Printed on: 07/23/2018. Please go to http://policy.umn.edu for the most current version of the Policy or related document.

ADMINISTRATIVE POLICY

Direct Costs on Sponsored Projects

Responsible University Officer(s):

  • Vice President for Research

Policy Owner(s):

  • Associate Vice President for Research Administration

Policy contact(s):

Date Revised:

Aug 11, 2015

Effective Date:

Aug 11, 2015

POLICY STATEMENT

All direct costs charged to Sponsored Projects awarded to the University of Minnesota must be allowable, allocable, necessary and reasonable for carrying out the objectives of the Sponsored Project. To be consistent in managing direct costs, the University extends these requirements to both federal and nonfederal sponsors.

Principal Investigators (PIs) are responsible for ensuring that all direct costs charged to their sponsored projects comply with this policy. Certified Approvers (CAs) and departmental approvers also have responsibilities for reviewing and approving certain transactions on sponsored projects to ensure that they comply with this policy.

REASON FOR POLICY

This policy has been developed to meet the requirements set forth in the Uniform Guidance (UG or 2 CFR 200) as it is applicable to Institutions of Higher Education.  PIs, CAs and departmental approvers involved in reviewing and charging direct costs to sponsored projects must understand and follow this policy and related procedures to ensure that direct costs are properly charged and documented to meet the UG regulations.

PROCEDURES

FORMS/INSTRUCTIONS

APPENDICES

FREQUENTLY ASKED QUESTIONS

CONTACTS

SubjectContactPhoneEmail
Primary Contact(s) Pamela Webb 612-624-1648 pwebb@umn.edu
Direct charging policy questions SPA Grant Administrator 612-624-5599  

DEFINITIONS

Allocable Costs
A cost is allocable to a particular sponsored award or other cost objective if the goods and services involved are chargeable or assignable to that sponsored award or cost objective in accordance with relative benefits received.
Allowable Costs
Costs that are (a) reasonable; (b) allocable to sponsored agreements under the principles and methods outlined in Uniform Guidance (UG or 2 CFR 200); (c) given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances; and (d) conform to any limitations or exclusions set forth in Uniform Guidance (UG or 2 CFR 200) or in the sponsored agreement as to types or amounts of cost items.
Contractor/Vendor
A dealer, distributor, merchant, or other seller providing goods or services that are required for the conduct of a program.
Direct Costs
“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.” (OMB Uniform Guidance 200.413a).
Pass-through Entity
An entity that provides a prime sponsored award to a subrecipient to carry out a portion of the prime sponsored award’s program. (Example: UMN receives an award from the NIH. A portion of that award will be done by another university by way of a subaward issued from UMN to the other university. UMN is the pass-through entity. NIH -> UMN -> Other University.)
Reasonable Costs
“A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.” (OMB Uniform Guidance 200.404).
Sponsored Project
An externally funded activity that is governed by specific terms and conditions. Sponsored projects must be separately budgeted and accounted for subject to terms of the sponsoring organization. Sponsored projects may include grants, contracts (including fixed price agreements), and cooperative agreements for research, training, and other public service activities.
Subaward
A formal written agreement made between the University and a Subrecipient in order for the Subrecipient to perform a portion of the University’s scope of work under a sponsored project or program that incorporates the sponsored award terms and conditions.
Subrecipient
An entity that receives a subaward from a pass-through entity to carry out part of a program; but does not include an individual that is a beneficiary of such program. The subrecipient may be a domestic or foreign educational institution, for –profit, non-profit organization or government. An individual cannot serve as a subrecipient.
Uniform Guidance (UG or 2 CFR 200)
This document establishes uniform regulations for each federal agency to follow regarding the administration of projects sponsored by the federal government. In addition, each federal agency has its own regulations that are listed in the Code of Federal Regulations (CFR) and explained in its policy handbook (if it has one).

RESPONSIBILITIES

Principal Investigators (PIs)
Ensures the appropriateness of all charges on sponsored projects. Ensure the consistent application of direct costing practices to their federal and non-federal sponsored projects with the assistance of the department research administrator (DRA), Sponsored Projects Administration (SPA), and Sponsored Financial Reporting (SFR). Prepares proposal budgets, justifies costs, initiates and oversees the incurring of project costs, and tracks costs.
Department Research Administrator (DRA)
Assists principal investigators in preparing proposal budgets, justifying costs, charging costs and tracking costs. Ensures consistency of charging practices within the unit, reviews sponsored project proposals for justification of direct costs requested, especially when costs normally charged as F&A/indirect are proposed as direct costs. In conjunction with principal investigators, maintains financial records for reviews by internal or external auditors.
Department Approver
Reviews financial transactions for accuracy (including accounts being charged), appropriateness, and compliance with applicable policies and procedures. Takes action to approve or return financial transactions based on the review.
Certified Approver (CA)
For costs on sponsored funds reviews for accuracy (including accounts being charged), appropriateness and compliance with applicable policies, procedures and Sponsor agreement. Takes action to approve or return financial transactions based on the review.
Department Head/Center Directors
Establishes effective processes and controls that will ensure compliance with this policy. Communicates these practices to all employees involved with sponsored research within the department.
Collegiate Research Associate Dean
Establishes effective processes and controls that will ensure compliance with this policy. Communicates these practices to all employees involved with sponsored research within the college and departments. Assigns certified approvers within the unit.
Sponsored Projects Administration (SPA)
Assists in interpretation of federal regulations, such as Uniform Guidance (UG or 2 CFR 200) and sponsor policy. Develops and maintains policies and procedures in accordance with the regulations.
Sponsored Financial Reporting (SFR)
Assists in interpretation of federal regulations and sponsor policy. Develops and maintains policy and procedures in accordance with the regulations. Works with PIs and DRAs to prepare financial invoice or report.

RELATED INFORMATION

HISTORY

Effective:
August 2015 - New Policy. Elevates the components of charging direct costs by moving the former procedure into to its own policy. Provides examples of allowable and unallowable direct costs in the new appendix. Formalizes practices and procedures around subawards into one University procedure. Clarifies changes related to the new OMB Uniform Guidance, where needed.
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