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Direct and Indirect Charging Practices

 

Index

Introduction

Sponsored Project Direct Charging Practices

            Availability of Funds

OMB Uniform Guidance (UG)

            Definition of a direct cost

            Definition of an indirect (F&A) cost

UG Selected Items of Cost

            200.421 Advertising and public relations

            200.423 Alcoholic beverages

            200.424 Alumni/ae activities

            200.425 Audit services

            200.426 Bad debts

            200.427 Bonding

            200.428 Collections of improper payments

            200.429 Commencement and convocation costs

            200.430 Compensation—personal services

            200.431 Compensation—fringe benefits

            200.432 Conferences

            200.433 Contingency provisions

            200.434 Contributions and donations

            200.435 Defense and prosecution (legal) costs

            200.436 Depreciation

            200.437 Employee health and welfare costs

            200.438 Entertainment costs

            200.439 Equipment and other capital expenditures

            200.440 Exchange rates

            200.441 Fines, penalties, damages and other settlements

            200.442 Fund raising and investment management costs

            200.443 Gains and losses on disposition of depreciable assets

            200.445 Goods or services for personal use

            200.446 Idle facilities and idle capacity

            200.447 Insurance and indemnification

            200.448 Intellectual property

            200.449 Interest

            200.450 Lobbying

            200.451 Losses on other awards or contracts

            200.452 Maintenance and repair costs

            200.453 Materials and supplies costs, including costs of computing devices

            200.454 Memberships, subscriptions, and professional activity costs

            200.455 Organization costs

            200.456 Participant support costs

            200.457 Plant and security costs

            200.458 Pre-award costs

            200.459 Professional service costs

            200.460 Proposal costs

            200.461 Publication and printing costs

            200.462 Rearrangement and reconversion costs

            200.463 Recruiting costs

            200.464 Relocation costs of employees

            200.465 Rental costs of real property and equipment

            200.466 Scholarships and student aid costs

            200.467 Selling and marketing costs

            200.468 Specialized service facilities

            200.469 Student activity costs

            200.470 Taxes (including Value Added Tax)

            200.471 Termination costs

            200.472 Training and education costs

            200.473 Transportation costs

            200.474 Travel costs

            200.475 Trustees

 

Introduction

University sponsoring agencies require institutions to have an adequate system of internal control and compliance for the direct costing or charging of expenses to sponsored projects in an accurate and consistent manner in accordance with:

It is the responsibility of the PI, Department Administrator, Office of Research and Sponsored Projects Accounting (in a supporting role) to ensure that direct charging of sponsored projects is accurate, consistent and compliant.

Sponsored Project Direct Charging Practices

Sponsored project direct charging practices are codified in the University’s financial guideline at:

http://www.cfo.pitt.edu/policies/guideline/direct_charging1.pdf

This financial guideline establishes the requirements for recording direct (and indirect) costs on the financial accounting records of the University in accordance with federal and other agency regulations and requirements, generally accepted accounting principles and accepted cost accounting practices on a consistent basis.

Availability of Funds

 

Availability of funds, budget or a University Department’s ability to pay or not to pay for a particular cost is not an adequate basis or determining factor as to whether a cost is direct charged to a particular sponsored project.  Availability of funds or budget-based costing decisions are noncompliant and will not be accepted by the University or its sponsors.

 

The Direct Charging Practices financial guideline lists some of the more common elements of allowable costs recorded as either direct or indirect cost to sponsored projects.

The Allowability of Costs financial guideline lists some of the more common expressly unallowable costs on sponsored projects on either a direct or indirect cost basis.  This guideline can be found at:            http://cfo.pitt.edu/policies/guideline/allowability_of_costs1.pdf

OMB Uniform Guidance (UG)

The most predominant, authoritative guidance for direct charging of costs to sponsored projects in higher education is the OMB UG.  The OMG UG is linked under the Resources/Sponsor Regulations and Guidelines of this website. 

Definition of a direct cost

 

The OMB UG defines a direct cost as those costs that can be identified specifically with a particular final cost objective, such as a sponsored project, or other internally or externally funded activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy (UG 200.413).

 

Definition of an indirect (F&A) cost

 

The OMB UG defines an indirect cost as those costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, or other internally or externally funded activity. 

 

More specifically, indirect or F&A costs must be classified as either Facilities or Administrative costs.  Facilities cost categories include depreciation, interest, operations and maintenance of University buildings, equipment and capital improvements.  Administration cost categories include general, department and sponsored project administration expenses.

 

Advance Payments or Prepayments

 

The OMB UG defines sponsored project costs as costs incurred and the UG references costs incurred numerous times throughout its text.  Costs incurred represent goods and services received and paid for by the University.  Advance payments or prepayments for goods and services that have not yet been received by the University, although paid, do not represent direct costs incurred by the University and therefore the University cannot seek a reimbursement from a sponsor for an advance or prepayments.  Although discouraged by the University, in cases where advance or prepayments cannot be avoided by the Department on a sponsored project, such payments must be charged to Departmental accounts, and allocated to sponsored projects only when direct project-related goods and services are actually received by the University.

UG Selected Items of Cost

In the UG, costing principles can be found under the GENERAL PROVISIONS FOR SELECTED ITEMS OF COST, Sections 200.420 to 200.475.  Facts and circumstances surrounding each costing/sponsored project scenario must be taken into consideration in that a “one size fits all” determination does not fit all possible scenarios.  Brief discussions of some of the more common elements of sponsored project cost follow.

200.421 Advertising and public relations

Advertising costs include the costs magazines, newspapers, radio and television, direct mail, exhibits, social media ads and communications.  Public relations costs include the costs of communicating with the media, press releases, meetings, conventions convocations, displays, exhibits, etc.

Advertising and public relations costs are generally unallowable as direct and indirect costs on sponsored projects.  Limited exceptions can include:

All other advertising and public relations costs are unallowable.

200.423 Alcoholic beverages

The costs of alcoholic beverages are unallowable and should be excluded from all direct and indirect cost claims on sponsored projects.  (A technical exception can occur when a sponsored project requires the purchase of alcoholic beverages for the conduct of a study that examines the effect of alcohol.)  Special care should be taken to review University travel and business expense reports to ensure the costs of alcoholic beverages are identified and charged to unallowable subcodes on the expense report so that the charges are removed from all direct and indirect cost claims on sponsored projects.

200.424 Alumni/ae activities

Costs incurred in support of alumni/ae activities are unallowable as direct cost identification or indirect cost allocations to sponsored projects.

200.425 Audit services

Audit fees for audit service are typically incurred centrally, and generally are unallowable as direct cost identification to sponsored projects.  Audit fees can be recovered as an indirect cost allocation to sponsored projects through the F&A Cost Rate recovery.

Exceptions can occur when a non-federal sponsor requires an audit by an independent public accounting firm depending on the dollar magnitude of the sponsored project.  These audits typically occur on awards from certain Departments within the Commonwealth of Pennsylvania and are coordinated by Sponsored Projects Accounting.  These audit fees can be recovered directly on the sponsored project if proposed in advance by the Department Administrator.  Estimated audit fees can be obtained by contacting Sponsored Projects Accounting.

200.426 Bad debts

Bad debt write-offs from uncollectable accounts and other uncollectable claims are unallowable

as direct cost identification or indirect cost allocations to sponsored projects.

200.427 Bonding

Bonding costs arise when a sponsoring agency requires assurance against financial loss to itself or others by reason of the act or default of the institution. Bonding costs also arise in instances where the institution requires similar assurance such as the cost of bonds for bid, performance, payment, advance payment, infringement, and fidelity bonds for employees and officials.

The costs of bonding required in the general conduct of the operations of the institutions are allowable as an indirect cost of the institution to the extent that such bonding is in accordance with sound business practice and the rates and premiums are reasonable under the circumstances.

The costs of specific bonding required per the terms of a sponsored award are an allowable direct cost of that award; although the University rarely is subject to such terms of an award.

200.428 Collections of improper payments

An “improper payment” is any payment thatshould not have been madeor that wasmade in an incorrect amountunder statutory, contractual, administrative, or other legally requirements.  Effort and expense related to recovery of such improper payments are allowable as either direct or indirect costs consistent with the manner in which they were incurred.

200.429 Commencement and convocation costs

Costs incurred for commencements and convocations are unallowable as either direct cost identification or indirect cost allocations to sponsored projects.

200.430 Compensation—personal services

Compensation for personal services includes all remuneration paid currently or accrued for services of employees during the accounting period and/or period of performance of the sponsored project.

Compensation cost are allowable direct cost identifications to sponsored projects and indirect cost allocations of the University subject to the following limitations.  The compensation costs must:

Reference the University’s Policy on Sponsored Projects Effort Reporting at:

http://cfo.pitt.edu/policies/documents/policy11-01-07web.pdf

The University distributes labor to sponsored projects through effort reporting and percentage of effort.  The University does not track sponsored projects faculty and staff effort through hours.  Hours are only used for payroll timekeeping purposes, not for labor distribution on sponsored projects.

That said, except for Time & Material type sponsored project awards, sponsored project faculty and staff effort must be negotiated in sponsored project awards as a percentage of effort and not on an hourly basis.  If University sponsors require us to incorporate hours into sponsored project awards, the University must also include the corresponding percentage of effort in the Notice of Award.  If percentage of effort is not reflected in the Notice of Award, this makes the University noncompliant because proposed and negotiated hours cannot be traced to the official accounting records of our University.

200.431 Compensation—fringe benefits

Fringe benefit costs include the costs of FICA, employee leave, health insurance, life insurance, unemployment benefits, pension and savings plans, retiree benefits and other employer provided employee benefits other than compensation.  These costs are normally incurred centrally at the University.

Generally, the costs of employee compensation in the form of fringe benefits are allowable direct cost allocations to sponsored projects at the University in the form of a percentage of base salary dollars by specific summary employee classification, subject to the following limitations by fringe benefit category:

Unallowable fringe benefits include:

The University of Pittsburgh develops its fringe benefit proposal and related rates in accordance with the federal OMB Uniform Guidance (UG). These rates are negotiated annually with our cognizant federal administrative agency. These fringe benefit rates are also used to internally cost University operating and discretionary activities as well. Accordingly, these rates, as proposed, represent real costs of the University and should be utilized to cost all federal and non-federal sponsored projects.  Fringe benefit rates are non-negotiable and should not be negotiated downward.  When this absolutely cannot be prevented, Departments must absorb the shortfall.

On occasion, contracting officers at some University sponsors will disallow all or a portion of our fringe benefit rates for a variety of reasons. Department Administrators, Principal Investigators and the Office of Research should do everything possible to ensure our fringe benefit rates are accepted as proposed by our sponsoring agencies. In those rare instances where such negotiations fall short and fringe benefit rates are not fully accepted as proposed by our sponsors, the following accounting remedy will be in effect:

200.432 Conferences

Conferences include meetings, retreats, seminars, symposiums, workshops or other events whose primary purpose is the dissemination of technical information beyond that available at the University.  Costs of sponsoring or hosting conferences can include rental costs, speaker fees, meals, refreshments, transportation and other support costs.  Costs of attending a non-University conference can include the payment of conference attendance fees.

If the hosting or attendance at a conference is required on a sponsored project, these costs represent allowable direct costs of a sponsored project provided they are reasonable, necessary and not expressly unallowable such as charges for alcoholic beverages. 

If the hosting or attendance at a conference is not required on a sponsored project, these costs can represent allowable indirect costs of the University provided they are reasonable, necessary, not expressly unallowable and represent an allowable business purpose in accordance with the UG and other agency regulations and requirements.

200.433 Contingency provisions

A contingency provision is that part of a budget estimate of future costs which is associated with events whose precise outcome is indeterminable but will likely result in additional activity or project costs.  The cost of major project scope changes, unforeseen risks, or extraordinary events that are indeterminable are unallowable

Contingency amounts that are more precisely determinable and can be reasonably estimated utilizing generally accepted cost estimating methodologies with minimal risk to the sponsoring agency and the University are allowable.  Examples would include:

Under no circumstances will contingency amounts be included in a billing to and reimbursed by a sponsoring agency on a particular sponsored project for which a corresponding cost is not identified and recorded on the sponsored project account.  Any amounts identified as such will be returned to the sponsoring agency by Sponsored Projects Accounting.

200.434 Contributions and donations

Costs of contributions and donations made by the University are unallowable as either direct cost identification or indirect cost allocations to sponsored projects.

The value of services and property donated to the University are also unallowable as either direct cost identification or indirect cost allocations to sponsored projects, but may be used to meet cost sharing or matching requirements on the sponsored project.

200.435 Defense and prosecution (legal) costs

Costs incurred in connection with any criminal, civil or administrative proceeding brought or joined by a governmental body against the University, are unallowable as a direct cost to sponsored projects or an indirect cost allocation of the University.  These costs are typically incurred centrally at the University.

200.436 Depreciation

Depreciation is the accounting method for allocating building, equipment and other fixed assets to accounting periods benefitting from the use of the assets, is an allowable indirect cost, and is only recoverable on sponsored projects through the application of the University’s indirect (F&A) cost rate.

200.437 Employee health and welfare costs

Employee health and welfare costs are costs that improve the working conditions, employer-employee relations, employee health and employee performance are allowable and are only recoverable on sponsored projects through the application of the University’s indirect (F&A) cost rate.

200.438 Entertainment costs

Entertainment costs include the costs of amusement, pleasure, recreation, social activities, etc. and related costs and are unallowable as either direct cost identification or indirect cost allocations to sponsored projects.  Exceptions can include entertainment costs having a sponsored project purpose that is approved in advance by the sponsoring agency.

200.439 Equipment and other capital expenditures

Definitions:

Capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges to sponsored projects, except with the prior written approval of the sponsoring agency (and provided that the general purpose expenditure meets the definition of a direct cost of the sponsored project).  Depreciation on such capital expenditures is recoverable as an allowable indirect cost allocation of the University.

Capital expenditures for special purpose equipment are allowable direct costs of a sponsored project, provided that items with a unit cost of $5,000 or more have the prior written approval of the sponsoring agency.

Capital expenditures for improvements to equipment, buildings, and land which materially increase their value or useful life are unallowable as direct charges to sponsored projects, except with the prior written approval of the sponsoring agency (and provided that the improvement expenditure meets the definition of a direct cost of the sponsored project).

200.440 Exchange rates

Cost increases for fluctuations in foreign currency exchange rates are allowable direct costs on transactions on sponsored projects subject to the availability of funds on the sponsored project and prior approval of the sponsor.  Foreign currency exchange rate fluctuations are also allowable indirect cost allocations.

200.441 Fines, penalties, damages and other settlements

These costs result from alleged or actual violations of federal, state or local laws or regulations and are typically incurred centrally.  They are unallowable as either direct cost identification or indirect cost allocations to sponsored projects except when incurred as a result of compliance with specific sponsored project provisions and approved in advance by the sponsoring agency.

200.442 Fund raising and investment management costs

Costs of organized fund raising include institutional advancement, campaigns, drives and other organized solicitations to raise capital or obtain contributions.  Costs of fund raising are unallowable, except when the costs of fund raising are required to meet the purposes of the sponsored project and are approved in advance by the sponsoring agency.  (The University has only experienced this once on a federal award under a U.S. Department of Education, Strengthening Institution Grant.)

Investment management costs are typically incurred centrally and represent costs of financial investment counsel and professional money managers to enhance returns from University investments.  These costs are unallowable, except when they are associated with pension and other investments which include sponsor participation.

200.443 Gains and losses on disposition of depreciable assets

Since depreciation on capital expenditures is recoverable as an allowable indirect cost allocation of the University, any gains or losses on the disposition of depreciable assets must also be treated as an indirect cost of the University.

Gains and losses on the sale, retirement, or other disposition of depreciable property must be included in the year in which they occur as credits or charges to the asset cost grouping(s) in which the property was included in the indirect cost pool.  The amount of the gain or loss to be included as a credit or charge to the appropriate asset cost grouping(s) is the difference between the amount realized on the property and the undepreciated basis of the property.

Gains and losses from the disposition of depreciable property must not be recognized as a separate credit or charge under the following conditions:

Gains or losses of any nature arising from the sale or exchange of property representing land, must be excluded in computing indirect costs of the institution as land is not depreciable.

When capital assets acquired with sponsored project funds are disposed of, the distribution of the proceeds must be made in accordance with sponsoring agency requirements.

200.445 Goods or services for personal use

Goods and services for personal use include personal automobiles, housing, housing allowances, personal living expenses, etc.  Such costs are unallowable as either direct cost identification or indirect cost allocations to sponsored projects.  In instances when housing, housing allowances and personal living expenses incurred are required by a sponsored project, these costs are allowable direct costs provided they are approved in advance by the sponsoring agency.

200.446 Idle facilities and idle capacity

Facilities are land, building and equipment owned or leased by the University.  Idle facilities are completely unused facilities that represent excess assets of the University.  Idle capacity is the unused portion of a partially used facility.

Costs of idle facilities or idle capacity include the cost of repairs, maintenance, rent, insurance, interest, telecommunications, security, etc.  Generally, the costs of idle facilities and idle capacity are unallowable as direct cost identification or indirect cost allocations to sponsored projects.

However, idle facilities and idle capacity can be allowable as an indirect cost allocations to sponsored projects when they:

200.447 Insurance and indemnification

The costs of insurance required in the general conduct of the operations of the institutions are generally allowable as an indirect cost of the institution, subject to certain limitations, to the extent that such insurance is in accordance with sound business practice and the rates and premiums are reasonable under the circumstances.

Although the University rarely is subject to such terms of an award, the costs of specific insurance required per the terms of a sponsored award not already carried by the University are an allowable direct cost of that award.

200.448 Intellectual property

Intellectual property refers to the costs of patents, copyrights, royalties, etc. incurred/paid related to the development, filing, purchase or use of such intellectual property.

The costs of intellectual property required in the general conduct of the operations of the institutions are generally allowable as an indirect cost of the institution, subject to certain limitations.

Costs of intellectual property generally never represent a direct cost of a sponsored award.  However, if such costs are necessary for the performance of an award, are required by the terms and conditions of the award and are budgeted for in advance, such costs can be an allowable direct cost of a sponsored project.

200.449 Interest

Interest is defined for purposes of this section as borrowing costs on capital expenditures, temporary use of endowment funds or the use of other University funds.

Generally, interest costs are unallowable as either an indirect or direct cost of a sponsored project.  The University may recover the interest costs associated with the acquisition, replacement or refurbishment of capital assets on an indirect cost basis as part of the development of its F&A cost rate.

200.450 Lobbying

Lobbying involves influencing activities associated with obtaining grants, contracts, cooperative agreements or loans in favor of the University.  Costs associated with lobbying are unallowable direct cost identifications to sponsored projects and indirect cost allocations of the University.

Costs associated with the following specific lobbying activities are unallowable:

Costs associated with the following activities do not represent unallowable lobbying activities:

200.451 Losses on other awards or contracts

Losses on grants, contracts and cooperative agreements represent any excess of costs over revenue or authorized funding level on those awards.  This is more commonly known as sponsored project overruns or overdrafts at the University.  Such losses, overruns or overdrafts on sponsored projects are unallowable as direct cost identification or indirect cost allocations to other sponsored projects.  Further, because such costs are unallowable as an indirect cost allocation, they must be included in the indirect cost base for purposes of the calculation of the University’s indirect (F&A) cost rate.  University cost sharing is afforded similar accounting treatment.

See the section of this website that addresses Overdrafted Sponsored Project Accounts under Sponsored Project Account Monitoring for the proper accounting treatment of these costs.

200.452 Maintenance and repair costs.

Maintenance and repair costs are costs typically incurred for utilities, insurance, security, necessary maintenance, janitorial services, repair, or upkeep of buildings and equipment which neither add to the permanent value of the property nor appreciably prolong its intended life, but keep it in an efficient operating condition.  Costs incurred for improvements which add to the permanent value of the buildings and equipment or appreciably prolong their intended life must be treated as capital expenditures.  The predominance of these costs are incurred centrally at the University and represent allowable indirect cost allocations of the University. 

Repair and maintenance of scientific or technical equipment related to sponsored projects requires special consideration.  Such equipment can be either general purpose or special purpose as set forth in UG 200.439.  Since general purpose lab equipment purchased by the University is an unallowable direct cost to a sponsored project, any maintenance or maintenance agreements on general purpose lab equipment is unallowable as a direct cost to a sponsored project be it specific identification or a direct cost allocation.  Conversely, any maintenance or maintenance agreements required on special purpose lab equipment procured directly on a sponsored project is an allowable direct cost of that sponsored project.  Availability of University budgetary funds is never a factor in determining direct cost or indirect cost assignment.

200.453 Materials and supplies costs, including costs of computing devices

Cost incurred for materials, supplies, and fabricated parts (including costs of computing devices) necessary to carry out the scope of work of the sponsored project are allowable direct costs to sponsored projects, provided:

Computing devices are defined as machines used to acquire, store, analyze, process, and publish data and other information electronically, including accessories (or “peripherals”) for printing, transmitting and receiving, or storing electronic information.  (UG 200.20)  A computing device is a supply if the acquisition cost is less than $5,000, regardless of the length of its useful life.  Examples include, but are not limited to, desktop computers, laptop computers, tablets, iPads, e-readers, printers, external hard drives, and smartphones.

Although prior agency written approval is not required for the purchase of a computing device, an explanation of how the computing device is essential and allocable to the proposed program must be included in the budget narrative.

Scenarios:

200.454 Memberships, subscriptions, and professional activity costs.

Generally, costs of memberships, subscriptions and professional activity costs are allowable indirect cost allocations of the University in that they generally benefit multiple instructional, research and public service activities.  This guidance is consistent with UG Appendix III (to Part 200) B. 6. b. (2) (A-21 F. 6. b.).

However, these costs can be allowable direct cost identifications to sponsored projects if:

Unallowable memberships include:

200.455 Organization costs

These costs are costs incurred to establish or reorganize a corporate or non-corporate entity and include incorporation fees, investment banking fees, attorney, accounting and consulting fees related to the establishment of the organization or reorganization.

Organizational costs are typically incurred centrally, and are unallowable unless approved in advance by the sponsoring agency.

200.456 Participant support costs

Participant support costs are allowable with prior approval of the federal awarding agency.

Participant support costs means 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 employees) in connection with conferences, or training projects (except NIH Kirschstein-NRSA programs). (UG 200.75)

Amounts allocated to the participant support cost budget category of federal awards are excluded from the Modified Total Direct Cost (MTDC) base and may not be reallocated into or out of other budget categories without the written approval of the federal sponsor. To track and manage participant support activity, a separate subaccount Project number, which is not coded to incur indirect costs, must be established for awards containing a participant support cost budget allocation.

Note that participant support costs are not routinely allowed on research projects. Typically, these expenses are incurred for projects that include an education or outreach component. The funding opportunity announcement (FOA) will indicate when these expenses are allowable as direct costs to the project. These types of costs are most commonly included in National Science Foundation (NSF) grants, such as the Research Experience for Undergraduates (REU) or Research Experiences for Teachers (RET) program.

Participant support costs are not:

200.457 Plant and security costs

Plant security costs are costs to protect facilities, personnel and work production such as wages and uniforms of security personnel, protective and detection equipment, barriers and devices, security services and security consultants.

Plant security costs are typically incurred centrally, and are allowable indirect allocations of the University.  Such costs would rarely be charged direct to sponsored projects at the University.

200.458 Pre-award costs

Pre-award costs are those costs incurred prior to the effective date of the sponsored award necessary for efficient and timely performance of the scope of work.  Such costs are allowable direct cost of the sponsored project to the extent that they would have been allowable direct costs if incurred after the date of the sponsored award and only with the written approval of the sponsoring agency.

200.459 Professional service costs

Professional services costs include consultant services and other professional services costs such as accounting, legal, engineering and other professional services costs.

Professional service costs that meet the definition of indirect costs are allowable as indirect cost allocations of the University.  Costs that meet the definition of direct costs are allowable as direct cost identifications to sponsored projects, subject to the following select determinations:

200.460 Proposal costs

Proposal costs are the costs of preparing bids, proposals, or applications on potential sponsored projects, including the development of data necessary to support the University's bids or proposals.  Proposal costs of the current accounting period of both successful and unsuccessful bids and proposals are allowable and normally should be treated as indirect costs allocations of the University.

200.461 Publication and printing costs

Publication and printing costs include the costs of professional journal publications, electronic and print media and related costs that can be incurred external or internal to the University.

Publication and printing service costs that meet the definition of indirect costs are allowable as indirect cost allocations of the University.  Costs that meet the definition of direct costs are allowable as direct cost identifications to sponsored projects, subject to the following determinations:

200.462 Rearrangement and reconversion costs

Rearrangement and reconversion costs are cost of moving, restoring, altering and otherwise rearranging existing facilities for the benefit of the University or the sponsoring agency.

Generally, these costs are allowable indirect costs of the University.  However, special alterations and arrangements that meet the definition of a direct cost of a particular sponsored project are allowable as a direct cost of the project with the prior approval of the sponsoring agency.

200.463 Recruiting costs

Employee recruiting costs include the costs and employment offices, help-wanted advertising, employment agencies, testing programs, travel, relocation, etc.

Generally the costs of employee recruitment are allowable indirect costs of the University.  When the purpose of the recruitment costs meet the definition of a direct cost and directly benefit a particular sponsored project that can include recruiting key personnel, etc., these costs can represent an allowable direct cost of a sponsored project if they receive advance approval by the sponsoring agency.

Special recruiting allowances over and above the University’s standard recruitment program are unallowable as either an indirect or direct cost recovery of the University.

200.464 Relocation costs of employees

Relocation costs are costs incurred related to the permanent change of physical work location of an existing or new employee. 

Generally the costs of employee relocation are allowable indirect costs of the University.  When the purpose of the relocation costs meet the definition of a direct cost and directly benefit a particular sponsored project that can include recruiting key personnel, etc., these costs can represent an allowable direct cost of a sponsored project if they receive advance approval by the sponsoring agency.

Allowable costs include:

Unallowable costs include:

200.465 Rental costs of real property and equipment

Rental costs of property and equipment are generally allowable as either a direct or indirect cost of a sponsored project provided:

200.466 Scholarships and student aid costs

Costs of scholarships, fellowships, and other student financial aid programs are allowable only when the purpose of the award is to provide training to selected participants and the charges are approved by the awarding agency.  However, tuition remission and other forms of compensation paid as, or in lieu of, wages to students performing necessary work are allowable provided that:

Charges for tuition remission and other forms of compensation paid to students as, or in lieu of, salaries and wages must be subject to the reporting requirements in §200.430 Compensation—personal services, and must be treated as direct or indirect cost in accordance with the actual work being performed. Tuition remission may be charged on an average rate basis.

200.467 Selling and marketing costs

Selling and marketing of any University services or products are generally unallowable as either a direct or indirect cost of a sponsored project with the exception of:

200.468 Specialized service facilities

Specialized service facility (SSF) costs include the cost of operating highly complex or specialized research and other facilities that can be scientific equipment centric.  Examples include the Department of Laboratory Animal Research (DLAR), PET facilities, CAT facilities, centrifuges, magnets, microscopes, nursing stations, etc.  The cost allocation of such services, normally through some measure of usage such as rates, quantity, time, etc., represents allowable, direct costs of a sponsored project provided the services:

See the University’s financial guideline on Cost Centers for further guidance which can be found at:            http://cfo.pitt.edu/policies/guideline/cost_centers1.pdf

200.469 Student activity costs

Student activity costs include intramural activities, student publications, student clubs, and other student activities, are unallowable unless specifically provided for in the sponsored project.

200.470 Taxes

Tax costs are typically incurred centrally, and are never charged direct to sponsored projects.  These costs are generally allowable as in indirect recovery of costs except for federal taxes such as Unrelated Business Income taxes.

200.471 Termination costs

A sponsored project “termination” is a term-of-art in the industry that implies that a sponsored project is either unilaterally or mutually ended before its scheduled completion date.  Sponsored project notices of award typically can contain a clause that addresses sponsored project termination.  Termination of a sponsored project is not to be confused with the completion date, end date or closing of a sponsored project.

Termination costs can represent the incurrence of certain existing costs that cannot be avoided, as well as new costs that would not have arisen had a sponsored project not been terminated.  Termination costs are generally allowable direct cost allocations to the sponsored project that is being terminated.  Examples include:

Unallowable direct termination costs include:

Any termination costs not reimbursed as a direct cost by the sponsoring agency under the termination settlement are unallowable indirect cost allocations of the University.

200.472 Training and education costs

Training and education costs include the cost of employee training, education and development.  These cost are generally allowable as an indirect expense.  However, training and education costs can also be allowable as a direct expense when specifically required by a sponsored project including:

200.473 Transportation costs

Transportation costs include the cost of freight, express, postage and other transportation services.  These costs are generally allowable on an indirect cost basis, and can be allowable as a direct cost on sponsored projects when the service is directly-related, directly benefits and can be specifically identified to the particular sponsored project.

200.474 Travel costs

Generally the costs of employee travel are allowable indirect costs of the University.  When the purpose of the travel costs meet the definition of a direct cost and directly benefit a particular sponsored project, these costs can represent an allowable direct cost of a sponsored project if they receive advance approval by the sponsoring agency.

Allowable travel costs include:

Unallowable travel costs include:

200.475 Trustees

Travel and subsistence costs of trustees to attend board and other committee meetings and to conduct other University business are generally allowable and recoverable on an indirect cost basis.  These costs are typically incurred centrally, and are never charged direct to sponsored projects.

Exceptions can include any charges for entertainment or alcoholic beverages.