The purpose of this policy is to ensure
federal funds received by Clark state college are spent only on allowable
activities in accordance with CFR Part 200 Subpart E - Cost Principles, other
special terms or conditions of the grant award, and/or other applicable state
and federal guidelines. The college is committed to ensuring that all
expenditures are appropriate and are conducted in accordance with sponsor terms
and conditions as well as regulations. The business office has the authority to
approve or reject expenditures based on allow-ability and
reasonableness.
The federal government is the largest
sponsor of externally funded activity at Clark state college. The cost
principles relating to expenditures on federal awards are contained in the
office of management of budget's (OMB) uniform administrative requirements,
cost principles and audit requirements for federal awards, final rule (uniform
guidance). These cost principles require that any expense charged to a
federally sponsored project be reasonable and necessary, allocable,
consistently treated, and conform to any limits or exclusions set forth in
uniform guidance or the terms and conditions of the award. In addition,
individual awards may include special terms and conditions, which must be
considered before allocating certain costs to the award.
This document outlines the general
procedure for determining allowable costs on federally sponsored awards. The
goal of this document is to provide clear guidance as to what costs constitute
appropriate expenses to sponsored projects as well as to achieve consistency in
expensing practices across Clark State college.
All employees who are involved with the
administration of sponsored agreements should be familiar with this policy.
This includes business administrators and departmental sponsored project
administrators, deans, chairs, principal investigators and other research
personnel who are involved with sponsored awards.
(A)
Except where
otherwise authorized by statute, costs must meet the following general criteria
in order to be allowable under federal awards and most other grant-sponsored
programs:
(1)
The cost must be necessary and reasonable for the
performance of the federal award or sponsored agreement and it does not exceed
that which would be incurred by a prudent person under the circumstances
prevailing at the time the decision was made to incur the cost.
(2)
The cost must be
allocable to a particular project when it has a direct benefit and can be
directly attributable to the project or activity being
performed.
(3)
The cost must be consistent with policies and
procedures that apply uniformly to both federally financed and other activities
of the college.
(4)
The cost is consistently treated when used in like
circumstances (i.e., as direct or indirect costs).
(5)
The cost must be
allowed by Clark state college policy, sponsor policies, and costs conform to
any limitations or exclusions set forth by section 200.403 principles or are
identified in the federal award.
(B)
A cost is
reasonable if the nature of the goods or services acquired or applied, and the
amount involved, reflect the action that a prudent person would have taken
under the prevailing circumstances when the decision to incur the cost was
made. Important consideration in determining the reasonableness of costs
are:
(1)
Is the
cost of a type generally recognized as necessary for the operation of the
college or the performance of the sponsored project?
(2)
Have the
restraints or requirements imposed by such factors as federal and state laws
and regulations, sponsored agreement terms and conditions, and arm's-length
bargaining been satisfied?
(3)
Have the
individuals concerned acted with due prudence in the circumstances, considering
their responsibilities of the institution, its employees, its students, the
government, and the public at large?
(4)
Is the extent of
the actions taken with respect to the incurrence of the costs (i.e., hiring
decision, choice of goods or services, determination of salary or price, vendor
selection, etc.) consistent with established Clark state college policies and
practices applicable to the work of the institution generally, including
sponsored projects?
(C)
A cost is
allocable to a particular cost objective (i.e., a specific function, project,
sponsored agreement, department, or the like) if the goods or services involved
are chargeable or assignable to such cost objective in accordance with relative
benefits received or other equitable relationship. Every incurred cost must
have a direct benefit to the sponsored project being charged. In general, a
cost is allocable to a particular sponsored project if it fulfills one of the
following conditions:
(1)
It is incurred solely to advance the work under the
sponsored agreement; or
(2)
it benefits both the sponsored agreement and other work
of the college, in proportions that can be approximated through use of
reasonable methods; or
(3)
it is necessary to the overall operation of the college
and, in light of the principles provided in OMB uniform guidance, is deemed
assignable in part to sponsored projects.
(D)
If a cost
benefits two or more projects or activities in proportions that can be
determined without undue effort or cost, the cost should be allocated to the
projects based on the proportional benefit. If a cost benefits two or more
projects or activities in proportions that cannot be determined because of the
interrelationship of the work involved, then the costs may be allocated or
transferred to benefited college departments/projects on any reasonable basis
as established by grant guidelines.
(E)
In the rare
instances in which a proper cost allocation cannot ultimately be determined
using any reasonable methods, the cost may be charged to a single sponsored
project.
(F)
Where the purchase of equipment or other capital items
is specifically authorized under a sponsored agreement, the amounts thus
authorized for such purchases are assignable to the sponsored agreement
regardless of the use that may subsequently be made of the equipment or other
capital items involved.
(G)
Any costs allocable to a particular sponsored agreement
under the standards provided in OMB uniform guidance may not be shifted to
other sponsored agreements in order to meet deficiencies caused by overruns or
other fund considerations, to avoid restrictions imposed by law or by terms of
the sponsored agreement, or for other reasons of convenience.
(H)
Any costs
allocable to activities sponsored by industry, foreign governments, or other
sponsors may not be shifted to federally sponsored agreements.
(I)
Applicable Laws,
Regulations, and Guidance
