Costing Principles and Practices-Case Studies and Best Practices

1. Costing Principles and Practices-Case Studies and Best Practices Tam Tran Assistant Director, Sponsored Projects Diane Nunes Compliance Officer, Contracts and Grants Accounting November 13, 2013

2. When to Charge to Award • Cost Principles A-21 (section C: Basic Considerations) • Reasonable • Allocable • Allowable • Consistently Treated • http://www.whitehouse.gov/omb/circulars_default

3. When to Charge to Award Reasonable: Public opinion test- any prudent person would purchase this item and pay this price Allocable: There is a direct relationship between each item purchased and the project Allowable : The cost must follow the Sponsored Agreement terms and federal policies Consistently Treated: At the institutional level, costs, direct and indirect, must be treated the same in like circumstance. • Must meet all four standards to remained charged to the Award

4. Cost Accounting Standards (CAS) CAS Required by OMB A-21 (revised May 1996) • CAS 501: requires educational institutions to use consistent cost accounting practices for estimating, accumulating and reporting costs for sponsored agreements • CAS 502: requires education institutions to treat all costs incurred for the same purpose, in like circumstances, consistently as either a direct cost or facilities and administrative (F&A)costs • CAS 505: requires the exclusion of all costs that are expressly unallowable or mutually agreed as unallowable from any proposal, application, claim or billing • CAS 506: requires the consistent use of the same cost accounting period (ie, the University’s fiscal year)

5. Cost Accounting Standards (CAS) • Public Law 100-679- Require CAS Disclosure Statement (DS-2) • Identify accounting practices, policies, and procedures for assigning costs to federally sponsored programs and attest to consistent treatment of those practices • http://snap.uci.edu/viewXmlFile.jsp?resourceID=5186

6. Order of Precedence Question: Can alcohol be charged to project? • Award Terms and Conditions (first place to determine whether cost can be charged to project) • Program Rules • Agency Terms and Conditions • OMB Circular A-21 • Keep in mind of Public Law and Institutional Policy

7. Is It Chargeable? • Moving expenses (relocation costs) • General use software • Air conditioner • Visa fees (foreign researcher) • Lab key • Air fare

8. Decision-Making • Does the expense meet award terms and conditions? • Does it meet specific program rules? • Does it meet agency terms and conditions? • Does the expense meet OMB A-21 criteria? • Does the PI justification connect the cost to the work of the project that will be charged?

9. Take Away Message • Its not the nature of a good or service that’s in question, but how it directly benefits a project. • It is appropriate to ask/verify how an item is allocable to a project. • To avoid audit disallowance –DOCUMENT! • Secure prior approval for rebudgeting through Sponsored Projects

10. Take Away Message • We are required and empowered to advise the PI and protect the University from the ramifications of inappropriate charges. • Sponsored Projects and C&G Accounting are available when you need clarification/assistance. • Non-compliance can expose University to financial risks • Non-compliance can jeopardize UCI’s ability to accept future federal funding

11. Questions??