Cost Principles 2 CFR 200 Sub part E

• • Direct Costs are costs that can be identified specifically with a particular final cost objective Indirect Costs are costs incurred for common or joint purposes benefiting more than one cost objective. Cost cannot be readily and specifically identified with a particular cost objective without effort disproportionate to the results achieved Federal agencies must accept a non-federal entity’s negotiated indirect cost rate A different rate may be used for a class of Federal awards or single Federal award only if: Required by statute or regulation, e. g. ED Restricted Rates, or justification Approval of Federal awarding agency head (per delegations authority) based on documented

Objectives of the Cost Principles • Uniform standards of allocation • Uniform standards of allowability • Designed to provide that the federal government bears its fair share of costs recognized under these principles • Simplify intergovernmental relations • Encourages consistent costing

What the Cost Principles Do: • Requires that a cost: Be allowable Be allocable Where’s your documentation ? Be reasonable Be treated consistently in like circumstances Be necessary to perform the program Be permissible under the law

What the Cost Principles Do Not Do: • Supersede limitations imposed by law • Dictate extent of federal funding • Dictate how IDC cost revenue should be used • Dictate organization form or management techniques necessary for program administration

• • What is a reasonable cost? Is the cost generally recognized as ordinary and necessary for the operation of the non federal entity, the performance of a grant or contract, or both? Was the cost incurred based on generally accepted sound business practices? Was it an arm’s length transaction? Was the cost in compliance with grant/contract terms and conditions, and federal and state laws and regulations? Was the cost allowable and allocable? Was the action that which a prudent businessperson would take in the circumstances? Does the cost incurred result from significant deviations in the established practices of the institution?

• • What is an Allowable Cost Everything included in your approved budget. If it has been budgeted, justified, and approved by the sponsor, by all meansspend it! Be necessary and reasonable, and allocable, Conform to any limitations or exclusions set forth in the cost principles or the award, Be consistent with policies and procedures afforded all activities of the organization, Be accorded consistent treatment, Be determined in accordance with GAAP, Not be against the law, Be adequately documented.

The following list provides general guidance pertaining to costs in which federal funds awarded through grants are allowable. Every funder is a bit different so each grant announcement requires careful review for specific guidance. When in doubt, ASK Advertising costs for recruiting personal required for the project; procurement of goods and services for the project; disposal of scrap or surplus materials acquired during the project (unless otherwise reimbursed); other specific purposes necessary to meet the requirements of the agreement Public relations costs specifically required by the agreement; costs of communicating with the public and press pertaining to specific activities or accomplishments; costs of conducting general liaison with news media and government public relations officers on matters related to keeping the public informed about matters of public concern (grant awards/contracts, etc. )

Communication costs (long-distance telephone calls, postage, messenger, electronic transmittal services) Compensation for personal services (salaries, wages, fringe benefits, pension plans) that conform to the established policies of the organization, are consistently applied, and are charged for work performed directly related to the agreements. Salary rates must match the employee’s regular compensation rate and work on the agreement cannot exceed the base rate. Intra-Organizational consulting is considered an in-kind service unless specified in the agreement. Materials and supplies used for the performance for a sponsored agreement Memberships, subscriptions, and professional activity costs Professional services and consultants who possess a special skill and when the work could not be performed more economically by a current employee

Meetings and conferences when primary purpose is dissemination of technical information. Includes cost of meals, transportation, rental of facilities, speakers’ fees, and other items incidental to the meeting Recruitment costs for positions related to the grant including advertising, HR operating costs, travel costs of applicants, and employment agencies to the extent that such costs are incurred pursuant to a well-managed recruitment program (but not spent on color or excessively sized print advertising). Rental costs of buildings and equipment determined and periodically monitored to be reasonable in comparison to equivalent facility rental rates. (additional considerations apply) Scholarships and fellowships, and student aid when the purpose of the agreement is to provide student training and is approved by the funder. Training costs for employee development

Unallowable Costs • Specifically identified in the grant/contract as being unallowable. • Specifically identified in Subpart E, as being unallowable. • Does not meet the criteria listed in Subpart E to be allowable. Not Allowed

Unallowable Costs • You would like grant funds for something your program needs. You must determine if your expenditure meets the following criteria: Proceed to guidance

The following list provides general guidance pertaining to costs in which federal funds awarded through grants are unallowable. When in doubt, ASK. • • • Student activity costs unless specifically provided for in the agreement Proposal costs/cost of preparing bids (should be included as IDC costs; may be allowable if found to be acceptable by Funder) Memberships and subscriptions to community civic organizations, country club or social or dining clubs Pre-agreement costs incurred before the effective date of the agreement unless approved by the funder Food costs (except for participants or meals while traveling that abide by organization policies) Goods or services for personal use

• General administrative costs • Advertising and public relations costs: Costs of meetings, conventions, convocations and other events related to the institution, including costs of displays, meeting rooms, hospitality suites used in conjunction with special events, and salaries and wages of employees engaged in setting up, displaying exhibits , and making demonstrations. Costs of promotional items, memorabilia, and gifts. Costs of advertising and public relations designed solely to promote the institution. • Alcoholic beverages • Entertainment costs (even on business trips)

Gift Cards Unallowable regardless of the circumstance.

Consistent Treatment NO DOUBLE DIPPING!!!

Questions?