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How to comply

Understand what can be charged: Work with your department/local administrator to determine what can and cannot be charged directly to a sponsored award.  For federal awards, the expense must be:

  • Allowable: An allowable cost is eligible for reimbursement from the sponsor either as a direct or indirect expense[1] and is permissible according to the terms and conditions of the award and established University policies and practices.
  • Necessary and reasonable: The item/expense is necessary and reasonable for the performance of the award (i.e., what a “prudent person” would deem appropriate).
  • Allocable: A cost is allocable as a direct cost if the goods or services provided are assignable in accordance with the relative benefits received (i.e., incurred solely to advance the work under the sponsored agreement).
  • Consistent: Costs must be consistently treated (i.e., treated in like circumstances either as direct or indirect cost in order to avoid possible double-charging federal awards).

Monitor expenditures: Review account status and charges on a routine, preferably monthly, basis.  Work with your knowledgeable and trained department/local administrator to ensure that: expenses are charged and documented correctly; accurately align/assign personnel effort to research aims (i.e., time and effort reporting); plan/forecast ahead; and make timely adjustments if needed.

 
[1] An expense is a “direct cost” if that expense can be identified specifically with a particular sponsored project or other activity with a high degree of accuracy.  “Indirect costs” (sometimes referred to as facilities and administration (F&A) costs, or overhead), are costs that benefit many activities (e.g., building operations and maintenance, IT expenses, security, administrative personnel such as grant managers).  F&A costs are recovered through the federally negotiated rate.