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RESEARCH CCHIP #002

CLARIFICATION OR CHANGE IN PROCEDURE (CCHIP)

Determining Costs Applicable to Sponsored Projects

OVERVIEW

This CCHIP in combination with agency guidelines shall be used to determine costs applicable to sponsored projects. These standards shall also be used in determining the costs of work performed by USF under sub-awards, subcontracts, and other awards made under sponsored projects, such as the pricing of fixed price or lump sum agreements.

Project costs consist of direct costs directly related to the performance of the sponsored project plus the allocable portion of F&A costs, less any applicable credits as defined below.

Four tests shall be addressed when determining costs applicable to sponsored projects: Reasonable, Allocable, Consistent, and Conformance. These four tests apply regardless of whether the category of costs is one specified in the cost principles or one governed by other terms and conditions of an award and regardless of treatment as a direct cost or an F&A cost.

The fact that a proposed cost is awarded as requested by USF does not indicate a determination of applicability.

DEFINITIONS

Administration – General administration & general expenses, departmental administration, sponsored projects administration, student administration and services, and all other types of expenditures not listed specifically under one of the subcategories of facilities.

Allocable Cost – Goods or services incurred solely to advance the work under the sponsored project that benefit both the sponsored project and other work at USF, in proportions that can be approximated through the use of reasonable methods, or necessary to the overall operation of USF and deemed to be assignable in part to sponsored projects.

Allowable Cost – Goods or services that are reasonable and allocable to sponsored projects that are given consistent treatment through application of generally accepted accounting principles appropriate to the circumstances and that conform to any limitations or exclusions set forth in this CCHIP, agency guidelines or sponsored project.

Applicable Credits – Refers to receipts or negative expenditures that operate to offset or reduce direct or F&A cost items such as purchase discounts, rebates, or allowances; recoveries or indemnities on losses; and adjustments of overpayments or erroneous charges.

Conformance – Costs must conform to any limitations or exclusions set forth in the terms and conditions of the award, including those in the cost principles.

Consistent Costs – Costs given consistent treatment when assigning to cost objectives for all work under similar circumstances, regardless of the source of funding, so as to avoid duplicate charges.

F&A Costs – Facilities & Administrative costs means costs that are incurred for common or joint objectives that cannot be identified readily and specifically with a particular sponsored project, instructional activity, or any other institutional activity. F&A costs are synonymous with indirect costs.

Facilities – Depreciation and use allowances, interest on debt associated with certain buildings, equipment and capital improvements, operation and maintenance expenses, and library expenses.

Reasonable Cost – Goods or services acquired or applied, in an amount that reflects the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made.

Sponsored Project – Any grant, contract, or other agreement between the 51ÔÚÏß and a sponsoring agency.

CLARIFICATION OR CHANGE

The guidelines contained herein shall be used by the Principal Investigator (PI) or designee to determine costs applicable to sponsored projects regardless of the source of funding. All costs must pass the four tests of allowableness: Reasonable, Allocable, Consistent, and Conformance.

PROCEDURES

Reasonable
Costs may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved, reflect the action that a prudent person would have taken under the circumstances prevailing when the decision to incur the cost was made.

The following considerations should be made in determining the reasonableness of costs:

• Is the cost of a type which is generally recognized as necessary for USF operations or the performance of the sponsored project?
• Have the restraints or requirements imposed by such factors as Federal and State laws and regulations, sponsored project terms and conditions, and arm’s length bargaining been satisfied? Have the individuals concerned acted with due prudence in the circumstances, considering their responsibilities USF, its employees, its students, the government, and the public at large?
• Were the actions taken with respect to the incurrence of cost consistent with USF’s policies and procedures?

Allocable
Costs may be considered allocable to a sponsored project if the goods or services acquired are assignable in accordance with the relative benefits received.

Any of the following criteria should be met in determining if costs are allocable to sponsored projects:

• Was the cost incurred solely to advance the work under the sponsored project?
• Does the cost benefit both the sponsored project and other USF work, in proportions that can be approximated through use of reasonable methods?
• Is the cost necessary to the overall operation of USF and, in light of the cost principles outlined in the Uniform Guidance (2 CFR §200) or Notice of Award, deemed to be assignable in part to sponsored projects?

Other considerations:

• If the purchase of equipment or other capital items is specifically authorized under a sponsored project, the amounts thus authorized for such purchases are assignable to the sponsored project.
• Any costs determined allocable to a particular sponsored project may not be shifted to other sponsored projects in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored project, or for other reasons of convenience.
• Any costs allocable to activities sponsored by industry, foreign governments or other sponsors may not be shifted to federally sponsored projects.
• Allocation and documentation standards.
• USF is responsible for ensuring that costs charged to a sponsored project are allowable, allocable, and reasonable under the cost principles outlined in the Uniform Guidance (2 CFR §200) or Notice of Award.
• USF’s internal controls shall ensure that no one person has complete control over all aspects of a financial transaction.
• If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit.
• If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, the costs may be allocated or transferred to benefited projects on any reasonable basis.
• USF is responsible for maintaining documentation for the management of sponsored projects.

Consistent
Consistency in the application of cost accounting practices is necessary to enhance the likelihood that comparable transactions are treated alike. The criteria for determining the allocation of costs to a sponsored project or other cost objective should be the same for all similar objectives.

All costs incurred for the same purpose, in like circumstances, are either direct costs only or F&A costs only with respect to final cost objectives.

The cost accounting practices used in estimating costs in pricing a proposal and in accumulating and reporting costs on the resulting sponsored project shall be consistent with respect to: 

• The classification of elements of cost as direct or indirect.
• The indirect cost pools to which each element of cost is charged or proposed to be charged.
• The methods of allocating indirect costs to the sponsored agreement.

Adherence to these cost accounting practices is necessary to guard against the overcharging of some cost objectives and to prevent double counting. Double counting occurs most commonly when cost items are allocated directly to a cost objective without eliminating like cost items from indirect cost pools which are allocated to that cost objective.

Conformance
All costs must conform to any limitations or exclusions set forth in the cost principles outlined in the Uniform Guidance (2 CFR §200) or in the sponsored agreement as to types or amounts of cost items.

CONTACT

Please address your comments or questions regarding this CCHIP to Sponsored Research Compliance.

AGENCY GUIDELINES

(Federal awards issued prior to 12.26.14)
(Federal awards issued on or after 12.26.14)

EFFECTIVE DATE

This CCHIP is effective as of the date of revision and rescinds all previous versions pertaining to Determining Costs Applicable to Sponsored Projects.

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ISSUED: June 30, 2007
LAST REVISION: August 16, 2018