Indirect Costs 1 Indirect Costs Defined Indirect costs

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Indirect Costs 1

Indirect Costs 1

Indirect Costs Defined Indirect costs benefit more than one cost objective or are not

Indirect Costs Defined Indirect costs benefit more than one cost objective or are not readily assignable to a specific cost objective without an effort disproportionate to results 2

Makeup of Indirect Costs �Indirect costs originating in each department or agency of the

Makeup of Indirect Costs �Indirect costs originating in each department or agency of the governmental unit carrying out Federal awards �Costs of central governmental services distributed through the central service cost allocation plan

Examples of Indirect Cost �State/local-wide central service costs �General administration of the agency �Finance

Examples of Indirect Cost �State/local-wide central service costs �General administration of the agency �Finance and accounting �Human resources �Procurement �Information Technology �Agency leadership

Examples of Indirect Cost �Depreciation or use allowances on buildings and equipment �Cost of

Examples of Indirect Cost �Depreciation or use allowances on buildings and equipment �Cost of operating and maintaining facilities �Utilities �Janitorial �Rent Let’s take a look at Handout 10 -1

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What is an Indirect Cost Rate An “indirect cost rate’’ is a device for

What is an Indirect Cost Rate An “indirect cost rate’’ is a device for determining in a reasonable manner the proportion of indirect costs each program should bear. It is the ratio (expressed as a percentage) of the indirect costs to a direct cost base. 7

Obtaining an Approved Rate Prepare an indirect cost rate proposal for a given period

Obtaining an Approved Rate Prepare an indirect cost rate proposal for a given period (ICRP) and submit to cognizant Federal Agency for review �NLT 90 days after Federal award �Annual thereafter within 6 months of the end our NFE’s FY �Rate is agreed upon and approved for that period 8

Indirect Cost Rate Proposal �Proposed rates and supporting documentation �Financial data used in determining

Indirect Cost Rate Proposal �Proposed rates and supporting documentation �Financial data used in determining the rate �Approximate amount of direct bases costs for Federal awards �Organization Chart Remember! � 3% limit of State central costs for WR/SFR 9

Honoring the Indirect Rate �The provisions of 2 CFR 200. 414 and related Department

Honoring the Indirect Rate �The provisions of 2 CFR 200. 414 and related Department policy DOI-AAAP-0007 require programs to accept federally-negotiated indirect cost rates 10

Exceptions to Negotiated Rates �Statutory limitation �Program has received approval from DOI/OMB �Recipient uses

Exceptions to Negotiated Rates �Statutory limitation �Program has received approval from DOI/OMB �Recipient uses some or all indirect as cost share �Recipient voluntarily charges less with a written statement from individual having authority to negotiate indirect cost rates for the recipient 11

Limitation on Central Services 50 CFR 80. 53 Administrative costs in the form of

Limitation on Central Services 50 CFR 80. 53 Administrative costs in the form of overhead or indirect costs for State central services outside of the State fish and wildlife agency must be in accord with an approved cost allocation plan and shall not exceed in any one fiscal year three per centum of the annual apportionment 12

Calculation of SWCAP Limit Central Services allocable to PR Dept Fish & Wildlife Annual

Calculation of SWCAP Limit Central Services allocable to PR Dept Fish & Wildlife Annual Apportionment 3% Max Allowed Limit of SWCAP passed to WR/SFR 13 $ 575, 000 $ 14, 000 X 3% $ 420, 000

Determining the Indirect Cost Pool Protection Dept. of Fish & Wildlife – Indirect Costs

Determining the Indirect Cost Pool Protection Dept. of Fish & Wildlife – Indirect Costs Eligible Statewide Central Services (3% limit) Total Indirect Cost Pool 14 15, 000, 0 00 420, 000 15, 420, 0 00

Calculation of Indirect Rate Calculation: Total Indirect Cost Pool Direct Cost Base Salaries &

Calculation of Indirect Rate Calculation: Total Indirect Cost Pool Direct Cost Base Salaries & Fringe Indirect Rate 15 15, 420, 000 / 50, 000 30. 84%

Types of Indirect Rates �Provisional Rate / Final Rate �Predetermined Rate �Fixed Rate with

Types of Indirect Rates �Provisional Rate / Final Rate �Predetermined Rate �Fixed Rate with Carry-Forward �Special Rate � 10% 16 de minimus (MTDC base)

The “Base” �Salaries/Wages and Fringe Benefits �Total Modified Direct Costs (TMDC)

The “Base” �Salaries/Wages and Fringe Benefits �Total Modified Direct Costs (TMDC)

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Applying the Indirect Rate Example: Fisheries Research Activities 22

Applying the Indirect Rate Example: Fisheries Research Activities 22

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