- GAP 200.320, Direct Costing on Sponsored Projects
GAP 200.320, Direct Costing on Sponsored Projects
GAP 200.320, Direct Costing on Sponsored Projects
III. Select Direct Cost Items
V. Review and Audit
VI. Federal Regulations
This procedure describes the practices used to determinewhether or not a cost item may be directly charged to a sponsored project. It refers to guidance provided in 2 CFR200: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance, or UG). Specifically, Subpart E – Cost Principles – of the UG sets forth general criteria for determining allowable direct costs on Federal awards.
It is critical for Grant Managers (GMs) and Principal Investigators (PIs) to review the terms and conditions of individual programs as they may differ based on sponsor or funding type. Based on this review, PIs and GMs should prepare detailed budgets identifying, to the best of their knowledge, the direct costs that will be associated with a sponsored research project. During the life of the project, adequate documentation is required to support all direct costs charged to sponsored funds.
Direct costs are those costs that can be identified specifically with a particular sponsored project, or that can be directly assigned to such activity relatively easily with a high degree of accuracy. Typical direct costs include personnel compensation, materials, travel, subaward payments, and equipment.
Direct costs must meet the following criteria to be considered allowable: are necessary and reasonable for the project; conform to limitations/exclusions listed in the UG; are consistent with related policies and procedures, and are consistently treated across projects; are in accordance with generally accepted accounting principles (GAAP); are not used to meet a cost sharing requirement on another project; and are adequately documented.
Questions regarding allowability should be escalated to your Post Award Financial Management liaison.
A direct cost is allocable to a sponsored project if it is incurred specifically for the sponsored project; or it benefits both the sponsored project and other work of the institution and can be distributed in proportions that can be approximated using reasonable methods.
If a cost benefits two or more projects or activities in proportions that can be determinedwithout undue effort or cost, the cost should be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefited projects on any reasonable documented basis. However, this allocation cannot be used to eliminate cost overruns.
A direct cost is reasonable if it passes the prudent person test: the nature and amount ofthe costs do not exceed what a prudent person would have determined when incurring the costs in the same circumstances.
Direct costs must be treated consistently with respect to institutional policies that apply to sponsored and non-sponsored activity, and to treatment as a direct or an indirect costwhen incurred for the same purpose in like circumstances across sponsored and non-sponsored activity.
Appropriate application of the federally-negotiated F&A rate is described in GAP 200.330, Facilities and Administrative Costs on Sponsored Projects. The process for reviewing costs that in unlike circumstances may be billed directly to a sponsored project is described in GAP 200.360, Charging Clerical and/or Administrative Expenses to Federally Funded Projects.
The Uniform Guidance addresses selected costs in Part 200 Subpart E Cost Principles, providing guidance to determine allowability. Several specific cost items are identified as unequivocally unallowable on a sponsored project, either as a direct or an indirect cost, including alcohol as entertainment, bad debt, personal use of automobiles, and losses that could have been covered by insurance. Other cost items can only be charged with the prior written approval from the sponsor, including for example entertainment, buildings and land, and student activities. Individual sponsor and project requirements may identify additional unallowable costs; GMs and PIs must review sponsor policies and award documents for specific guidance.
III. Select Direct Cost Items
Salary Basis: Charges for work performed on federal awards by faculty, staff and students are allowable at the Institutional Base Salary (IBS) rate. IBS is defined as the annual compensation paid by Duke University for an individual's appointment, whether that individual's time is spent on research, instruction, administration, or other activities.
The UG identifies allowable activities as those contributing and directly related to work under an agreement, such as delivering special lectures about specific aspects of the ongoing activity, writing reports and articles, developing and maintaining protocols (human, animals, etc.), managing substances/chemicals, managing and securing project-specific data, coordinating research subjects, participating in appropriate seminars, consulting with colleagues and graduate students, and attending meetings and conferences.
Note: IBS excludes any income that an individual earns outside of duties performed for Duke University, such as providing consulting services.
GAP 200.170, Effort Reporting provides further instruction on certifying effort on sponsored projects. GAP 200.360 provides additional guidance for directly charging administrative/clerical salaries on Federal awards.
Computing devices, defined as machines used to acquire, store, analyze, process, and publish data and other information electronically, including accessories for printing, transmitting and receiving, or storing electronic information, may be treated as direct costs up to $5,000, if documentation can support they are essential and allocable, but not necessarily solely dedicated, to the performance of the Federal award. Devices whose primary function is communication (voice and email) are generally unallowable. Exceptions are subject to GAP 200.360, Charging Clerical and/or Administrative Expenses to Federally Funded Projects.
Research Data Storage:
Cost associated with research data storage are generally allowable and must be incurred during the period of performance. As specific allowability often varies by sponsors, please refer to applicable sponsor or agency regulations and guidance.
Consumable supplies may be treated as direct costs if the project can demonstrate that such supplies are used specifically for the purposes of the project and are consumed completely in the course of achieving the programmatic and scientific aims of the project. If used only for project purposes, items such as laboratory supplies and materials, lab notebooks, printer paper for research data and reports, report binders, and so forth are justified as consumable supplies.
Note: if there is a residual inventory of unused supplies exceeding a total value of $5,000 at the end of the Federal award and the supplies are not needed for any other Federal award, Duke must compensate the Federal Government for its share.
Alcohol is an unallowable cost on federally-sponsored projects. Furthermore, events or functions where alcohol is served must be considered public relations/social events and charged to non-federal funds. Duke University Employee Travel & Reimbursement has established processes and procedures for costs associated with alcohol on meals where individuals are out-of-town.
Conference related costs may be allowable when the primary purpose is the dissemination of technical information and must be necessary and reasonable for performance of the award and managed to minimize costs to the award. Examples of conference related costs are rental of facilities, speakers’ fees, costs of meals and refreshments, local transportation, and other items incidental to the conference.
Participant Support Costs:
Participant support costs are direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not Duke employees) in connection with conferences, or training projects. Participant support costs are allowable expenses with the prior approval of the federal sponsor; funds budgeted for participant support costs can generally be rebudgeted to other costs only with sponsor prior approval.
Field-based Personnel Support Costs:
Costs required to support non-Duke personnel for long-term international field research operations should be coordinated with central Finance resources, should be supported by an in-country partner and should be managed according to written policies developed in collaboration with project leadership.
Adequate documentation for costs directly charged to sponsored projects means that the transaction has been assigned to the correct General Ledger account (G/L account) and includes all required and necessary receipts, forms and approvals to support the relationship to the sponsored project. Documentation for transactions must support the transaction and demonstrate AARC standards (as listed in Section II above) are satisfied. Examples of documentation may be detailed text and/or attachments for journal entries, purchase order, invoice, receipts, or an accounts payable check request. Documentation should reflect why the transaction is necessary and support that the costs benefit the award and represent items received.
The G/L account is a six-digit code that classifies the transaction as salaries, fringes, supplies, travel, subrecipient payments, etc. A complete listing of the G/L accounts is maintained on the Financial Services website. Correctly identifying G/L accounts for individual transactions ensures a proper application of Duke’s F&A rate, activates the proper internal controls for purchases such as capital equipment, and allows for PIs to accurately assess the financial status of a project.
If funds are not available on a sponsored project but an item is determined to be necessary to the scientific and programmatic aims of a sponsored project, the item should initially be charged to the Federal award using the appropriate G/L account for that expense type; the award is subsequently credited using the appropriate cost sharing G/L account. Refer to GAP 200.140, Cost Sharing on Sponsored Projects for further information.
V. Review and Audit
The Office of Post Award Administration monitors direct charges to ensure appropriate coding, required internal controls, and adequate justification. Inadequately justified charges are noted, and the department is required to remove these charges from federal codes.
All direct costing concerns must be resolved before the final invoice/report is provided to the external sponsor. Refer to GAP 200.180, Closeoutof Sponsored Projects for further information regarding required procedures and responsibilities.
VI. Federal Regulations
This GAP reflects the provisions of the UG, which became effective as of December 26, 2014, and revised as of November 12, 2020, and all awards issued on or after this date must be managed in accordance with its provisions. It is important to verify the applicable regulations for an individual award, which may be found in the Award Notice issued by the funding agency.
These guidelines pertain to federally sponsored projects and should be used as guidance for all sponsors unless specifically addressed in a non-federal sponsor’s policies and/or procedures.
This GAP supersedes previous GAP versions, Duke Policies, Guidelines, etc.
Note: This guidance is administrative in nature and is not a cost reimbursement policy. Failure to comply may or may not result in adjustments of charges to the award. Noncompliance with this policy does not mean this cost is unallowable from an external perspective. Any adjustments of charges will be as required under applicable Federal cost reimbursement principles. If a cost is removed from an award for any reason, whether or not related to this guidance, the cost will generally be charged to departmental funds.