Listed below are questions and answers associated with the implementation of A-21 and the Cost Accounting Standards. If you would like additional clarification on any of the answers provided below or have any additional questions, please do not hesitate to contact Nancy Gast.

Question: How was UTMB's Consistent Treatment of Cost policy developed?

Answer: The policy was developed using OMB Circular A-21 and the Cost Accounting Standards by a team of individuals consisting of Department Administrators, a Faculty member, and representatives from Office of Sponsored Programs and the Office of Cost Reimbursements. The policy was then reviewed and approved by the Vice Presidents of UTMB.

Question: Operation of a research laboratory requires a number of items that are not strictly reagents. Examples of such items include pencils, paper, computer supplies, printer supplies, service charges on telefax lines, library photocopy charges, etc. Although we have paid for such items from direct grant funds, in the past; we are now told that NIH holds that such items must be provided from indirect funds. The department maintains that funds for such items are unavailable, and we have been told that additional indirect cost funds are unlikely to be provided to the department to cover these expenses. Have you any suggestions as to how we may obtain these essential items, under the prevailing circumstances?

Answer: Each department will need to address this question as it relates to their specific charging practices. Charges that in the past have been charged to a funding sources other than the federal award will need to be directly charged to the federal award assuming the charges are allowable. An example would be the salary of the Principal Investigator if in the past the level of effort associated with the award was greater than the amount paid from the award. The department can then use the other funding source to purchase items such as pencils and paper.

Question: We are given to understand that some or all charges to grants will be reviewed by OSP to insure compliance with the new rules. Is this correct? What types of charges will be reviewed? What types will not be reviewed? Does OSP anticipate that additional personnel will be required to insure that charges are processed in a timely fashion?

Answer: The current expenditure review being performed by OSP is completed at the time of the purchase and does not include all expenditures. The only additional review that will take place is a quarterly review of a somewhat random selection of expenditures. All expenditures will be subject to this review, but there will be some concentration in the area of office supplies, photocopy costs, administrative/clerical salaries, and telephone cost, etc.. Since this review will be after the fact, it will not effect the processing time of purchasing documents. It is not anticipated that additional personal will be required to perform such a review or to process the transactions in a timely manner. It should be understood that such a review system does not guarantee that all unallowable cost will be discovered.

Question: What is a "major project"?

Answer: UTMB’s Consistent Treatment of Costs policy describes the circumstances which may allow a project to be classified as a major project. It is important to understand that the nature of the work being performed is the critical determinant, not the awarded dollar value of the award.

Question: What is the procedure for requesting major project status?

Answer: The Principal Investigator should complete the Declaration of Major Project Status form at the time the proposal is being completed. This form should be submitted to Office of Sponsored Programs. The form will be reviewed by the Director of OSP and the applicant will be advised by means of the form entitled "Declaration of Major Project Addendum" of those items approved for inclusion in the major project classification. For projects already awarded by a federal agency, the form should be completed as soon as possible and submitted to Office of Sponsored Programs.

Question: Is Office of Sponsored Programs (OSP) going to review grant and contract proposals differently?

Answer: OSP will be reviewing the proposal budgets and budget justification looking for expenditures that are normally considered unallowable expenditures. If time permits, OSP will return the proposal budget for additional information and/or correction.

Question: Does the fact the federal agency approved the budget permit the Principal Investigator to charge the account for all the line items in the budget?

Answer: The federal government has indicated that is the responsibility of the Principal Investigator and the University to insure compliance with all federal regulations. A line item in a "approved" budget does not necessarily indicate that the expenditure is allowable.

Question: If a project is considered a major project, should items normally considered unallowable (Administrative/Clerical salaries, office supplies, postage, copying) be line items in the proposed budget and addressed in the budget justification?

Answer: Yes. If the project is considered a major project, those items normally considered unallowable should appear both as line items in the proposed budget and should be described in the budget justification.

Question: What are some examples of routine administrative activities?

Answer: Routine administrative activities include but are not limited to the preparation of grant/contract proposals, routine purchasing activities, general ledger review, personnel related activities such as the preparation of Payroll Action Forms (PAF), and preparing cost transfers.

Question: Who has the responsibility to ensure that the charging guidelines are followed?

Answer: The federal government issues the award to UTMB and expects UTMB to ensure that proper policies and procedures are in place to administer the funds. Due to the Principal Investigators role in determining which account(s) receives benefit from a particular expenditure, UTMB expects the Principal Investigator to know and understand the rules and regulations associated with the charging of expenditures to the award.

Question: Does UTMB have to be consistent even if the federal agencies are not?

Answer: Yes. The Cost Accounting Standards (CAS) applies to all federal awards including federal flow-through funds (subcontracts). The fact that federal agencies are inconsistent in their treatment of costs is technically irrelevant.

Question: To what type of awards do the charging guidelines apply?

Answer: The UTMB Consistent Treatment of Costs policy applies to all federally funded grants and contracts. This includes federal flow-through awards issued to UTMB from state, city, county or private agencies. The UTMB policy does not apply to non-federally funded research and clinical trial awards.

Question: Are training grants subject to the UTMB policy and CAS?

Answer: Yes, if they are federally funded. However, charging of normally unallowable costs may be allowable because the nature of the work requires coordination of trainees and the related paperwork which may be considered beyond a routine level. A Declaration of Major Project Status form should be submitted to Office of Sponsored Programs.

Question: Do the new CAS guidelines apply to federal awards that do not pay full indirect cost rate or pay a reduced indirect cost rate?

Answer: Yes. To date, the Federal government has not indicated any exceptions to CAS for grants or contracts which do not pay indirect cost or pay a reduced level of indirect cost.

Question: Is it correct that the new policies will require us to certify that an item, purchased 100% from a given grant, will be used 100% for the purposes of that grant? If we are required to certify that a particular item will be used 100% for the purposes of a given grant (or a collection of grants), would this not constitute agreement to the effect that we will not use these items for any purpose not directly related to that grant (or group of grants)? If we must restrict the use of items to the purpose of the grants from which they were purchased, will that not preclude the sharing of resources among other investigators who are not involved in the grant (or grants) for which these items were purchased?

Answer: The cost of an item should be allocated based on the estimated use at the time of the purchase. If you charge 100% of the cost of the item to an award, you are in effect certifying that the award will receive 100% of the benefit. In the case of laboratory supplies (test tubes, beakers, etc.) and equipment, if after the purchase is made additional uses are discovered the item can be used with the understanding that the federal funded award has priority .

Question: If I purchase an item 100% from one grant, can I repair it with funds from another, concurrent grant?

Answer: Yes, if the other account is receiving or will receive benefit from the item being repaired. Repair costs should be allocated based in the projected use of the item.

Question: The new policies state that grant funds may not be used to purchase an item if the life expectancy of that item extends beyond the duration of the grant. Does this mean that I cannot use funds from a five year grant to pay 100% of the purchase price of an item that has a life expectancy of ten years?

Answer: No. You can use the funds if the items purchased are laboratory supplies or equipment. It is important to remember that "reasonable" is one of the conditions that must be met in deciding if an expenditures is allowable. An example is making such purchases at the end of the award which might result in a questioned cost. Charges for items such as subscription , maintenance agreements and travel expenditures should not extend beyond the award period.

Question: Do the new policies affect the ability to pay travel expenses for individuals who do not receive salary support from the grant to which the expenses are charged?

Answer: Any expenditure that does not benefit the award is unallowable. In this specific example, I am assuming that the individual is performing duties in which the award will receive benefit and is being funded from some other source (cost shared). If this is true and the trip relates to the scope of the award, the expenditure is allowable. I would suggest providing documentation on the travel documents as to what function this person performed in relation to the grant scope.

Question: Do the new policies recognize that publication of scientific data occurs through a wide range of media, including published manuscripts, poster sessions presented at scientific meetings, and public lectures in which the data are presented to colleagues? Do our policies allow that costs associated with all of these media are direct costs?

Answer: Yes, cost associated with the dissemination of technical information can be directly charged if such costs are not specifically disallowed in A-21 (i.e. office supplies, administrative /clerical salaries.)

Question: Is it anticipated that these new policies will have any impact upon the ability to redistribute funds (i.e. transfer funds from one category to another) within grants?

Answer: This policy should not have any impact upon the ability to redistribute funds within the grant if the expenditures associated with the redistribution are allowable. In other words, you could not transfer M&O budget into personnel in order to pay for administrative/clerical salaries on an account that was not a major project.

Question: What type of documentation is required to support expenditures charged to the grant or contract?

Answer: Documentation must be sufficient to enable any reviewer of the expenditure to determine whether the expenditure is required and allowable for the conduct of the project. Where applicable, the expenditure should be supported by a receipt/invoice.

Question: If an individual with an administrative or clerical title is performing technical work that benefits the project, will the expenditure be considered unallowable due to their title?

Answer: The important factor in this issue is the nature of the work be performed, not the UTMB title for the position. If the individual is performing technical work that benefits the award, the expenditure is an allowable charge to the award. It may be advisable to contact the UTMB Human Resources department for possible reclassification.

Question: Would it be allowable to direct charge the cost of photocopying a paper or article that relates directly to the project?

Answer: Yes, if the article significantly benefits the research project itself. Routine photocopying charges associated with administrative activities are normally considered unallowable charges.

Question: Can copier rental charges be included in calculating the per copy charge for copies made for the benefit of a federal award?

Answer: Yes. The per copy rate should include such costs as copier rental, toner, paper, etc.

Question: Are telephone/fax equipment and line charges an allowable cost to an award?

Answer: Telephone/fax equipment and line charges are normally unallowable charges to federal awards. These charges may be allowable if the project is considered a major project and the line is "project dedicated".

Question: Are office supply charges allowable on federal awards?

Answer: Office supplies charges are normally considered unallowable charges to federal awards. These charges may be allowable if the project is considered a major project.

Question: Can subscriptions be charged to federal awards?

Answer: A subscription can usually be charged to a federal award if there is a specific benefit to the award and the subscription is not available in the library. If the subscription benefits more than one research project or activity, the cost of the subscription should be allocated on a reasonable estimate of the benefit to each project or activity.

Question: Can membership dues to a professional association be charged to a federal award?

Answer: Membership dues to professional associations are unallowable charges to federal awards. If a subscription contains a cost attributed to membership dues, the membership cost must be separated to the extent possible and paid from a funding source other than a federal award.

Question: Are maintenance and repair agreements allowable charges to federal awards?

Answer: Yes, but the cost must be allocated based on the projected use of the equipment.

Question: Can food served at staff meetings be charged to federal awards?

Answer: Food associated with staff or department meeting is an unallowable charge to federal awards. Food associated with grant sponsored conferences or with health related issues dealing with patient care are allowable charges if food, or any other associated cost is a specific line item in the budget and is included in the budget justification.

Question: Can cost overruns from one federal award be charged to another federal award?

Answer: Cost overruns are unallowable charges to federal awards.

Question: Can federal funds for a specific project be used to obtain preliminary data to support a unrelated proposal?

Answer: No. Expenditures charged to a specific federal award must benefit the specific scope of that award.

Question: Can a piece of equipment purchased from a federal award be used for the scientific purpose of another award?

Answer: The cost of a piece of equipment should be allocated based on the estimated use at the time of the purchase. If a Principal Investigator knows that the equipment will be used for multiple projects, the costs should be allocated based on the estimated use. If after the purchase is made additional uses are discovered, the equipment can be used with the understanding that the federally funded project has priority.

Question: Can equipment considered general purpose equipment such as network servers, copy machines and office equipment be charged to a federal award?

Answer: Generally, general purpose equipment is an unallowable charge to federal awards per OMB Circular A-21. A-21 defines general purpose equipment as "equipment, the use of which is not limited only to research, medical, or scientific or other technical activities". The equipment must be specifically approved by the sponsoring agency. If the cost is determined to be allowable, then it is a good example of a cost that should be allocated based on estimated use including research, instruction and patient care.

Question: Can research supplies such as flasks and pipettes purchased from a federal award be used for other activities in the laboratory?

Answer: The UTMB policy and the federal regulations are not meant to require that commonly used laboratory supplies, such as pipettes, must be somehow marked and used only for a particular project. The point is that the laboratory supplies needed to complete the study are allowable costs. A related issue is if large quantities of a specific laboratory supply are purchased and are to be used to support multiple projects, the cost should be allocated based on the estimated use of those supplies.

Question: Can an item with a life expectancy beyond the termination date of the award be charged to the federal award?

Answer: Yes, if the items purchased are laboratory supplies or equipment. Making such purchases at the end of the grant may be questioned. Charges for items such as subscriptions, maintenance agreements and travel expenditures should not extend beyond the award period.

Question: Can travel expenditures related to attending meetings and conferences be charged to federal awards?

Answer: Expenditures for travel like all other expenditures to federal awards should be allocated based on an estimate of the benefit to each activity in which a Principal Investigator is involved. If the primary purpose of a trip is to present the results of an Investigators NIH funded research, then the expenditure is allowable and should in most cases be allocated 100% to the NIH grant that funded the project. If the Investigator is attending a conference where the primary purpose is the dissemination of technical information, this is an allowable cost and should be allocated on an estimate of the benefit to each activity in which the Investigator is involved.

Question: Is the cost of business cards an allowable expenditure on federal awards?

Answer: Yes, if a sound justification can be provided. An example might be a person who in funded 100% from a federal grant or contract and needs business cards to give to study participants.