Step 1: Do you agree that it is your responsibility to ensure that costs are proposed and recorded accurately and in accordance with sponsor requirements?
- No–Recognize that every person on campus involved with the proposing, accepting, and spending of sponsored project funds is in part responsible for the proper treatment of those funds. If you agree, please proceed to Step 2.
- Yes–Go to Step 2.
Step 2: Is the cost an allowable cost? Remember the criteria for allowable costs: The cost is reasonable, the cost is allocable, the treatment of the cost is consistent across the campus, and the cost is allowable under the terms of the particular award.
- No–You must find another source of funding for this particular expense, perhaps from an unrestricted fund. UCSD accounting treatment requires that you use the proper assigned account code so the unallowable expense can be identified as such within our accounting system.
- Yes–Go to Step 3.
Step 3: Based on UCSD typical accounting treatment for this type of sponsored project cost, is this cost normally recorded as a direct cost? (Keep in mind that, in the case of federally funded sponsored projects, administrative and clerical salary costs and general office supplies are typically recorded as indirect costs.)
- No–This cost probably should be treated as an indirect (F&A) cost. Find another source of funding for this particular expense. UCSD accounting treatment requires that you use the proper assigned account code so the indirect expense can be identified as such within our accounting system. However, if you believe you have a special circumstance that warrants further consideration, go to Step 5.
- Yes–Go to Step 4.
Step 4: You now need to verify that this cost is a direct expense. Can this cost be indentified specifically or logically with a particular sponsored project or program? Does the cost provide the project with a clear and supportable benefit? Are you certain that the sponsored project's terms and conditions do not prohibit this particular expense from being charged directly?
- No–You must not charge this as a direct expense. Find another source of funding for this particular expense. UCSD accounting treatment requires that you use the proper assigned account code so the indirect expense can be identified as such within our accounting system.
- Yes–You can record this expense as a direct cost.
Step 5: Is the cost for administrative or clerical salaries?
- No–Go to Step 9.
- Yes–Go to Step 6.
Step 6: Is the administrative or clerical cost on a federal or a federal flow-through award?
- No–For non-federal sponsors, you can charge administrative and clerical expenses which are allowable, allocable, and reasonable. If the terms and conditions of your award permit such expenses, you can record this expense as a direct cost.
- Yes–On a federal or a federal flow-through award, under certain circumstances, administrative and clerical salaries may be directly charged to a federal sponsored project if identified with a major project. Go to Step 7.
Step 7: A major project is one that requires an extensive amount of administrative or clerical support that is significantly greater than the routine level of such services provided by academic departments. Do you believe that the federally funded sponsored project in question is a major project?
- No–This cost should be treated as an indirect cost. Find another source of funding for this particular expense. UCSD accounting treatment requires that you use the proper assigned account code so the indirect expense can be identified as such within our accounting system.
- Yes– As a major project, you have met the definitional test. Go to Step 8.
Step 8: You now need to consider whether the administrative or clerical salary costs for this federal or federal flow-through award may be charged as a direct cost. Are these costs for individuals who meet one of the following criteria?
- The employee's effort is at least 15% of either the employee's total annual effort or 15% of the employee's effort during a definable period of time.
- The employee's salary has been distributed using a labor clearing fund approved for this purpose and at least 80% of the employee's effort is assigned to sponsored projects.
- No–This cost should be treated as an indirect cost. Find another source of funding for this particular expense. UCSD accounting treatment requires that you use the proper assigned account code so the indirect expense can be identified as such within our accounting system.
- Yes– As a major project, you have met the empirical test. Go to Step 4.
Step 9: Is this non-administrative cost on a federal or federal flow-through award?
- No–For non-federal sponsors, you can charge expenses which are allowable, allocable, and reasonable. If the terms and conditions of your award permit such expenses, you can record this expense as a direct cost.
- Yes–Go to Step 10.
Step 10: You now need to consider whether this non-salary cost may be charged directly to this award. You are at this step because you believe there is a special circumstance which may allow this. Costs that are normally considered indirect may be treated as direct costs if the purposes and circumstances for which these costs are incurred are different. A typical example of different purpose and circumstance occurs when a particular project requires specific and identifiable support that is over and above the level of support provided and charged indirectly to all activities. These incremental costs are charged direct because they are not incurred for the same purpose as the common costs.
Review the discussion and examples in Sponsored Project Direct and Indirect (F&A) Costs. Having reviewed this material, do you believe your purpose or circumstance supports the charging of a normally indirect cost as a direct cost?
- No–This cost should be treated as an indirect cost. Find another source of funding for this particular expense. UCSD accounting treatment requires that you use the proper assigned account code so the indirect expense can be identified as such within our accounting system.
- Yes–Go to Step 11.
Step 11: You have non-salary costs that you believe deserve special treatment, based on your determination that the purposes and circumstances for which these costs are incurred are different. These costs must meet all of the following conditions before you can charge them as direct:
- The cost is required to be incurred by the project scope.
- The cost can be specifically identified to the project.
- The cost is explicitly budgeted in the award. (When an agency permits rebudgeting for these items and the cost meets the first two criteria, this criteria is not required.)
Do your costs meet the above criteria?
- No–This cost should be treated as an indirect cost. Find another source of funding for this particular expense. UCSD accounting treatment requires that you use the proper assigned account code so the indirect expense can be identified as such within our accounting system.
- Yes–Return to Step 4. You must verify once more that this qualifies as a direct cost. Document for your files your justification for the differing purpose and circumstance that may permit the charging of these costs as a direct expense.
Questions? Contact OPAFS.
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