Procedures for Charging Expenditures to Federally Sponsored Programs
(Revised June 2024)
INTRODUCTION
The Office of Management and Budget (OMB) issued guidelines for costing practices and indirect cost recoveries called Uniform Guidance (UG), or 2 CFR 200, "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards" (formerly referred to as OMB Circular A-21). In addition, the Cost Accounting Standards Board (CASB) requires private firms performing federally sponsored projects to comply with nineteen cost accounting standards. As of FY2000, four of these standards that deal with consistent treatment of cost were included in CFR 200. In addition to complying with the cost accounting standards, Louisiana State University Health Sciences Center, New Orleans (LSUHSC-NO or the University) is required to file a disclosure statement to the Department of Health and Human Services (DHHS), Division of Cost Allocation (DCA) to disclose our accounting practices, policies and procedures for assigning costs to Federally sponsored programs and to attest to the consistency of those practices.
To insure the consistent treatment of costs incurred by LSUHSC-NO departments and charged directly or indirectly to federally sponsored programs, LSUHSC-NO has incorporated the following 2 CFR 200 cost accounting principles in its accounting practices. These principles apply except to the extent Federal awarding agencies via program regulations, policy statements, guidelines, instructions, etc modifies them. To facilitate the understanding of what costs can be directly or indirectly charged, a brief overview follows of the costs recovered through the indirect cost rates charged to federally sponsored research.
During the last revision to OMB Circular A-21, the use of the term "indirect cost" was replaced with "facilities and administrative cost". This change was done by the Federal government to recognize the two distinct categories of overhead cost. To be consistent, this document will refer to indirect costs as F&A costs.
The Facilities and Administrative cost rate is made up of the following components:
Facilities Component (Appendix III to Part 200, Title 2)
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Building Use Depreciation - Depreciation on non-federally funded portions of buildings
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Equipment Use Depreciation - Depreciation on non-federal equipment only
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Operations and Maintenance - Consists of facility costs such as electricity, steam, chilled water, plant operations, maintenance and repairs, health and safety, grounds maintenance, security, etc.
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Library - Includes Library costs identified as supporting sponsored programs
Administrative Component (Appendix III to Part 200, Title2)
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General Administration - Includes the Chancellor's Office, Accounting, Payroll, Personnel, Purchasing, etc.
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Sponsored Projects Accounting - Offices of Research Services and Sponsored Programs responsible for administration, accounting and reporting for Federal awards.
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Student Administration - (Note: not generally allocated to sponsored programs)
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Departmental Administration - Includes Dean's office, Faculty Administrative salaries, equipment service contracts and repairs, administrative and clerical salaries, office supplies, and other non-salary costs that will be addressed later.
The following are the accounting practices and procedures for assigning expenditures to federally sponsored programs as direct or F&A costs. This will provide the framework for consistently charging costs throughout LSUHSC-NO. The University's responsibility for compliance with these and other cost regulations is clearly established in 2 CFR Part 200 Subpart E - General Provisions.
The primary responsibility for making a determination as to whether an administrative support position (as well as other direct costs) is justified and appropriate to be charged directly to a federal project and for compliance with Federal requirements at the time of any transaction or subsequently upon audit or other request rests with the Project Director or Principal Investigator and his or her Department Chair/Division Head. Restricted cost categories and other inappropriate charges can be readily detected in audits, and resulting disallowances must be reimbursed to the federal government.
To understand potential issues that may arise in a Federal review; we have included the section of the regulations that addresses departmental costs and whether they should be recovered as direct or F&A.
§ 2 CFR Appendix III to Part 200 6.b.
The following guidelines apply to the determination of departmental administrative costs:
(1) In developing the departmental administration cost pool, special care should
be exercised to ensure that costs incurred for the same purpose in like
circumstances are treated consistently as either direct or indirect (F&A)
costs.
For example, salaries of technical staff, laboratory supplies (e.g., chemicals),
telephone toll charges, animals, animal care costs, computer costs, travel
costs,
and specialized shop costs shall be treated as direct cost wherever identifiable
to a particular cost objective. Direct charging of these costs may be
accomplished through specific identification of individual costs to benefiting
cost objectives, or through recharge centers or specialized service facilities,
as
appropriate under the circumstances. See §§ 200.413(c) and 200.468.
(2) Items such as office supplies, postage, local telephone costs, and
memberships must normally be treated as indirect (F&A) costs.
(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.
Charging Academic Departmental Costs
LSUHSC-NO accounting practices for charging academic departmental costs (direct and F&A) to Federal projects are outlined in the following sections.
A. SALARIES AND WAGES
1. ADMINISTRATIVE SALARIES AND WAGES
As stated in 2 CRF 200, clerical and secretarial salaries should generally be assigned to Federal sponsored agreements as F&A costs. The provision is intended to establish the principle that the salaries of administrative and clerical staff should usually be treated as F&A costs, but that direct charging of these costs may be appropriate where the nature of the work performed under a particular project requires an extensive amount of administrative or clerical support which is significantly greater than the routine level of such services provided by academic departments. The costs would need to meet the Federal criteria for direct charging as outlined in §§ 200.413(c). The circumstances of direct charging services would need to be justified to the satisfaction of the awarding agency in the grant application or contract proposal.
The following are examples of the treatment of administrative and clerical expenditures as direct and F&A costs:
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Extraordinary and extensive administrative support, significantly greater than the routine level provided by academic department administrative and clerical staff may be budgeted and charged to sponsored projects and include the following.
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Business managers performing extraordinary and extensive administrative support
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Programmatic project effort
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Extraordinary and extensive data entry
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Research data gathering and/or cleaning
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Conducting interviews
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Laboratory technician activities
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Conducting computer research work
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Telephone surveys
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Computer programming
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Non-routine budget creation and maintenance
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Extraordinary effort in grant related transcription
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Writing manuscripts for publication (not data entry)
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Develop materials for presentations
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Large conference planning and organization
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Research training
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Clinical and patient activities including: scheduling patient visits; physical exams; blood drawing; height and weight measurement and/or non-routine effort in formalizing physician reports
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The following represents administrative and clerical activities that normally should not be direct charged to grants or contracts:
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Typing and mail correspondence
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Accounting and budgeting
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Purchasing
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Non-scientific software and system development
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Local area network administration
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Payroll processing
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Department administration
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Filing
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Processing vouchers
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Travel related planning
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Data entry
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Answer telephone
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Database maintenance
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Typing applications for awards
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These examples are not exhaustive nor are they intended to imply that direct charging of administrative or clerical salaries would always be appropriate for the situations illustrated in the examples. Where direct charges for administrative and clerical salaries are made, care must be exercised to assure that costs incurred for the same purpose in like circumstances are consistently treated as direct costs for all activities. Questions about LSUHSC-NO accounting practices for departmental salaries should be referred to the Office of Sponsored Programs.
2. FACULTY AND OTHER SALARIES
Salaries and wages paid at the University's approved rates are allowable costs to Federal projects so long as they reflect the level of effort expended on the project and are documented by the LSUHSC-NO's time and effort system. Fringe benefits in accordance with established University policies are allowable and are charged to projects based on University established fringe benefit rates.
Time & Effort Reporting
In describing a system to track effort on Federal projects § 2 CRF 200.430(i) Standards for Documentation of Personnel Expenses states the following:
(iii) Reasonably reflect the total activity for which the employee is compensated
by
the non-Federal entity, not exceeding 100% of compensated activities (for
IHE,
this per the IHE's definition of IBS);
LSUHSC-NO utilizes an after‑the‑fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. In defining the "after-the-fact certification" system, LSUHSC-NO follows these guidelines:
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Certification reports will reflect the distribution of activity expended by employees covered by the system.
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The reports will reflect an after-the-fact reporting of the percentage distribution of activity of employees. Charges may be made initially on the basis of estimates made before the services are performed, provided that such charges are promptly adjusted if significant differences are indicated.
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Reports will reasonably reflect the activities for which employees are compensated by the institution. To confirm that the distribution of activity represents a reasonable estimate of the work performed by the employee during the period, the reports will be signed by the employee, principle investigator, or reasonable official(s) using suitable means of verification that the work was performed.
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The system will reflect activity applicable to each sponsored agreement and to each account in instruction, general administration and other indirect cost categories including department administration.
Process
LSUHSC-NO has established a Time and Effort Certification system in order to comply with § 2 CFR 200.430(i). Time and Effort Certification forms are required to be certified according to campus instructions. LSUHSC-NO utilizes an after‑the‑fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Since Time and Effort Certification Forms are the source documents that support salary charges to sponsored projects, it is essential that this data be based on reasonable estimates of actual effort expended in the various effort categories.
Inaccurate effort estimates made to the Time and Effort Certification Forms, whether knowingly or through carelessness or mismanagement, may result in errors when charging costs to the federal government and other sponsors, Each individual with responsibility for Time and Effort Certification must therefore thoroughly understand the proper method of completing Time and Effort Certification Forms and ensure effort percentages reported on the forms reasonably reflect actual effort expended during the report period. Once signed, the information on the Time and Effort Certification Form is subject to independent audit and review by the federal government, other sponsors, and LSUHSC-NO.
Report Content and Procedures
The Time and Effort Certification form prints the percentage of appointment workload distribution from specific accounts for the reporting period. In some cases, these percentages may not reflect the individual's actual effort to the project attributable to the account. Since the percentages are generated from the appointment data within the PeopleSoft (PS) HRMS payroll system, they are after‑the‑fact projections of the level of effort the individual was expected to expend. If this percentage paid does not substantially (five percent or more) correspond to the effort actually expended by the individual on those projects during the report period, the Time and Effort Certification form must be completed to reflect actual effort expended. Payroll redistributions must be processed if actual effort percentages vary from the percentage paid by a project as averaged over a four month period a payroll reallocation must be created to change the actual payroll distribution in the HRMS system to match the actual effort reported on the Time and Effort Certification form. See Time and Effort Certification Policy located on the website.
B. NON-SALARY EXPENDITURES
Adherence to the Federal cost principles and requirements outlined in 2 CRF 200 is critical to the acceptance of LSUHSC-NO charges to Federal awards. The application of these cost principles is based on the fundamental premises that (§ 2 CRF 200.400):
(a) The non-Federal entity is responsible for the efficient and effective
administration of the Federal award through the application of sound
management practices.
(b) The non-Federal entity assumes responsibility for administering Federal funds
in
a manner consistent with underlying agreements, program objectives, and
the
terms and conditions of the Federal award.
(c) The non-Federal entity, in recognition of its own unique combination of staff,
facilities, and experience, has the primary responsibility for employing
whatever
form of sound organization and management techniques may be necessary in
order to assure proper and efficient administration of the Federal award.
(d) The application of these cost principles should require no significant changes
in
the internal accounting policies and practices of the non-Federal entity.
However, the accounting practices of the non-Federal entity must be consistent
with these cost principles and support the accumulation of costs as required
by
the principles, and must provide for adequate documentation to support costs
charged to the Federal award.
(e) In reviewing, negotiating and approving cost allocation plans or indirect cost
proposals, the cognizant agency for indirect costs should generally assure
that
the non-Federal entity is applying these cost accounting principles on a
consistent basis during their review and negotiation of indirect cost proposals.
Where wide variations exist in the treatment of a given cost item by the
non-
Federal entity, the reasonableness and equity of such treatments should
be fully
considered. See the definition of indirect (facilities & administrative
(F&A)) costs
in § 200.1 of this part.
(f) For non-Federal entities that educate and engage students in research, the
dual
role of students as both trainees and employees (including pre- and post-
doctoral staff) contributing to the completion of Federal awards for research
must be recognized in the application of these principles.
(g) The non-Federal entity may not earn or keep any profit resulting from Federal
financial assistance, unless explicitly authorized by the terms and conditions
of
the Federal award. See also § 200.307.
ALLOWABLE EXPENDITURES
The cost items listed in this section are some of the more common costs involved on sponsored programs at the LSUHSC-NO and are provided as guidance only. Failure to mention a particular item of cost is not intended to imply that it is either allowable or unallowable. For expenditures that are used to support multiple projects, those projects should normally be charged an appropriate amount based on use to the extent practical. For a list of common expenditures, and whether they should be charged directly or indirectly to federally sponsored programs, see "Direct versus Indirect Quick Reference" (end of policy). If you have questions about the allowability of any cost on your project, please contact the Office of Sponsored Programs. The following are referenced in § 200.420 Considerations for selected items of cost.
(b) The only allowable advertising costs are those which are solely for: (1)
The
recruitment of personnel required by the non-Federal entity for performance
of
a Federal award (See also § 200.463); (2) The procurement of goods and
services for the performance of a Federal award; (3) The disposal of scrap
or
surplus materials acquired in the performance of a Federal award except
when
non-Federal entities are reimbursed for disposal costs at a predetermined
amount; or (4) Program outreach and other specific purposes necessary
to
meet the requirements of the Federal award.
Costs for alumni activities are unallowable.
Costs of entertainment, including amusement, diversion, and social activities and any associated costs are unallowable, expect where specific costs that might otherwise be considered entertainment have a programmatic purpose and are authorized either in the approved budget for the Federal award or with prior written approval of the Federal awarding agency.
Costs incurred for alcohol, amusement, social activities, entertainment, and any items relating thereto, such as meals, lodging, rentals, transportation, and gratuities are unallowable. Special care should be followed to ensure that entertainment costs are not charged to Federal projects.
§ 200.439 Equipment and Other Capital Expenditures
Federal cost principles define equipment (§ 2 CFR 200.1) as "tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000." When the University acquires equipment using Federal funds, it must assure that all purchases or leases are necessary, beneficial, and non duplicative.
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Approval to Purchase or Lease
Since approval criterion on the purchase or lease of capital expenditures varies between the different awarding agencies, approval will be obtained based on such awarding agency requirements. For further information, contact Office of Sponsored Programs. -
Screening
To certify that an equipment acquisition is not duplicating an already available item, property-screening procedures must be followed.
§ 200.441 Fines, Penalties, Damages and Other Settlements
Costs resulting from non-Federal entity violations of, alleged violations of, or failure to comply with, Federal, state, tribal, local, or foreign laws and regulations are unallowable, except when incurred as a result of compliance with specific provisions of the Federal award, or with prior written approval of the Federal awarding agency. See also § 200.435.
§ 200.447 Insurance and Indemnification
Costs of insurance required or approved and maintained, pursuant to the Federal award, are allowable.
Costs incurred for interest on borrowed capital, temporary use of endowment funds, or the use of the non-Federal entity's own funds, however represented, are unallowable. Financing costs (including interest) to acquire, construct, or replace capital assets are allowable, subject to the conditions in § 200.449.
§ 200.451 Losses on Other Awards or Contracts
Any excess of costs over income under any other award or contract of any nature is unallowable. This includes, but is not limited to, the non-Federal entity's contributed portion by reason of cost-sharing agreements or any under-recoveries through negotiation of flat amounts for indirect (F&A) costs. Also, any excess of costs over authorized funding levels transferred from any award or contract to another award or contract is unallowable.
§ 400.435 Materials and Supplies Costs, Including Costs of Computing Devices
Costs incurred for purchased materials and supplies used for the performance of the sponsored agreement are allowable (this does not include office supplies).
§ 200.454 Memberships, Subscriptions and Professional Activity Costs
(a) Costs of the non-Federal entity's membership in business, technical, and
professional organizations are allowable.
(b) Costs of the non-Federal entity's subscriptions to business, professional,
and
technical periodicals are allowable.
(c) Costs of membership in any civic or community organization are allowable
with prior approval by the Federal awarding agency or pass-through entity.
(d) Costs of membership in any country club or social or dining club or
organization are unallowable.
(e) Costs of membership in organizations whose primary purpose is lobbying are
unallowable.
Memberships are allowable as a direct charge as long as they are specifically approved in the projects budget and the scientific information in the subscription is the primary reason for the expenditure.
Office Supplies
Normal departmental office supplies are treated as F&A costs and included in the Department Administration F&A cost pool. An extensive amount of office supplies significantly greater than the routine level may be direct charged if justification can be made.
§ 200.450(c)(1)(ii) Political Activities
Costs associated with the following activities are unallowable:
(i) Attempts to influence the outcomes of any Federal, state, or local election,
referendum, initiative, or similar procedure, through in-kind or cash
contributions, endorsements, publicity, or similar activity;
(ii) Establishing, administering, contributing to, or paying the expenses of
a political
party, campaign, political action committee, or other organization established
for the purpose of influencing the outcomes of elections in the United States;
(iii) Any attempt to influence:
(A) The introduction of Federal or state legislation;
(B) The enactment or modification of any pending Federal or state legislation
through communication with any member or employee of the Congress
or
state legislature (including efforts to influence state or local officials
to
engage in similar lobbying activity);
(C) The enactment or modification of any pending Federal or state legislation
by preparing, distributing, or using publicity or propaganda, or by
urging
members of the general public, or any segment thereof, to contribute
to or
participate in any mass demonstration, march, rally, fund raising drive,
lobbying campaign or letter writing or telephone campaign; or
(D) Any government official or employee in connection with a decision to
sign or
veto enrolled legislation;
(iv) Legislative liaison activities, including attendance at legislative
sessions
or committee hearings, gathering information regarding legislation,
and analyzing the effect of legislation, when such activities
are carried
on in support of or in knowing preparation for an effort
to engage in
unallowable lobbying.
§ 200.474 Postage or Delivery Costs
Costs incurred for freight, express, cartage, postage, and other transportation services relating either to goods purchased, in process, or delivered, are allowable. When such costs can readily be identified with the items involved, they may be charged directly as transportation costs or added to the cost of such items.
§ 200.461 Publication and Printing Costs
(a) Publication costs for electronic and print media, including distribution,
promotion, and general handling are allowable. If these costs are not
identifiable with a particular cost objective, they should be allocated
as indirect
costs to all benefiting activities of the non-Federal entity.
(b) Page charges for professional journal publications are allowable where:
(1) The publications report work supported by the Federal Government; and
(2) The charges are levied impartially on all items published by the journal,
whether or not under a Federal award.
(3) The non-Federal entity may charge the Federal award during closeout
for
the costs of publication or sharing of research results if the
costs are not
incurred during the period of performance of the Federal award.
If charged
to the award, these costs must be charged to the final budget period
of the
award, unless otherwise specified by the Federal awarding agency.
The costs of preparing proposals - including typing, copying, mailing, etc. are treated as F&A costs and may not be assigned as a direct charge to a sponsored project.
(d) The only allowable public relations costs are:
(1) Costs specifically required by the Federal award;
(2) Costs of communicating with the public and press pertaining to specific
activities or accomplishments which result from performance of the
Federal
award (these costs are considered necessary as part of the outreach
effort
for the Federal award); or
(3) Costs 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 funding opportunities,
financial
matters, etc.
All other public relations costs are unallowable.
§ 200.462 Rearrangement and Reconversion Costs (Remodeling Costs)
Special arrangements and alteration costs incurred specifically for a Federal award are allowable as a direct cost with the prior approval of the Federal awarding agency or pass-through entity.
§ 200.466 Scholarships and Student Aid Costs
Costs of scholarships, fellowships, and other program of student aid at IHEs are allowable only when the purpose of the award is to provide training to selected participants and the charge is approved by the awarding agency.
§ 200.469 Student Activity Costs
Costs incurred for intramural activities, student publications, student clubs, and other student activities, are unallowable, unless specifically provided for in the Federal award.
§ 200.471 Telecommunication Costs and Video Surveillance Costs
(a) Costs incurred for telecommunications and video surveillance services or
equipment such as phones, internet, video surveillance, cloud servers
are
allowable except for the following circumstances:
(b) Obligating or expending covered telecommunications and video surveillance
services or equipment or services as described in § 200.216 to:
(1) Procure or obtain, extend or renew a contract to procure or obtain;
(2) Enter into a contract (or extend or renew a contract) to procure; or
(3) Obtain the equipment, services, or systems.
Travel costs are allowable when they are directly attributable to specific work under a sponsored agreement and are approved in the sponsored agreement.
Foreign travel costs are allowable only when the travel has received specific prior approval.
Costs of meetings and conferences, when the primary purpose is the dissemination of technical information, are allowable. This includes costs of meals, transportation, rental of facilities, and other items incidental to such meetings or conferences.
For additional policies and procedures pertaining to travel please refer to the Policy and Procedure Memorandum 49 - Louisiana State Travel Guide. The travel rules are also stated in Permanent Memorandum 13 - University Travel.
Direct vs Indirect Quick Reference
The following Quick Reference lists common expenditures, and whether they are generally charged directly or indirectly to federally sponsored programs. The actual written LSUHSC-NO policy should be referenced to fully understand how costs should be charged for specific circumstances.
| DIRECT | INDIRECT | |
| Project Salaries | Administrative Salaries | |
| Student Salaries | Clerical Salaries * | |
| Advertising Costs | Memberships | |
| Equipment | Office Supplies * | |
| Insurance | Printing Costs ** | |
| Material Costs | Depreciation | |
| Printing and Publications | Security Costs | |
| Subscriptions | Electricity | |
| Approved Travel | Steam | |
| Repairs and Maintenance *** | ||
| University Administration | ||
| Sponsored Programs Admin | ||
| Library Costs | ||
| Proposal Costs |
* These costs may be charged directly to federally sponsored programs provided that they are extraordinary and are being used in significantly greater proportions than a routine level of support would require.
** Printers used exclusively in a research laboratory, which are connected to computers with specialized scientific software.
*** Maintenance agreements may be charged to federal Sponsored Programs if the costs are directly attributable to the equipment used only on the project.