The cost principles as defined in OMB Circular A-21 provide the basis for determining the procedures used to identify direct costs. Costs incurred to support a project are treated as direct costs and are charged to sponsored projects when the costs can be specifically identified to the project with relative ease and with a high degree of accuracy and are allowed by all terms and conditions governing a particular project. These conditions include being reasonable, allocable and allowable.
Facilities & Administrative (F&A) costs are general institutional expenditures that are incurred for common or joint objectives benefiting instruction, research, or public service and therefore cannot be readily identified with a particular sponsored project. These costs are allocated to sponsored projects in accordance with OMB circulars through the application of the University's Federally approved F&A Cost Rate.
Allocability - the assignment of an item of cost to one or more sponsored awards/accounts, of which each award/account charged receives a realistic proportional benefit from the incurrence of the cost. There must be a correlation between the direct benefit received and the portion of the cost that is charged to each project/account.
All expenditures to a sponsored award must meet the definition of a direct cost. It is important to look at the purpose of the individual project. What may be considered a normal direct cost for one project may not be reasonable for another.
Based on NC State University's approved disclosure statement (DS-2) and other Federal, State and University guidelines we provide you a list of costs and how they are NORMALLY charged. There may be exceptions for individual projects and you should contact your college business office for more specific information on the justification and documentation needed to allow for an unlike circumstance.
Note to Centers: While you may have very clear unlike circumstances on some awards, the justification and documentation issues still apply.
Costs that are normally DIRECT include PI or technical salaries and wages, research supplies, travel related to project, copy charges, long distance phone calls, special purpose equipment, subcontracts, etc.
Costs that are normally F&A include clerical salaries and wages, office supplies, office furniture, cell phones, telephone line charges, postage, memberships and subscriptions, etc.
Questions arise frequently about certain items and how they should normally be charged. Below we have tried to address these specific items. This list is not meant to be all-inclusive. It covers the most commonly questioned items and the items that pose the most risk. For more information on specific costs please contact your college business office or the Office of Contracts and Grants.
CLERICAL/ADMINISTRATIVE SALARIES (account codes 51000-51999)
These charges are normally F&A costs. They may be charged as direct costs when the nature of the work performed under a particular project requires an extensive amount of administrative/clerical support and the costs meet the general criteria for direct charging in Circular A-21. Please see the Administrative and Clerical Salaries/Wages/Fringe Benefits section of Cost Accounting Standards for more information on unlike circumstances directly related to salaries.
GENERAL OFFICE SUPPLIES (account codes 52000-52999)
Costs include those incurred in support of routine administrative activities associated with instruction, public service, research and other institutional activities, (i.e., paper, pencils, pens, ink, toner cartridges, office furniture, general purpose software, etc.). These items of cost are considered readily expendable and are treated as facilities and administrative costs covered by the negotiated F&A cost rate. The only exceptions are those wherein the purchase of the supplies is extensive in nature, can be specifically identified as related to the technical aspect of the project, and meets the definition of a direct charge.
BOOKS (account codes 52000-52999)
The classification of this cost is broken down into two categories - the types of books normally found in a University library versus those that are not. The cost of the types of books found in a University library is normally a Facilities & Administrative (F&A) cost. The cost of the types of books not normally found in a University library, such as textbooks, is normally a direct charge to a sponsored project if there is a direct link to the purpose of the project. Due to the nature of this cost, specific documentation must be present for the cost to be allowable as a direct charge on a specific sponsored award.
BOOKS NORMALLY FOUND IN A UNIVERSITY LIBRARY
Since this cost is normally an F&A cost, an unlike circumstance must be justified in order to charge the cost as a direct cost. Factors that must be considered are:
Books that will be used to gain an understanding of general knowledge in a field of work would not meet the relative ease/high degree of accuracy test.
BOOKS NOT NORMALLY FOUND IN A UNIVERSITY LIBRARY
The cost of this type of book is normally a direct cost. The cost will be allowable as a direct charge if the cost for each book has been adequately justified in the proposal or a justification is in the College file if the need arises after the project was awarded. The important distinction between this type of book and the type of book described above is that the cost does not have to be extensive in nature since no unlike circumstance is required. However, due to the nature of this particular cost it is harder than usual to meet the justification and documentation requirements.
The following factors should be considered when preparing the justification:
GASES (account code 52300)
Gases such as carbon dioxide and liquid nitrogen are considered direct charges.
PRINTING, BINDING, PUBLICATION AND COPYING (account code 52600 or 53400 depending on the charge)
These costs are normally direct charges to a sponsored project. One important criterion to this definition is that you must be able to specifically identify the charge to a particular project with relative ease and high degree of accuracy and that cost must provide a direct benefit to that project sometime during the life of the award. Please go to the Printing, Binding, Publication and Copying section of Cost Accounting Standards for more information related to the documentation issues associated with this charge.
Wolfcopy charges are allowable as a direct charge only if there is proper documentation, including a log describing what was copied.
TRAVEL (account codes 53110-53180)
Travel costs by those individuals readily identifiable to the sponsored project are treated as a direct charge. If an individual is on business related to a sponsored award they should be providing a cost benefit to the award. If there is a cost benefit to the project there will normally be effort - directly charged or cost shared to the project.
TELEPHONE AND VARIOUS OTHER COMMUNICATION EXPENSES (account codes 53200-53292)
Communication expenses incurred in support of routine administrative activities associated with instruction, public service, research and other institutional activities should not be charged directly against sponsored projects. Installation charges, monthly use charges, local access calls, pagers, etc. are considered F&A costs and should not be charged directly to sponsored accounts. The only exceptions are those relating to long distance calls, telegrams, fax long distance charges, equipment charges (dedicated research/lab lines), and various other communication expenses specific to a project and incurred for the sole direct benefit of the project.
Cellular Phones - Per NCSU policy, individuals who require cellular telephone service to conduct University business must obtain approval from the dean or department head of their unit. Orders for cellular services and equipment must be placed through the Telecommunications Services Division, Office of Information Technology Services (ITS). Services and equipment must be requested on the Cellular Phone Service Request Authorization form.
The services paid for by the University are to be used in the conduct of University business. These phones and their charges would require an unlike circumstance in order to be charged to a sponsored award.
Use of Personal Cellular Service for Business - Reimbursement of the employee for cellular telephone usage for business calls will be handled the same as making business calls away from the office. The employee may request reimbursement monthly. A copy of the cellular bill denoting business related calls must be submitted for reimbursement, with personal calls blacked out for privacy. No reimbursement will be made for the instrument, monthly fees, or the portion of "free" minutes. The employee should also provide information on how the call relates to the purpose of the project
POSTAGE EXPENSES (account code 53220)
Postage expense incurred in support of routine administrative communication activities associated with instruction, public service, research, and other institutional activities should not be charged directly to sponsored accounts. The only exceptions are those cases where extensive postage expense is required in support of the goals and objectives of the sponsored award being charged. Mailing technical reports and other project deliverables are considered part of normal, routine business expenses and are therefore considered F&A costs. Postage expenses include US Mail, Federal Express, UPS, etc. All shipping costs for purchases are charged to the same account code as the items being purchased. The difference between postage (F&A) and freight (direct) is driven by the item(s) being sent not the means by which it is sent.
REPAIRS AND MAINTENANCE OF EQUIPMENT (account codes 53500-53591)
These charges are allowable direct charges insofar as they relate to the technical goals and objectives of the project.
FREIGHT (account code 53600)
This account code would be used for services to transport or move resources owned or used by the institution. An example of this would be moving a piece of equipment to another location. It could also be used for departmental moving expenses. This would be considered an allowable direct charge. It would NOT include project deliverables, technical reports and other such items sent by the US Mail, UPS, Federal Express, DSL, etc. (see account code 53220).
MEMBERSHIPS AND SUBSCRIPTIONS (account codes 54910-54920)
Institutional memberships in professional organizations and subscriptions to technical periodicals are normally treated as an F&A cost. They may be charged direct only when related to a specific project and necessary for the successful completion of the goals and objectives of the project.
Generally, individual memberships are unallowable. Individual memberships in civic or social organizations are expressly unallowable.
An individual membership or subscription to a professional group or periodical may be allowed as a direct charge to a contract or grant only if the following can be demonstrated:
LAB/COLLEGE/DEPARTMENT OWNED VEHICLES (account code 54998)
In order for charges for these vehicles to be charged as direct costs, there should be an approved use rate similar to Motor Pool. This would cover the costs of repair and maintenance. A log would also need to be kept for audit purposes.
SERVICE CENTERS(account code 54998)
Costs identified to a particular sponsored project for the use of University-owned labs and other service centers should be budgeted, charged, and reported as direct costs. These charges must be based on actual utilization supported by adequate documentation. These charges must also be based on a usage rate approved by the Office of Contracts and Grants. The rate must be approved before the charge is incurred by the sponsored projects.
EQUIPMENT (account codes 55000-55999)
Per OMB Circular A-21:
Per Federal Demonstration Partnership (FDP):
General/Special purpose equipment is allowable as a direct charge only if used primarily in the actual conduct of research. These may or may not need prior approval depending on the agency specific regulations.
AIR CONDITIONERS (account code 55521)
These costs are part of the F&A costs through Facilities Maintenance.
FOOD COSTS (NOT IN TRAVEL STATUS)
Meals for employees not in travel status are normally considered "entertainment" or personal" expenses.
INTERNET ACCESS (in an employee's residence)
These costs are considered personal and are not allowed as a direct charge.
Go to the Expense Accounts Chart on the NCSU Accounting Web Site for information related to specific account codes.