Cost Accounting, KUCR
This document was developed to ensure consistent compliance with 2 CFR 200 Uniform Guidance and the Cost Accounting Standards, under which all federal funds must be managed. For consistency purposes, the KU Center for Research (KUCR) applies the basic principles of 2 CFR 200 Uniform Guidance to all other sponsored projects. Some funds held at KUCR are outside of the realm of sponsored funding and may allow additional flexibility. This document should clarify those exceptions. Please note that awards that were issued before December 26, 2014, and do not receive additional or incremental funding, will still be governed by OMB Circular A-21.
This policy provides the general principles for managing accounts held in KUCR including all sponsored projects awarded to the University of Kansas Center for Research, Inc. and the University of Kansas (except where prohibited by State of Kansas policies for KU held funds), PI accounts, fee for service accounts, matching accounts, etc. Exclusions are noted below for each item. In addition, some sponsors have the authority to approve what would otherwise be considered an unallowable cost and the sponsor’s determination will provide sufficient justification for allowance.
April 20, 2010
This document was developed to ensure consistent compliance with OMB Circular A-21 and the Cost Accounting Standards, under which all federal funds must be managed. In addition and for consistency purposes, KUCR applies the basic principles of OMB Circular A-21 to all other sponsored projects. Some funds held at KUCR are outside of the realm of sponsored funding and may allow additional flexibility. This document should clarify those exceptions.
This policy provides the general principles for managing accounts held in KUCR including all sponsored projects, PI accounts, fee accounts, matching accounts, etc. Exclusions are noted below for each item. In addition, some sponsors have the authority to approve what would otherwise be considered an unallowable cost and the sponsor’s determination will provide sufficient justification for allowance.
One of the most important underlying principles for determining the allowablity and appropriateness of charges is ensuring that transactions are adequately documented. Adequate documentation includes an invoice or receipt that identifies WHAT was purchased, WHERE it was purchased, and WHO purchased it. In addition, WHEN it was purchased may also be a deciding factor on allowability. Adequate documentation is necessary to determine allowability and appropriateness.
The Principal Investigator/Project Director (PI/PD) or other responsible party overseeing an account and department/unit are ultimately responsible for the allowablity and appropriateness of expenditures charged to a sponsored project, PI account, or other KUCR service accounts. The PI/PD is in the position to determine the best use of the funds available and should rely on the basic principles of the 2 CFR 200 Uniform Guidance for Allowability (see §200.403). Judgment on the reasonableness of all expenditures, and especially in the case of hospitality, is the responsibility of the department or unit managing the project or fund account. Certain types of expenditures from a KUCR fund are never allowable, except as noted below.
Unallowable expenditures include:
- Alcoholic beverages charged to any fund account unless the use is for an official business purpose, for cooking, research, or course study. No federal funds may be used for the purchase of alcoholic beverages.
- Flowers or gifts of any kind in connection with the illness, death or personal benefit of employees or family members. Flowers used for public functions, such as retirement parties and convocations may be allowable from non-federal, non-restricted funds (e.g. a PI account) when they serve an official business purpose.
- Employee hospitality functions such as holiday parties and recognition lunches, departmental retreats, and retirement parties that serve a business purpose are allowable from KUCR non-restricted funds. Events that do not serve a business purpose are not allowable. The University’s Detail for Official Hospitality/Food/Beverages form must be attached to charges and document the business purpose/justification and attendees of the function.
- Any item of personal benefit to the recipient as the Internal Revenue Service considers such items to have a taxable nature.
The following expenditures categories have inherently been subject to more scrutiny, both in audit situations, internally and with the public.
KUCR provides cash advances for travel to support the research mission of the Office of Research and the University. A KUCR Travel Expense Report or other reporting of these expenses (including return of excess cash) must be submitted to the KUCR Business Office within 30 days of return or completion of activity as stated above. Outstanding loans may be reported as income at the end of the calendar year. Requests for additional cash advance will be approved only if all prior cash advances have been fully documented in accordance with KUCR Policy.
Cell Phones, PDAs, Smart Phones, and Other Electronic Communication devices
Mobile Communication and Information Devices describes KU's policy on cellular phones, and should be followed for purchase and use of cellular devices.
The monthly service fees for most all types of cellular and/or portable communication devices are generally considered an unallowable cost on federal sponsored projects unless detailed justification and explicit sponsor approval is received prior to the expense. The purchase of the material devices, enhancements, and non-recurring costs may be allowed from non-restricted KUCR accounts. Recurring service costs for the maintenance of such devices may also be allowed from non-restricted accounts if prior approval is received through normal KU procedures in compliance with the KU cellular phone or other applicable policy.
Computers, Laptops, and Printers
2 CFR 200 Uniform Guidance allows charging computing devices as direct costs if the device(s) is/are essential and allocable, but not solely dedicated, to the performance of a federal award (see 2 CFR 200 Uniform Guidance §200.453). Equipment that cannot be shown as directly contributing to the federal project to which it is charged will not be allowed. Non-restricted funds, such as PI accounts, may be used to purchase computers and printers that will be used for general purposes.
2 CFR 200.432 defines a conference as a meeting, retreat, seminar, symposium, workshop or event whose primary purpose is the dissemination of technical information beyond the non-Federal entity and is necessary and reasonable for successful performance under the federal award.
- For conference costs to be allowable, the conference must be attended by individuals outside of KU-Lawrence and KU Medical Center.
- Allowable conference costs paid by KUCR as the sponsor/host of the conference may include rental of facilities, speakers' fees, costs of meals and refreshments, local transportation, and other items incidental to such conferences unless further restricted by the terms and conditions of the federal award.
- Conference hosts/sponsors must exercise discretion and judgment in ensuring that conference costs are appropriate, necessary and managed in a manner that minimizes costs to the Federal award.
- The federal awarding agency may authorize exceptions where appropriate for programs including Indian tribes, children, and the elderly.
Domestic and International Travel
All travel on sponsored projects should be reviewed to make sure it is allowable under sponsor guidelines. International travel may carry additional restrictions regardless of funding source, such as prior approval for travel to any country on the State Department warning list, export control limitations, and limitations on cash that may be carried into or out of certain countries.
As of March 2020, non-refundable travel costs and travel cancellation fees for travel canceled due to public health concerns related to the outbreak of coronavirus (COVID-19) are allowable on sponsored projects, as long as
planned travel was allowable on the project;
appropriate documentation is provided to show an attempt to obtain refund; and
sponsor has not explicitly disallowed these costs.
For all air travel, commercial airfare costs in excess of the basic least expensive unrestricted accommodations class offered by commercial airlines are unallowable except when such accommodations would:
- Require circuitous routing;
- Require travel during unreasonable hours;
- Excessively prolong travel;
- Result in additional costs that would offset the transportation savings; or
- Offer accommodations not reasonably adequate for the traveler's medical needs. The non-federal entity must justify and document these conditions on a case-by-case basis in order for the use of first-class or business-class airfare to be allowable in such cases (See 2 CFR 200 Uniform Guidance §200.474).
For an up to date listing of important issues related to travel using any KUCR funds, please refer to the KUCR Travel Expense Report and Related Information page. For additional questions please email email@example.com.
Furniture and Office Equipment
In general, purchase of furniture and office equipment, including but not limited to desks, cabinets, chairs, and copiers, is unallowable on federally sponsored projects or projects supported by federal flow-through funds unless itemized and justified in the proposal and approved in advance by the sponsoring agency as necessary for the successful conclusion of the project. These items may be purchased as necessary to further the PI’s research with funds from the PI account.
Home Internet Connections
The cost of home internet connections is not normally allowed as a direct cost to any KUCR funding except in cases where the connection is a requirement for the successful completion of a project, and not merely a convenience to the employee. These cases are assumed to be very rare and will require the approval of the employee’s applicable dean, director, or chairperson.
Non-sponsored project funds may be used for official university hospitality expenses and will be processed provided the voucher documentation includes the who (specify names and business relationship if not clear), why, where, what, and when of the event, and indicates the nature of the business discussion or activity. It is the responsibility of the college and/or department/center to explicitly state the business purpose on all expenditure transaction vouchers authorizing payment of costs associated with employee related events.
The college and/or department/center should determine when non-restricted funds may be used for the purchase of coffee, soft drinks, doughnuts, or other food for university meetings with a KU business purpose. In general, such business meetings include staff external to the hosting department and the meetings are pre-planned or are held over lunch/dinner due to other scheduling conflicts, and have mandatory attendance requirements.
Memberships and Subscriptions
Institutional memberships that serve a broader than individual purpose, such as the American Council on Education, the Institute of Electrical and Electronics Engineers (IEEE), and other institutional association memberships should be made at the vice chancellor, college, or departmental levels. Personal memberships in professional organizations may be paid from non-sponsored funding. Professional memberships that are required to be purchased for participation at a conference may be allowable. Memberships and subscriptions are not allowed to be purchased on federal sponsored projects unless an unlike circumstance can be justified or specific written approval from the administrative signatory of the sponsoring agency is received. An unlike circumstance is generally defined as an item that is normally considered an unallowable direct cost, but that which is determined to be necessary for the successful completion of the project and for which the project will be the sole beneficiary of the purchase. Memberships of a purely social nature are not allowable.
Journals or other professional materials relating to the unit’s business purpose are allowable if included in an allowable cost of membership. Institutional and individual subscriptions to business, professional, or technical journals are allowable costs on non-sponsored project funds.
It is the responsibility of the college and/or department/unit to assure that the authorization or expense of memberships and subscriptions conforms to university policy as well as with any sponsoring agency polices.
Personal Protective Equipment (PPE)
As of March 2020, due to the COVID-19 pandemic, personal protective equipment is an allowable expense on all sponsored projects to ensure the safe conduct of project activities, including those in non-laboratory or non-field work environments. These are allowed to keep sponsored project personnel safe and protect from the spread of coronavirus. These purchases must be made in accord with sponsor guidelines, and documentation to demonstrate the benefit to the project must be kept with transactions. The FITC PPE account code 530102 should be used for these purchases.
Publication costs for electronic and print media, including distribution, promotion, and general handling are allowable. Page charges for professional journal publications are allowable where:
- The publications report work supported by the sponsor; and
- The charges are levied impartially on all items published by the journal, whether or not under a sponsored project.
KUCR may charge the costs of publication or sharing of research results even if the costs are incurred after the period of performance, but before the closeout date. (See 2 CFR 200 Uniform Guidance §200.461)
Salaries for Administrative Personnel and Other Departmental Expense
Salaries for administrative or clerical services are not normally allowed to be charged to federal grants or contracts. However, there are some exceptions to this federal guideline if the specific situation meets the following exceptions:
1.Administrative or clerical services are integral to a project or activity;
2.Individuals involved can be specifically identified with the project or activity;
3.Such costs are explicitly included in the budget or have the prior written approval of the federal awarding agency; and
4.The costs are not also recovered as indirect costs.
Requests for administrative or clerical salaries to be considered integral to a project or activity should be justified based on the essential need of those individuals to complete the project. Their essential need to completing a project would not necessarily be determined by the size, amount, or scope of the project, but determined by the duties to be performed in relation to the scope of work being proposed. (See 2 CFR 200 Uniform Guidance §200.413.)
Administrative and clerical salaries may be allowed as direct expenses on non-federal projects if the sponsor does not impose any such limitations and they are justified and approved by the sponsor. These costs may be directly charged to non-restricted KUCR accounts.
Salary and Fringe for Employees impacted by COVID-19
2 CFR 200.403 (c) requires treatment to be “consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity”. To ensure that salary and fringe costs of employees appointed to sponsored projects are treated consistently with employees paid on non-sponsored, the salary and related fringe for individuals who are appointed to sponsored projects, but are unable to work due to the COVID-19 outbreak, will be considered allowable on the project as long as salary/fringe is an allowable project expense, the individual is appointed based on sponsor-approved budget or a documented benefit to the project (when the individual can perform duties), and sponsor has not explicitly denied these costs as allowable for pay period with earnings ending date 3/21/2020 through pay period with earnings end date 6/27/2020. Salary for employees who are unable to work/perform project tasks is not an allowable expense on or after pay periods with earnings end date of 7/11/2020 (earning start date of 6/28/2020).
Supplies and General Purpose Items
Purchase of office supplies including paper, toner, pens, staples, folders, markers, postage, local telephone costs, or any other item that cannot be exclusively identified to a project are unallowable as direct costs on federally sponsored projects. Purchase of these general purpose items may be allowable on non-restricted KUCR accounts and some sponsored projects only if the sponsor has approved the costs as noted by inclusion on the awarded budget and are allowable by the sponsor’s own guidelines.
General use items such as coffee, coffee pots, refrigerators, microwave ovens, etc. for employee use only may be allowable from non-federal, non-restricted funds if the use is shared and the appliance is in a common area.
In addition to the above items, the following information may be relevant if the method of payment for items charged to KUCR accounts is by credit card:
KUCR Credit Card Transactions
The KUCR credit card program is designed to improve efficiency in processing transactions. The same rules of allowability apply as listed previously in this document, but source documents, such as packing slips, invoices, order forms, etc. need to be obtained and provided to KUCR by the card holder. Every transaction must have complete documentation.
Pre-approval for use of a KUCR credit card outside of the United States is required, as the cards are generally restricted from foreign currency usage for fraud-prevention reasons. With an advance request to KUCR Purchasing Office this restriction can be modified in certain cases. Please contact Financial Services (firstname.lastname@example.org) at least two weeks prior to departure for a foreign destination to determine if the usage is allowed by the issuing bank and federal regulations.
KUCR does reimburse for passport and visa fees if necessary for completion of the business purpose of the trip (see travel information at http://research.ku.edu/travel_policies).
Visa fees required for H-1B employment must be paid by the department, but are not allowable costs to be charged to a sponsored project. These longer-term, immigration visas are not allowable direct project expenses.
Short-term, travel visa costs (as opposed to longer-term, immigration visas) are generally allowable expenses that may be proposed as a direct cost. Since short-term visas are issued for a specific period and purpose, they can be clearly identified as directly connected to work performed on a Federal award. For these costs to be directly charged to a Federal award, they must:
- Be critical and necessary for the conduct of the project;
- Be allowable under the applicable cost principles;
- Be consistent with the non-Federal entity's cost accounting practices and non-Federal entity policy; and
- Meet the definition of “direct cost” as described in the applicable cost principles. (See 2 CFR 200 Uniform Guidance §200.463.)
Four Basic Cost Considerations for Sponsored Projects Subject to 2 CFR 200 Uniform Guidance (Federal or Federal Flow-through Funds)
This policy covers all transactions that involve federal funds. This includes any sponsored projects directly awarded to KUCR and any funds received from a non-federal source that originated from a federal source. Many State of Kansas funds are federal flow-through funds and it is important to clarify the original source of funding prior to making expenditures. If you are uncertain of the source of funding, please contact your account representative in Post-Award Services at KUCR. It is the responsibility of the department or research administrative unit to determine whether or not expenditures on all federally-funded projects are reasonable, allocable, and allowable based on standards from 2 CFR 200 Uniform Guidance.
The Office of Management and Budget (OMB) is responsible for publishing costing principles applicable to federal funding. 2 CFR 200 Uniform Guidance (obtainable in its entirety online) establishes principles for determining costs applicable to federal grants, contracts, and other agreements with educational institutions.
The following definitions are excerpted from 2 CFR 200 Uniform Guidance:
A cost may be considered 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 circumstances prevailing at the time the decision to incur the cost was made (see 2 CFR 200 Uniform Guidance §200.404).
Major considerations involved in the determination of the reasonableness of a cost are:
- whether or not the cost is of a type generally recognized as necessary for the operation of the institution [typically F&A costs] or the performance of the sponsored agreement [direct costs];
- the restraints or requirements imposed by such factors as arm’s length bargaining, federal and state laws and regulations, and sponsored agreement terms and conditions;
- market prices for comparable goods or services for the geographic area;
- whether or not the individuals concerned acted with due prudence in the circumstances, considering their responsibilities to the institution, its employees, its students, the federal government, and the public at large; and,
- the extent to which the actions taken with respect to the incurrence of the cost are consistent with established institutional policies and practices applicable to the work of the institution generally, including sponsored agreements.
A cost is allocable to a sponsored agreement if the goods or services are chargeable or assignable to the project in accordance with relative benefits received or other equitable relationship (see 2 CFR 200 Uniform Guidance §200.405)
Subject to this, a cost is allocable if:
- it is incurred solely to advance the work under the sponsored agreement,
- it benefits both the sponsored agreement and other work of the institution, in proportions that can be approximated through the use of reasonable methods, or
- it is necessary to the overall operation of the institution and…it is deemed to be assignable in part to sponsored projects.
Costs must be treated consistently in like circumstances under generally accepted accounting principles. This means that all costs incurred for the same purpose, in like circumstances, must be treated as either a direct costs only or as an F&A (indirect) costs only. This requirement is applicable to all sponsored projects including grants, contracts, and cooperative agreements, and must also be applied to estimating costs in proposals for all types of instruments, including fixed-price contracts. For additional information on this topic please refer to the Cost Accounting Standards for Educational Institutions, CAS 9905.501.
Limitations on Allowance of Costs
Costs must conform to limitations or exclusions set forth in 2 CFR 200 Uniform Guidance or the sponsored agreement. When the maximum amount allowable under a sponsored agreement is less than the total amount allowable in accordance with the principles in 2 CFR 200 Uniform Guidance, the amount that is not recoverable may not be charged to other sponsored agreements. Any costs allocable to activities by industries, foreign governments or other sponsors may not be shifted to federally-sponsored agreements. Costs incurred as a result of overruns or other fund considerations, to avoid restrictions imposed by law or by the terms of the sponsored agreement, may not be shifted to federal funds (see 2 CFR 200 Uniform Guidance §200.408).
Assistant Vice Chancellor
Office of the Vice Chancellor for Research
01/28/2021: Corrected email listing.
06/08/2020: Added Personal Prorective Equipment as an allowable project expense related to COVID-19.
03/17/2020: Updated cost categories to address cost allowability related to COVID-19.
08/07/2019: Updated link.
01/18/2018: Updated contact information. 06/02/2017: Fixed broken link.
07/05/2016: Updated to remove gendered pronouns.
03/01/2015: Policy updated to be compliant with 2 CFR 200 Uniform Guidance. Updates reviewed and endorsed by the Director of Research Administration and the Director of Finance for Research.
11/25/2014: Policy formatting cleanup (e.g., bolding, spacing).
07/02/2014: Updated references to 'Vice Chancellor for Research' to reflect accurate title; added links to OMB Circular A-21 and Cost Accounting Standards where those documents are mentioned; fixed broken/outdated links in Related Policies and Related Procedures.
07/22/2013: Updated contact information.