Direct costs are those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy.
Indirect costs represent the expenses of doing business that are not readily identified with a particular grant, contract, project function or activity, but are necessary for the general operation of the organization and the conduct of activities it performs.
F&A costs are the “indirect” costs associated with running a sponsored project. Indirect cost rates are used to distribute those costs to benefiting revenue sources.
The proper administration of an award, including award spending, is the responsibility of the Principal Investigator (PI) and department. It is important the PIs and departments understand the terms and conditions of the award to fulfill the requirements outlined by the awarding agency.
PIs are responsible for oversight of financial, scientific and compliance aspects of the award. PIs and departments exercise budgetary control and ensure that expenditures incurred are within the authorized budget and period and that only those costs that are allowable, allocable and reasonable are charged.
Sufficient records to support sponsored project transactions must be maintained, available for audit, and demonstrate compliance with contract terms, LU policy, accounting guidance, and federal regulations.
The effort certification process at Lamar means of providing assurance to sponsors those salaries charged to sponsored projects are reasonable, in relation to the work performed and that faculty and staff have met the effort committed to a project.
An effort report is required for any employee whose salary, or any portion of salary, is charged to a federally sponsored award, including federal flow-through funds, and for any employees with a cost-charging commitment associated with a federal or federal flow-through award. If an effort was committed on a sponsored project charged to a federal or federal flow-through project, the report must be certified.
Effort reporting occurs Quarterly at the beginning of each quarter. Post Award officials will contact each PI at the beginning of the quarter informing them that the effort reporting period has begun.
Please see below table for lists of allowable/unallowable cost:
Advertising
Only for the recruitment of personnel required for the project
Air Conditioning
Allowable as Indirect
Alcoholic beverages
Unallowable
Alterations, non-construction
Must be budgeted or approved
Animals
Generally allowable
Bad debts
Unallowable
Bonding
Generally allowable
Bonus payments
Allowable if part of compensation
Books
Generally allowable
Business meals and meeting costs
Only when specifically permitted by the Sponsored Agreement
Civil defense
Allowable as indirect cost
Commencement and convocation
Unallowable
Communication costs
Generally allowable
Computer costs
Allowable if essential to the performance of the work and will be used solely for such project
Conferences
Only when specifically permitted by the Sponsored Agreement
Construction
Unallowable unless authorized by awarding agency
Consultant services
Allowable, some agencies require approval. All Texas State employees must be approved in advance or listed in the approved budget
Contingent reserves
Unallowable except self
Contributions
Unallowable
Custom and import duty
Generally allowable
Depreciation
Indirect costs only
Donors
Generally allowable
Drugs
Generally allowable
Dues
Generally allowable
Entertainment
Unallowable unless specifically approved
Equipment: general purpose (desks, file cabinets, fax machines)
Usually must be budgeted or approved in advance
Equipment: Scientific
Allowable when necessary and will be used primarily, or exclusively for the project(s) to which the costs will be charged
Equipment maintenance and repair
Generally allowable as noted above
Equipment rental
Generally allowable as noted above
Fines and penalties
Unallowable
Fringe benefits
Generally allowable
Fundraising costs
Unallowable
Goods or services for personal use
Unallowable
Human subjects
Generally allowable
Insurance
Only allowed to the extent required or approved
Interest
Usually allowable. Can be allowed if total cost of purchase including interest does not exceed the cost of rental
Investment management costs
Unallowable
Labor relations
Should be charged as indirect costs
Legal costs
Generally allowable
Library costs
Indirect costs
Licenses and permits Losses
Unallowable
Maintenance
Generally allowable
Materials
Generally allowable
Meals
Allowable for subjects and participants or employees on trips
Memberships
Business, technical and professional organizations only if specifically approved
Moving costs
Generally allowable
News releases
Allowable with approval
Overtime
Allowable, with institutional approval
Patient costs
Generally allowable
Plant security costs
Indirect Cost
Periodicals
Unallowable unless approved by the funding agency or essential to the daily conduct of the project and not readily available from other sources (such as the library)
Postage: Routine postage
Unallowable except where a project requires specifically identifiable large mailings or the like
Postage: Special mailing or delivery costs
Allowable when necessary for the success or completion of project
Pre-award Costs
Unallowable, except for grants under Federal Demonstration Project grants and cooperative agreements from certain federal agencies with institutional approval
Promotional items and memorabilia, including models, gifts and souvenirs
Unallowable unless specifically requested and approved in proposal
Proposal costs
Unallowable as a direct expense
Publication costs
Unallowable unless approved by the funding agency or essential to the daily conduct of the project and not readily available from other sources (such as the library)
Registration fees
Generally allowable
Rearrangement costs, refreshments
Not allowable unless specifically approved by contracting officer
Recruiting costs
Generally allowable
Relocation costs
Generally allowable
Rental/lease of facilities or Equipment
Generally allowable
Renovation costs
Allowable if approved by agency
Repairs
Generally allowable
Royalty costs
Generally allowable
Salaries and wages: Faculty/Technical
Costs of personnel are allowable on research agreements to the extent supported by actual effort performed on the project and approved in the award budget. An individual's base salary must be used to compute the cost charged to a sponsored agreement
Salaries and wages: Administrative and Clerical
Generally recovered through indirect costs; therefore, they are usually unallowable as direct costs on federal agreements
Scholarships and student aid
Allowable costs for training grants only
Service charges
Generally allowable
Specialized service center costs
Generally allowable
Student activity costs
Unallowable
Subject costs
Generally allowable
Supplies: Project Supplies
Allowable if identified as being exclusively for the support of a sponsored agreement. Chemicals, laboratory supplies, pens, pencils, folders, notebooks and the like
Supplies: Office Supplies
Unallowable if items commonly found in any office such as wall clocks, calendars, waste cans, letterhead, staples, etc. that would likely be used for other purposes except in specific circumstances
Taxes
Generally allowable
Telephone: Local
Generally unallowable as direct cost
Telephone: Long Distance
Allowable when specifically identified with an individual project
Transportation costs
Generally allowable
Travel costs
Allowable within the approved budget limits and university policy. Foreign travel requires program approval
Coffee Mugs for Administrative Staff; Bus Chartered for Administrative Staff; Reunion for Former Participants; Selling and Marketing; T-shirts; Engraved key chains; Texas State banners (unless specifically requested and approved in proposal)
Unallowable costs are costs that cannot be paid by a sponsored program. Such costs may be expressly prohibited by Uniform Guidance 2CFR 200. Charging an unallowable expense to a sponsored award is prohibited, i.e., at no time should unallowable costs be charged to the sponsored project.
However, if an error does occur and unallowable cost is identified, the following process should be followed:
If PI/Department is non-responsive to the request, ORSPA has the authority to move unallowable costs to the PI/Department/College Designated Returned Indirect Cost Account.