Controller's Office - CAS Guidelines

TABLE OF CONTENTS

Treatment of Administrative Salaries and Benefits on Extramural Funds

Treatment of Non-Salary Administrative Expenses

APPENDIX A: Unallowable Costs
APPENDIX B: Frequently Asked Questions
APPENDIX C: Allowability of Meals on Sponsored Project Awards
APPENDIX D: Charging Maternity Leave to Sponsored Awards

I. INTRODUCTION
In response to federal Cost Accounting Standards (CAS) regulations, the University of California, San Francisco (UCSF) developed charging practice guidelines for sponsored projects. Federal regulations mandate that universities establish consistent practices for defining and charging costs either directly or indirectly. Office of Management and Budget (OMB) Circular A-21 Cost Principles for Educational Institutions, sets forth the principles for determining the costs – direct vs. Facilities & Administrative (F&A), allowable vs. unallowable, etc. – applicable to federally sponsored projects and acceptable allocation methodologies.

As a recipient of federal awards, UCSF is required to periodically prepare Facilities & Administrative Cost Rate Proposals that comply with the guidelines set forth in OMB Circular A-21. In addition, UCSF is required to file a CAS Disclosure Statement (DS-2) identifying accounting practices, policies, and procedures for assigning costs to federally sponsored programs, and to attest to the consistent treatment of those practices.
It is the responsibility of principal investigators, department heads and administrators to understand and comply with this guidance in order to prevent disallowance of costs by the federal government.

This document sets forth guidelines for the following:

Defining which costs may/may not be charged to extramurally sponsored projects
Treatment of administrative costs
Effort reporting
Managing sponsored project cost overruns
Recharge costing practices

The allowability of a particular charge to a particular DPA-Fund always depends on specific facts, circumstances, terms, conditions, restrictions, and policies in effect at the time of the charge. Therefore, this document is intended to provide general guidelines for charging. More detailed information is contained in Appendix A, Unallowable Costs, and the Frequently Asked Questions.
Note: The term "project" as used in these guidelines does not refer to PeopleSoft's "Project" field as used in the Research Administration System; it refers to any sponsored project in general.
Also see these related documents:
Cost Sharing
Program Income
After-the-fact verification review under SAS 112

II. DEFINITION OF COSTS

Direct Costs are those costs that can be identified specifically with a particular sponsored project or that can be directly assigned to such activities relatively easily with a high degree of accuracy. (OMB Circular A-21, D1.)

Facilities & Administrative (F&A) Costs are those costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project. (These costs were previously known as indirect costs.) (OMB Circular A-21, E1.)

Unallowable Costs and Activities are those costs and activities that cannot be directly charged to a federal contract or grant, nor can they be included in F&A rate calculations.

III. PRINCIPLES FOR CHARGING COSTS TO SPONSORED PROJECTS
In order for an expense to be considered allowable as a direct cost, the cost must be:

Allowable – The cost must be allowable under the terms and conditions of the sponsored award, under applicable sponsor regulations (OMB Circular A-21, C2), and under University policies.

Reasonable– The cost may be considered reasonable if the nature of the goods or services acquired, and the amount involved therefore, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made. (OMB Circular A-21, C3)

Allocable – The cost must benefit the project and be directly attributable to the project or activity being performed. The cost can only be assigned and allocated to the project(s) based on that portion of the expense that represents the direct benefit to the project. (OMB Circular A-21, C4)

Consistently treated – Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or F&A costs. (OMB Circular A-21, C10) and (OMB Circular A-21, C11)

IV. GUIDELINES FOR DIRECT-CHARGING ADMINISTRATIVE COSTS TO FEDERAL PROJECTS

A. Treatment of Administrative Salaries and Benefits on Extramural Funds

1. Standard Treatment
In accordance with OMB Circular A-21 salaries and benefits of persons doing routine administrative and clerical activities should generally be treated as F&A costs and charged to appropriate department funds. The portion of time spent by administrative and clerical staff providing core support to the department should always be treated as department administration. (OMB Circular A-21, F6)
The following departmental activities are considered routine administrative and clerical activities. As such, these costs should not normally be charged directly to a federal project:

General departmental administration
Contracts and grants administration*
Personnel activities/Payroll/Human Resources
Accounting and budgeting activities
Financial monitoring
Processing vouchers and payments
Administrative data entry
Newsletter/brochure preparation
Processing and tracking routine purchase orders
Maintaining departmental databases
Departmental Reception Activities

*Note: “contracts and grants administration" in the above list includes the development of grant or contract proposals and associated activities such as word-processing, copying, mailing, and electronic proposal submission.

2. Non-Standard Treatment of Administrative Salaries and Benefits
OMB Circular A-21 F.6.b. (2) provides that, “The salaries of administrative and clerical staff should normally be treated as F&A costs. Direct charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and individuals involved can be specifically identified with the project or activity. "Major project" is defined as a project that 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 following are examples of “major projects” for which direct charging of administrative or clerical staff salaries may be appropriate:

Large, complex programs such as General Clinical Research Centers, Program Project Awards, and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions (such as P01s and U01s)
Projects which involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting (such as epidemiological studies, clinical trials, and retrospective clinical records studies)
Projects that require making travel and meeting arrangements for large numbers of participants, such as conferences and seminars
Projects whose principal focus is the preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports)
Individual projects requiring project-specific database management, individualized graphics or manuscript preparation, human or animal protocols, and multiple project-related investigator coordination and communications
Training grants that require an extensive amount of administrative or clerical support, which is significantly greater than the routine level of such services provided by academic departments. Training grants permit a budget for “trainee-related expenses” which can include staff salaries, consultant costs, equipment, research supplies, staff travel, and other expenses directly related to the training program. For more information, please see the following url: NIH Grants Policy Statement

3. Qualifying Questions for Preparing Budget Justifications for Non-Standard Treatment of Administrative Salaries
When justifying administrative/clerical salaries (or before charging such expenses to a sponsored project), it is helpful to address the issues listed below.

Are the administrative support needs of this project significantly greater than the routine level of administrative support provided for all projects? If yes, why? Also, describe how the administrative support activities of the administrative/clerical personnel working on the project are necessary for the successful performance of the project.
Does a job title or payroll classification imply that an individual’s work is administrative in nature? If yes, but the employee will not be engaged in administrative work on a sponsored project, describe the specific non-administrative work the individual will be performing, as well as how such work is necessary for the technical performance of the project.
Can the proposed administrative/clerical support costs be easily and accurately allocated to the project? If yes, explain how this will be done. For example, an administrator working full-time for a project can be allocated easily and accurately to the project. However, if that person works on multiple projects, it may be difficult to accurately document the relative benefit of the administrator’s salary (effort) to any specific project. The more projects a person works on, the more difficult it is to accurately and easily document the relative benefit to each project.

B. Treatment of Non-Salary Administrative Expenses
See Frequently Asked Questions for related information.
1. Standard Treatment
In accordance with OMB Circular A-21, the following examples of non-salary expenses are normally F&A costs and should not normally be budgeted in proposals or charged to extramural projects as direct expenses.

Basic telephone line and equipment charges and local telephone services
Routine postage costs and mail stop charges
Routine reproduction
Ordinary repairs and maintenance for state-supported space in UCSF-owned buildings or at the SFGH site
Office supplies used for administrative activities (see FAQ)
Employee ID badges
Memberships in technical and professional organizations
Subscriptions to professional or technical periodicals that are already available through the campus library.
Equipment depreciation

2. Non-Standard Treatment of Non-Salary Administrative Expenses
In accordance with OMB Circular A-21,non-salary administrative expenses may be budgeted and charged as a direct cost if special circumstances exist, where they are incurred at a level significantly greater than what is routinely provided to every UCSF sponsored project. To treat such non-salary administrative expense as a direct cost, the administering unit must maintain documentation that explains and supports the following conditions:

The sponsored project must require non-salary administrative expenses that are significantly greater than the routine level of support
The expense can be specifically identified, with relative ease and high degree of accuracy with the sponsored project

The following examples illustrate circumstances for which direct charging of non-salary administrative expenses may be appropriate:

Sponsored project-related office supplies used for the production of manuals as described in the scope of work or required as a deliverable under the terms of sponsored award.

Sponsored project-related office supplies required to conduct, tabulate and store the results of a survey identified in the scope of work of a sponsored award. See FAQ, Office Supplies

3. Qualifying Questions for Preparing Budget Justifications for Non-Standard Treatment of Non-Salary Administrative Expenses
When justifying non-salary administrative expenses (or before charging such expenses to a sponsored project), it is helpful to address the following issues:

Are the non-salary administrative needs of this project significantly greater than the routine level of non-salary administrative support provided for all projects? If yes, why? Also, describe why it is necessary to incur the non-salary administrative expenses for the successful performance of the project.
Can the proposed non-salary administrative expenses be easily and accurately allocated to the project? If yes, explain how this will be done. If non-salary administrative expenses benefit multiple projects, it may be difficult to accurately document the relative benefit of such expenses to any specific project.

V. UNALLOWABLE CATEGORY OF EXPENSES
Unallowable expenditures are costs for activities that may not be directly charged to a federal contract or grant, and which also must be excluded from federal F&A rate calculations. Unallowable expenditures are excluded from F&A rate calculations through the use of appropriate unallowable Natural Class Accounts (NCAs - see Appendix A These NCAs must be used to charge unallowable expenditures, regardless of the DPA-Fund charged.

VI. GUIDELINES FOR DIRECT-CHARGING NON-FEDERAL PROJECTS
Under UCSF policy, it is permissible to charge normal department administration costs to any non-federal sponsored project fund that benefits from the costs and that are allowed by the sponsor. When this occurs, such costs will then be treated as direct costs of the sponsored project charged, not as F&A costs.

VII. CHARGING MATERNITY LEAVE TO SPONSORED AWARDS
No explicit federal guidance exists for maternity leave for employees. Guidance regarding the allowability of all costs, including maternity leave, comes from two primary sources: A-110 and A-21. A-110 Subpart C, Section 27 indicates that allowability is determined by A-21. A-21 J.10 a. indicates that the established university policies prevail.

In general, UCSF maternity policy for birth and adoptive mothers begins two weeks before birth and ends six weeks after the birth (eight weeks for caesarian section). The maternity leave pay is under the University's Pregnancy Disability Plan. The 8 weeks of short-term disability is a fringe benefit and is funded centrally; it cannot be charged to sponsored awards and is not considered paid time off. However, depending on the type of award it may be allowable.

See Appendix D for related questions.

VIII. EFFORT REPORTING
Effort is the portion of time spent on a given professional activity and expressed as a percentage of the total professional activity for which an individual is employed by the University of California. (Total professional activity includes research, teaching, patient care, administrative and other University appointed activities.)

As recipients of federal funding, educational institutions must abide by Title 2 Code of Federal Regulations (2 CFR), part 220 (formerly Office of Management and Budget Circular A-21). 2CFR, part 220 requires an effort certification system that:

Encompasses all employee activities (100% effort)
Confirms effort expended after-the-fact
Requires certification to be performed by an individual who has first-hand knowledge or used suitable means of verification to determine if the work was performed
Requires certification to be encompassed in the institution's official records

UCSF utilizes the Effort Reporting System (ERS) to report on and certify the effort for each employee who works on a federally sponsored agreement.
Per academic policy APM-110, faculty are responsible for (1) teaching, (2) research and other creative work, (3) other professional activity, and (4) University and public service.
Some sponsor agencies, such as agencies of the federal government (e.g. NIH), prohibit faculty from devoting 100% of their effort to sponsored activities when their academic appointment requires them to be engaged in non-sponsored activities. As such, the following activities must be paid from sources other than sponsored funds unless they are specifically approved activities of a sponsored project:

Teaching
Clinical and professional activities such as seeing patients outside of the context of a sponsored human subject study, patients consultation, patient care, etc.
University and public service (University service includes institutional governance, service on institutional committees, and department administrative activities)
Preparation of new or competing proposals (unless current funding allows it, such as a K award)

More information on Effort Reporting is available on Financial Compliance Tools website.

IX. PROJECT COST OVERRUNS
Costs that exceed the budget on a sponsored agreement should be tracked and accumulated. The excess costs (i.e., deficit) must be transferred using NCA 437691 to a discretionary DPA-Fund. See the Cost Overruns section in FAQ for more details.

X. RECHARGE COSTING PRACTICES
A recharge is the assessment and collection by one university unit for products or services furnished to another university unit. The Campus Budget and Resource Management department has established policies and procedures for charging organizational units for products or services that include all allowable costs associated with providing the products or services.

Recharges must be charged to the benefiting activity. Recharge costs are allowable costs to a sponsored project as long as the department recharging the project has followed the guidelines in UCSF Administrative Policy 250-11, Recharges & Common Cost Allocations and the recharge rate(s) have been approved by Budget and Resource Management. See the Budget and Resource Management recharge website for more information.