Cost Principles January 6, 2016

1. Cost Principles January 6, 2016

2. What are cost principles? Principles for determining costs applicable to research and development, training and sponsored work performed by NCSU on State and Federal appropriations and Federally-funded sponsored agreements and deals with the subject of cost determination: Is the cost reasonable?Is the cost allocable?Is the cost allowable?

3. Is the cost reasonable? A cost is reasonable if a prudent person would purchase the item at that price The cost is necessary for the performance of the activity Incurrence of the cost is consistent with policies and practices of NCSU

4. Is the cost allocable? A cost is allocable if the cost benefits the project that is being charged and there’s available budget

5. Is the cost allowable? A cost is allowable if it serves NCSU’s business purpose/mission, including instruction, research, and public service It is permissible, according to NCSU policy and federal regulations (regardless of whether or not it is a sponsored project) It is permissible (for a sponsored project) according to the terms and conditions of the Sponsored Agreement It does not meet the rules for “unallowables”

6. State/Federal Unallowable Costs Overview Repairs and Maint. to buildings cannot be applied to Federal funding Gifts of any kind not allowed on State/Fed funding Utilities such as Water (53330) and Electricity (53310) not allowed on Academic, Federal or ETF funding Paper towels, tissue paper, cleaning agents, trash bags, etc. not allowed on State/Federal funding if for office or kitchen use at a location that has housekeeping services

7. State/Federal Unallowable Costs Overview cont. Promotional items such as shirts, hatsand jackets are not allowed on State/Fed funding Promotional items such mugs, lapel pins, pens, pencils, sunglasses, etc. not allowed on State/Fed Picture frames, paintings, canvas prints, framing services for faculty pics not allowed on State/Fed Displayable items for CALS Tailgate not allowed on State/Fed funding Tent/chair rentals not allowed on State/Fed

8. State/Federal Unallowable Costs Overview cont. Voluntary Dues not allowed on State/Fed funding Voluntary meals on registrations not allowed on State/Fed funding Drinking water for human consumption not allowed on State/Fed funding Caps & gowns not allowed on State/Fed funding Amazon Prime Membership not allowed Thank you notes/cards and flowers not allowed on State/Fed funding

9. State/Federal Unallowable Costs Overview cont. Subscriptions for individuals are not allowed on State/Fed funding unless required for the position and cannot be sent to a personal residence Individual memberships/annual dues are not allowed on State/Fed funding unless the membership is required for the employee’s position or if the individual who’s name the membership is in can prove that he/she is receiving a cost savings on conference registrations during the course of that year, otherwise the charge has to go on discretionary or gift funding

10. Tuition Tuition and Student Fees not allowed on State/Federal projects, however, if the student is paid from a grant that generates F&A during the time period the tuition or fees were incurred then the tuition and/or fees can be applied to a 257xxx project (Overhead or F&A funding) Tuition and Student Fees can be applied to ledger 6 and ledger 7 projects and upper ledger 3 projects such as 37xxxx, if appropriate for the purpose of that trust fund

11. Food Food for human consumption is not allowed on State/Federal projects Food purchased for classroom instruction or demonstrating food preparation can be applied to State/Federal projects Sponsored research that requires the purchase of food items that is included in the grant budget Food for human consumption is allowed on ledger 6 and ledger 7 projects as well as GSA Projects (354xxx-355xxx) and upper-ledger 3 Projects (37xxxx) only if you can verify that the project has the proper food exemption code

12. Vehicles Vehicles can be purchased on all funding sources except for GSA, ETF and 5 ledger projects, unless a specific 5-ledger grant states that a vehicle can be purchased

13. Indirect Costs Indirect costs are such items as copier paper, pens, note pads, staples, telecom services, salary of administrative personnel; basically expenditures that are administrative in nature and that help a department operate but that aren’t tied to specific research Indirect costs are not allowed on Federal projects, GSA projects or ETF projects

14. Policy Reminders PCardreceipts require a business purpose PCard charges for travel related expenditures require appropriate approval (TA, AP104) Expenditures cannot cross Fiscal Years on State/Federal appropriations Spending Guidelines for State/Federal projects are the same for Receipt, ETF and Overhead projects International Travel cannot post to State/Federal projects without the appropriate Director’s approval (incl. JVs) Invoices and Marketplace orders require a business purpose

15. Guidelines Basic Spending Guidelines: https://materialsmgmt.ofb.ncsu.edu/uploads/pdf/Spending_Guidelines.pdf Trust Fund Guidelines: https://materialsmgmt.ofb.ncsu.edu/uploads/pdf/guidelines_June2011.pdf

17. Questions