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Treatment
of Administrative and Clerical Costs
Background
On July 26, 1993, the Office of Management and Budget (OMB) published final
revisions to OMB Circular A-21 that defines Departmental Administrative expenses as expenses "which have been incurred for administrative and supporting services that
benefit common and joint departmental activities." Departmental Administrative costs are the costs of administrative and clerical
salaries, office supplies, postage, local telephone costs, memberships, and other similar costs which support the basic missions
of the University (Instruction, Research, and Public Services).
On November 8, 1994, the Cost Accounting Standards Board (CASB) published final regulations on the cost accounting
standards and "Disclosure Statement" requirements for educational institutions. These new regulations became effective January
9, 1995. The regulations established four specific cost accounting standards for educational institutions and apply to all
educational institutions that receive sponsored agreements. In regard to the charging of administrative and clerical costs, the
Cost Accounting Standards Board established Standard 502, which deals with the consistency in allocating costs incurred for
the same purpose. It requires that the costs incurred for the same purpose, in like circumstance, be consistently treated as either
direct or indirect costs. These requirements were incorporated in Circular A-21, May 8, 1996, and apply to all types of
sponsored agreements (i.e., grants, contracts, and cooperative agreements).
Policy
The policy applies to all sponsored agreements, federal and non-federal. However, the costs identified as "normally indirect"
may be directly charged to a non-federal project if permitted by the sponsor's policy or otherwise approved by the sponsor.
Administrative and Clerical Salaries Excerpted from OMB Circular
A-21, Section F.6.b.:
"...The salaries of administrative and clerical staff should normally be treated as indirect costs. Direct charging of these costs
may be appropriate where a major project of activity explicitly budgets for administrative or clerical services and individuals
involved can be specifically identified with the project or activity. Items such as office supplies, postage, local telephone costs,
and memberships shall normally be treated as indirect costs."
Excerpted from the OMB Interpretations:
"This provision is intended to establish the principle that the salaries of
administrative and clerical staff should usually be treated as indirect 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 general criteria for direct charging
in Section D.1. – i.e., "be identified specifically with a particular sponsored project… relatively easily with a high degree of
accuracy," and the special circumstances requiring direct charging of the services would need to be justified to the satisfaction of
the awarding agency in the grant application or contract proposal."
"The following examples are illustrative of circumstances where direct charging the salaries of administrative or clerical staff may
be appropriate:
- Large, complex programs, such as General Clinical Research
Centers, Primate Centers, Program Projects, environmental research
centers, engineering research centers and other grants and contracts
that entail assembling and managing teams of investigators from a
number of institutions.
- Projects that 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 principle focus is the preparation and productions
of manuals and large reports, books, and monographs (excluding
routine progress and technical reports).
- Projects that are geographically inaccessible to normal
departmental administrative services, such as seagoing research
vessels, radio astronomy projects, and other research field sites
that are remote from the campus.
- Individual projects requiring project-specific database
management; individualized graphics or manuscript preparation; human
or animal protocol, IRB preparations and/or other project-specific
regulatory protocols; and multiple project-related investigator
coordination and communications."
"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. This should be accomplished through a "Direct Charge Equivalent" or other
mechanism that assigns the costs directly to the appropriate activities."
Procedures
A. Administrative and Clerical Salaries
1. Proposals
Administrative and clerical salaries' costs included in proposals
must be explicitly identified. Administrative and clerical salaries
must have been explicitly budgeted to be allowed.
2. Administrative or Clerical Salaries - Dean's Office
Dean's office administrative expenses must be treated as
Facilities and Administrative costs (F&A costs). Accordingly, no
Dean's office administrative expenses shall be charged directly to
sponsored agreements.
3. Administrative or Clerical Salaries - Academic Departments
In order to charge administrative or clerical (professional and staff
support) salaries directly to federal sponsored projects,
the following criteria must be met:
- The nature of the project activity requires an extensive
amount that is significantly greater than the routine level of
such services provided by academic departments.
- The administrative and clerical personnel must be performing
responsibilities "unlike" and "beyond the
normal" administrative type duties and responsibilities in
the department.
- The administrative and clerical personnel can be specifically
identified with project or activity.
- The administrative and clerical personnel are explicitly
listed on the approved proposal budget by
position (and name, if known) and the special circumstances
requiring direct charging of the services are justified in the
proposal.
- The administrative and clerical personnel are not specifically
disallowed in the award notice or other written communication
from the awarding agency.
- 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 directly charged 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.
- 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 & Expenses - Normally Facilities &
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 Telephone
- 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.
Examples of Appropriate
Charges to Sponsored Accounts
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Professor A charges 70% of his/her secretary's salary and benefits to his/her disability research center grant which
represents the secretary's time spent on effort related to the administration of the center. The remainder of the secretary's
time, which includes a normal department administrative effort such as preparing documents, tracking receipts and
expenditures, etc., is charged to a general funds index.
Professor B has a grant which requires a large mail survey. He charges the grant for the cost of postage and paper
related to the survey.
Professor C charges the cost of a dedicated telephone line to his/her grant. The phone line is dedicated to communicating
with current and prospective clients related directly to the scope of the research project.
Examples of
Inappropriate Charges to Sponsored Accounts
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Professor X charges 5% of his/her secretary's salary and benefits to each of his/her fifteen grants because he/she cannot
identify the secretary's efforts specifically to any one grant. The secretary's office supplies are charged to whichever
index has money left on it. This is inappropriate, and the secretary's salary, benefits, and associated office materials
should not be charged to a federally sponsored index.
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Professor Y splits the cost of his/her office telephone between two federal grants. This is inappropriate treatment of this
cost as local telephone costs should not be charged to a sponsored index.
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