Identifying and Classifying Costs for Indirect

Transcript:Identifying and Classifying Costs for Indirect:
Identifying and Classifying Costs for Indirect Cost Rates North Carolina Department of Health and Human Services Office of the Controller Cost Analysis/Federal Financial Reporting/Administrative Services October 2016 Objectives Background Purpose of Cost Principles Identifying allowable and unallowable costs Determining whether cost is direct or indirect Types of indirect cost rates Examples of indirect cost rates Background Prior to 12/26/2013, cost principles for nonprofits fell under OMB Circular A-122; state and local government cost principles were contained in OMB Circular A-87 Effective 12/26/2013, federal circulars were collapsed to one super circular, the OMB 2 CFR Uniform Administrative Requirements, Cost Principles, and Audit requirements for Federal Awards Basic cost principles remained largely unchanged Purpose of Cost Principles To determine the allowable cost of work performed by the non-Federal entity To provide framework for consistent treatment of costs across grants Emphasis on identifying types of cost Cost Principles Nonprofit organization means any corporation, trust, association, cooperative, or other organization, not including IHEs, that: (1) Is operated primarily for scientific, educational, service, charitable, or similar purposes in public interest (2) Is not organized primarily for profit (3) Uses net proceeds to maintain, improve, and/or expand its operations. (Major nonprofit organizations receive more than $10 million dollars in Federal funding of direct costs) Expenditures that are specifically permitted under grant agreement Costs that are Eligible Reasonable Necessary Allocable What is an “allowable” cost? Examples of Allowable Costs Employee health and welfare – documented policies for improvement of working condition, employee health Advertising—for recruitment of personnel, procurement of goods and services, etc. Maintenance and repair costs Professional service costs Employee compensation—when reasonable, with time worked on grant documented Allowable Costs Requiring Prior Approval Fundraising activities that meet program objectives Goods and services for personal use in relation to housing and rent Organization costs for establishing or reorganizing an organization Participant support costs for trainees in the form of stipends, travel and subsistence allowances Advisory councils Unallowable costs Not reasonable Not allocable to the award Not necessary Not allowed by grant agreement Examples of Unallowable Costs Alcoholic beverages - for any purpose Bad debts Entertainment Contributions and donations Lobbying – attempts to influence government officials Fines and penalties Defense and prosecution of criminal proceedings Allocable Cost Cost is incurred for benefit of one grant Cost benefits more than one grant but can be proportioned to each through use of reasonable methods (direct cost) Each receives appropriate allocation