data is verified by the employee or by a responsible official having first-hand knowledge of the work performed. It is recognized that in an academic setting, teaching, research, and administration are often inextricably intermingled.  A precise assessment of factors that contribute to costs is not always feasible, nor is it expected.  Reliance, therefore, is placed on estimates in which a +/- 5% degree of tolerance is appropriate to establish the individual’s payroll distribution to DPA-Fund sources.

More information is available at UCSF Controller's Office website on Effort Reporting.

VIII.  PROJECT COST OVERRUNS

Costs that exceed the budget on a sponsored agreement should be tracked and accumulated.  The excess costs (i.e., deficit) must be transferred using NCA 437691 to a discretionary DPA-Fund.   See the Cost Overruns section in Appendix B for more details.

IX.  RECHARGE COSTING PRACTICES

A recharge is the assessment and collection by one university unit for products or services furnished to another university unit.  The Campus Budget and Resource Management department has established policies and procedures for charging organizational units for products or services that include all allowable costs associated with providing the products or services. 

Recharges must be charged to the benefiting activity.  Recharge costs are allowable costs to a sponsored project as long as the department recharging the project has followed the guidelines in UCSF Administrative Policy 250-11, Recharges & Common Cost Allocations and the recharge rate(s) have been approved by Budget and Resource Management.   See the Budget and Resource Management recharge website for more information.

This page last updated on: Tuesday July 22 2008