Treatment of administrative and clerical costs

Background

Effective December 26, 2014, OMB issued Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR 200. Salaries of administrative and clerical staff should normally be treated as indirect (F&A) costs.

Policy

Direct charging of these costs may be appropriate only if all of the following conditions are met:

(a) General. Direct costs are those costs that can be identified specifically with a particular final cost objective, such as a Federal award, or other internally or externally funded activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect (F&A) costs. See also ยง200.405 Allocable costs.

(b) Application to Federal awards. Identification with the Federal award rather than the nature of the goods and services involved is the determining factor in distinguishing direct from indirect (F&A) costs of Federal awards. Typical costs charged directly to a Federal award are the compensation of employees who work on that award, their related fringe benefit costs, the costs of materials and other items of expense incurred for the Federal award. If directly related to a specific award, certain costs that otherwise would be treated as indirect costs may also include extraordinary utility consumption, the cost of materials supplied from stock or services rendered by specialized facilities or other institutional service operations.

(c) The salaries of administrative and clerical staff should normally be treated as indirect (F&A) costs. Direct charging of these costs may be appropriate only if all of the following conditions are met

(1) Administrative or clerical services are integral to a project or activity;

(2) Individuals involved can be specifically identified with the project or activity;

(3) Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency; and

(4) The costs are not also recovered as indirect costs.

(d) Minor items. Any direct cost of minor amount may be treated as an indirect (F&A) cost for reasons of practicality where such accounting treatment for that item of cost is consistently applied to all Federal and non-Federal cost objectives.

Procedures

A.  Administrative and clerical salaries

Accounting Treatment 

Accounting for activities of administrative and clerical staff charged directly to sponsored agreements shall be consistent with accounting for activities of any university employee working directly on a sponsored agreement. Departments shall not use any type of pooled allocation method to direct charge sponsored agreements for administrative or clerical support services of an indirect nature.

B. Supplies and expenses - normally facilities and administrative (F&A) costs

The supplies and expenses listed below shall normally be treated as F&A costs and shall not be charged directly to federally sponsored agreements. These costs can be charged directly to sponsored agreements only in exceptional and unique circumstances. "Unlike" circumstances are those that require the incurrence of supplies and expense costs specifically for the technical purpose of the award rather than to support administrative or clerical efforts, e.g., a project that requires data collection through local telephone interviews or a mail survey.

  • Postage 
  • Local telephones
  • Office supplies 
  • Memberships

When exceptional circumstances justify direct charges for any of these costs, they may be charged directly if the following conditions are met:

  • The supply or expense can be specifically identified with the project or activity. 
  • The supply or expense (by type, e.g., postage) is explicitly listed in the proposal budget and the special circumstances requiring direct charging are justified in the proposal. 
  • The supply or expense (by type, e.g., postage) is not specifically disallowed in the award notice or other notification to the University.

In the vast majority of instances, it is expected that these types of costs would be included in the approved budget of the awards. If a need arises for these types of services at a later date, they can be charged directly to the program only if the following conditions are met:

  • The University has rebudgeting authority under federal regulations or the terms of the sponsored agreement. 
  • A written justification is prepared which is equivalent to the justification that would have been included in the original proposal. 
  • Approval is given by the Dean or the Dean's designee.
  • Justification and approval are to be maintained on file in the Grants and Contracts Accounting office.