PURPOSE

The purpose of this statement is to provide guidelines related to the direct charging of expenses to contracts and grants awarded the University.

GENERAL GUIDELINES/APPLICABLE POLICIES

The criteria for charging costs to federal contracts and grants is based on the following predetermined groups of allowable and unallowable costs as identified in OMB Circular A-21 Section C. Cost Principles. Expenses grouped in the allowable cost category may be charged to contracts and grants based on the policy restrictions of the awarding agency. Expenses grouped in the unallowable cost category may not be charged to contracts and grants unless the awarding agency provides specific approval. The following guidelines are not all inclusive, and in each case, the budget as approved by the sponsor in making an award and any policy restrictions of the sponsor, and applicable state regulations must be consulted.

Allowable Expenses

A. Advertising and Public Relations

1. The term advertising costs means the costs of advertising media and corollary administrative costs. Advertising media include magazines, newspapers, radio and television programs, direct mail, exhibits and the like.

2. The term public relations includes community relations and means those activities dedicated to maintaining the image of the institution or promoting understanding and favorable relations with the community or public at large or any segment of the public.

3. The only allowable advertising costs are those solely for a) the recruitment of personnel required for the performance by the institution of obligations arising under the sponsored agreement when considered in conjunction with all other recruitment cost as set forth in section J37 of OMB Circular A-21 (b) the procurement of goods and services for the performance of the sponsored agreement (c) the disposal of scrap or surplus materials acquired in the performance of the sponsored agreement except when institutions are reimbursed as a predetermined amount in accordance with Attachment N, OMB Circular No A-110; or (d) other specific purposes necessary to meet the requirements of the sponsored agreement.

4. The only allowable public relations cost are: (a) costs specifically required by the sponsored agreements; (b) Costs of communicating with the public and press pertaining to specific activities or accomplishments which result from performance of sponsored agreements; or (c) Cost of conducting general liaison with news media and government public relations officers, to the extent that such activities are limited to communication and liaison necessary to keep the public informed on matters of public concern such as notices of contract/grant awards, financial matter, etc.

B. Communications - Costs incurred for telephone services, local and long distance telephone calls, telegrams, radiograms, postage and the like are allowable.

C. Compensation for Personal Services - Compensation for personal services must be based on current or accrued salary of an employee rendering services during the period of performance. For academic personnel, charges for work performed on contracts or grants must be based on the individual's regular compensation on an academic year calendar.

D. Fringe Benefits - Employer contributions or expenses for retirement, social security, employee insurance, and workmen's compensation insurance. Benefits must be granted in accordance with established policies for Payroll and Benefits.

E. Equipment - See the Property Management Statement on Federal Equipment.

F. Insurance and Indemnification - Costs of insurance required or approved pursuant to the contract or grant are allowable.

G. Maintenance and Repair - Costs incurred for necessary maintenance, repair or upkeep of property (including government property unless otherwise provided for) which neither add to the permanent value of the property nor appreciably prolong its intended life but keep it in operating condition.

H. Material and Supplies - Costs incurred for purchased materials, supplies, and fabricated parts directly related to the contract and grant.

I. Memberships, Subscriptions, and Professional Activity - Costs of meetings and conferences, when the primary purpose is the dissemination of technical information, are allowable. This included cost of meals, transportation, rental or facilities, and other items incidental to such meetings or conference. Expenses must be within the approved contract or grant budget and follow the established University procedures.

J. Patent Cost - Costs of preparing disclosures, reports and other documents required by the contract or grant to the extent necessary to make such invention disclosures, are allowable. In accordance with the clauses of the sponsored agreements relating to patents, costs of preparing documents and any other patent costs, in connection with the filing of a patent applicable where title is conveyed to the Government, are allowable.

K. Professional Services - Costs of professional services rendered by the members of a particular profession who are not employees of the institution are allowable fir specified in the proposal budget and approved by the sponsoring agency. Costs of legal, accounting, and consulting services, and related costs, incurred in connection with the prosecution of claims against the Federal government, are not allowable. In addition, the use of outside consultants for research activities is governed by Administrative Memorandum 104. Principal investigators must familiarize themselves with the restrictions governing outside consultants during the proposal budget preparation process.

L. Printing and Binding - The costs of printing, production, reproduction, and binding of technical reports, and deliverable are allowable.

M. Public Information Services - Costs of news releases pertaining to specific research or scientific accomplishments are allowable, when they result from performance of sponsored agreements.

N. Rearrangement and Alteration - Costs incurred for ordinary rearrangement and alteration of facilities. Special arrangement and alteration costs incurred specifically for the project are allowable when special work has been approved in advance by the sponsoring agency.

O. Rental Cost of Building and Equipment These costs are allowable subject to approval by the awarding agency during the proposal process.

P. Scholarships and Student Aid - Cost or scholarships, fellowships, and other programs of student aid are allowable only when the purpose of the sponsored agreement is to provide selected participation and charges are approved by the sponsoring agency.

Q. Specialized Service Facilities - The cost of University lab or recharge centers involving the use of highly complex or specialized facilities such as electronic computers, wind tunnels, and reactors are allowable if the Comptroller has approved the rates for specialized services charges and facilities.

R. Transportation - Costs incurred for freight express, postage, and other transportation services relating either to goods purchased, in process or delivered.

S. Travel - Travel costs are the expenses for transportation lodging, subsistence, and related items incurred by employees who are in travel status on official contract or grant related business. Domestic travel costs are allowable when permitted by the sponsored agreement.

All travel must meet the requirements as established in the University Travel Policy for each trip (Travel Section of this manual.) Expenditures for domestic travel exceeding 25% or $500, whichever is greater of the current approved budget for project travel will be considered unallowable cost unless the sponsoring agency provides prior approval.

Foreign travel is defined as any travel outside Canada and the United States and its territories and possessions. Foreign travel costs are allowable only when the travel has received specify prior approval. In addition, each separate foreign trip must have prior agency approval. For specific guidelines of particular agency, refer to the "General Agency Guidelines" in this Section

Unallowable Costs

The following costs are considered unallowable charges to a contract or grant unless prior written approval is received from the sponsoring agency.

A. Alcoholic Beverage - Cost of alcoholic beverages are unallowable.

B. Alumni Activities - Costs incurred for, or in support of alumni activities and other similar services are unallowable.

C. Bad Debt - any losses, whether actual or estimated, arising from uncollectable accounts and other claims, related collections costs, and related legal costs, are not allowable.

D. Advertising and Public Relations

1. All advertising and public relations costs other than those specified as allowable in this section under direct cost.

2. Costs of convocations or other events related to instruction or other institutional activities including:

a. Cost of displays, demonstrations and exhibits

b. Costs of meeting rooms, hospitality suites, and other special facilities used in conjunction with shows and other special events; and

c. Salaries and wages or employees engaged in setting up and displaying exhibits making demonstrations and providing briefings;

3. Costs of promotional items and memorabilia, including models, gifts, and souvenirs;


4. Costs of advertising and public relations designed solely to promote the institution.

E. Commencement and Convocation - Costs incurred for commencements and convocations are not allowable.

F.. Contingency Provisions - Contributions to a contingent reserve or any similar provision made for events, the occurrence of which cannot be foretold with certainty as to time, intensity, or with an assurance of their happening are not allowable.

G. Entertainment Costs - Cost of entertainment, including amusements, diversion, and social activities and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation and gratuities are unallowable.

H. Office Equipment - Costs incurred for typewriters, file cabinets, desks, etc., computers are not allowable unless prior approval is received by the sponsoring agency.

I. Fines and Penalties - Costs resulting from violations or, or failure of the University to comply with Federal, State, and local laws and regulations are not allowable.

J. Pre-agreement Costs - Costs incurred prior to the effective date of the sponsored agreement, whether or not they would have been allowable thereunder if incurred after such date, are not allowable unless approved by the sponsoring agency.

K. Student Activity - Costs incurred for intramural activities, student publications, student clubs, and other student activities are not allowable, unless specifically provided for in the sponsored agreement.

Procedures

It is the responsibility of each School and/or Department to establish policies and internal controls that will assure compliance with the guidelines and the policy restrictions of the sponsoring agency.