DIRECT AND INDIRECT COSTS
How To Determine Direct Costs And Amenities And Administrative (Oblique) Costs
Identification with the sponsored work rather than the character of the products and companies concerned is the determining consider distinguishing direct from oblique cost of sponsored agreements.
Direct Costs are these costs that may be recognized specifically with a specific sponsored challenge, an tutorial activity, or some other institutional exercise, or that can be instantly assigned to such activities relatively simply with a high diploma of accuracy. Prices incurred for a similar objective in like circumstances must be handled constantly as both direct or oblique costs. The place an institution treats a particular type of value as a direct price of sponsored agreements, all prices incurred for the same purpose in like circumstances shall be treated as direct costs of all activities of the institution.
When charging expenses to federally sponsored agreements, Virginia Commonwealth College (VCU) faculty and staff must pay attention to the appropriateness of the charges. OMB Round A-21 gives the criteria for direct charging costs to federally sponsored programs. The fundamental precept is that costs directly charged to a sponsored undertaking have to be allocable, allowable, cheap and crucial, and handled consistently.
Allocable - The cost should have a direct profit and be straight attributable to the challenge or exercise being performed. For example, an investigator purchases a piece of kit to be able to conduct a sponsored project. This piece of kit is allocable to that venture and will be charged as a direct value to the project. The investigator also purchases workplace supplies for your complete department. These supplies are usually not instantly attributable to the venture and are due to this fact not allocable and cannot be charged as a direct value to the project.
Allowable - The cost must be allowed by VCU coverage, sponsor policies, and OMB Circular A-21. For example, an investigator has three lab technicians working on her challenge and costs their salary to the project. These are allowable prices to the challenge and might be charged as direct costs. The investigator takes her three lab technicians out to lunch in the course of the project. This expense is an unallowable value to the project and can't be charged as a direct cost.
Cheap and Crucial - The fee should be reasonable and essential for the efficiency of the project. For instance, an investigator purchases lab supplies as a way to full the work on his project. These provides are reasonable and essential to the efficiency of the venture and could be charged as direct costs. The investigator also purchases a new microscope that was on sale at the retailer where he bought the lab supplies. The microscope just isn't wanted for his present project however could also be wanted for an upcoming project. This expense isn't cheap and crucial for the efficiency of the current project and subsequently cannot be charged as a direct cost.
Consistently Handled - All costs incurred for a similar goal, in like circumstances, are both direct costs solely or F&A prices only. VCU can't double charge the government for comparable costs by straight charging a cost to a sponsored undertaking and by together with the identical type of cost in the F&A rate charged to that sponsored project. For example, a Enterprise Supervisor purchases stamps for the department. Investigator A makes use of 5 stamps for various mailings related to his challenge and Investigator B uses eight stamps for numerous mailings associated to her project. If the cost of the stamps is included as a direct value to Investigator A or B's sponsored mission, and similar prices (stamps) incurred in like circumstances (general purpose) are included in the College's F&A fee, the fee are usually not treated consistently.
Any expense that does not meet all of those standards should not be straight charged to a federally sponsored project. Notice that approval of a specific expense as a direct value by the sponsoring company doesn't assure that the expense constitutes an allowable cost. The expenditure must also meet the requirements for treating prices consistently as described above.