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Administration and Fiscal Management

Introduction

It is important for Washington State University to recover the full costs of each individual sponsored project where permitted by the established policies of the funding agency. OMB Circular A-21, Cost Principles for Educational Institutions and the Cost Accounting Standards included in the circular, define what costs are allowable on federally funded grants, contracts and cooperative agreements (collectively called sponsored agreements). Agreements with non-federal sponsors are also subject to these cost principles if the source of the sponsor's funding is federal (i.e. federal flow-through agreements). These federal regulations require that the same types of costs be treated consistently as either direct costs or indirect costs. Therefore, it is essential to maintain consistency across WSU departments, colleges, centers, and institutes in the way direct and indirect costs are charged.

Direct Costs

Direct Costs: Are those allocable and allowable costs that can be identified specifically within the performance of the scope of work or are necessary for the completion of the specific project. They are easily assigned to a specific research project and paid directly from that project.

Direct Cost Examples
  • Salaries and Wages
  • Personnel Benefits
  • Materials and Project Specific supplies
  • Project Related Travel
  • Equipment Purchased for the Project
  • Long Distance Telephone Charges
  • Project Specific Photocopying

Indirect Costs (a.k.a F & A)

Facilities and administrative (F & A) costs:Are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity. F&A costs are those involving resources used mutually by different individuals and groups, making it difficult to assess precisely which users should pay what share.

What does Indirect Costs (F&A) pay for?

  • General Administration
  • Sponsored Projects Administration
  • Library Expenses
  • Plant Operation and Maintenance
  • Depreciation or Use Allowance on Building and Equipment
  • Student Administration and Services

Major Program Projects

Major Program Projects are defined as those requiring an amount of administrative or clerical support significantly greater than the routine level provided by academic departments.Direct charging of administrative or clerical 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 Program Project Examples

  • Large, complex programs
  • General Clinical Research Centers
  • Primate Centers
  • Program Projects
  • Environmental research centers
  • Engineering research centers
  • Other grants and contracts that entail assembling and managing teams of investigators from a number of institutions
  • Projects which involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting
    • Such as epidemiological studies, clinical trials, and retrospective clinical records studies

Major Program Project Examples

  • Projects that require making 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 and technical reports
  • Projects that are geographically inaccessible to normal
  • departmental administrative services
  • Such as research vessels, radio astronomy projects, and other research
  • fields sites that are remote from campus
  • Individual projects requiring project-specific database
  • management; individualized graphics or manuscript preparation;
  • human or animal protocols; and multiple project-related
  • investigator coordination and communication

The Cost Principles of OMB A-21:

Although cost principles specifically apply to federally sponsored agreements, the Office of Management and Budget (OMB) Circular A-21 (Cost Principles for Educational Institutions) is commonly used to describe the cost principles for all sponsored agreements. The tests for appropriateness under these principles are:

Reasonable Costs:A cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved, reflect the actions a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made. See OMB Circular A-21 Section C.3 for major considerations involved in the determination of the reasonableness of costs.

Allocable costs:A cost is "allocable" if the goods or services involved are chargeable or assignable to the project. Project costs must advance, benefit or be necessary for the sponsored agreement to be allocable. See OMB Circular A-21 Section C.4.

Allowable costs:For costs to be allowed they must be in accordance with the principles in OMB A-21 or the terms of the sponsored agreement. Allowable and unallowable costs are defined in OMB Circular A-21, Section J

For costs to be allowable on a project, the following criteria must be met:

  • Must be a reasonable cost
  • Must be allocable to the sponsored program
  • Must be treated consistently, through the application of generally accepted accounting principles
  • Must be within the type and dollar amount limitations specifically defined in OMB A-21 and the particular contract or agreement

Unallowable Costs:

The following list indicates those costs that A-21 identifies as unallowable.

  • Advertising or public relations except as necessary to the work of the project.
  • Alcoholic beverages
  • Alumni activities.
  • Alcoholic beverages
  • Bad debts.
  • Commencement and convocation costs.
  • Contributions to a contingency reserve.
  • Costs incurred outside effective dates of sponsored agreement unless approved by sponsor.
  • Legal fees
  • Donations or contributions.
  • Development/fundraising costs.
  • Entertainment costs. (shows, sporting events, meals, lodging, etc.)
  • Fines and penalties for violations of Federal, State, and local or foreign laws and regulations
  • Goods or services for personal use (including gifts). Housing and personal living expenses of the institution's officers (including past officers).
  • Individual memberships and subscriptions.
  • Interest, fund raising, and investment management costs.
  • Lobbying costs.
  • Losses on other sponsored projects
  • Proposal preparation costs
  • Recruiting costs that are excessive.
  • Relocation costs
    • If employee leaves voluntarily within 12 months of hire
  • Selling and marketing costs.
  • Student activity costs unless specifically allowed in the sponsored agreement.
  • Travel costs in excess of commercial coach airfare
  • Trustee travel and subsistence costs.