In recent years, the Office of Management and Budget (OMB) has become concerned with the costing practices and increased cost recoveries of universities and colleges and has made several revisions to OMB Circular A-21, "Cost Principles for Educational Institutions". In addition, the Cost Accounting Standards Board (CASB) which has generally provided cost accounting standards for firms in the private sector, has also shown concern, and has issued cost accounting standards for colleges and universities. Currently there are nineteen cost accounting standards for private firms performing federally sponsored projects. Four of these standards which deal with consistently treating costs have been issued for colleges and universities. Tulane University (Tulane or the University) will be required to file a disclosure statement to the DHHS-DCA Washington, DC office to disclose our accounting practices, policies and procedures for assigning costs to federally sponsored programs, and to attest to the consistency of those practices.
To ensure the consistent treatment of costs incurred by Tulane departments and charged directly or indirectly to federally sponsored programs, Tulane has incorporated the following OMB Circular A-21 cost accounting principles in its accounting practices. These principles apply except to the extent they are modified by federal awarding agencies via program regulations, policy statements, guidelines, instructions, etc. To facilitate the understanding of what costs can be directly or indirectly charged, a brief overview follows of the costs recovered through the indirect cost rated charged to federally sponsored research. Facilities and Administrative costs (formerly indirect costs) are composed of the following components:
- Building Depreciation - Depreciation on non-federally funded portions of buildings
- Equipment Depreciation - Depreciation on non-federally purchased or donated equipment only
- Operations and Maintenance - Consists of facility costs such as electricity, steam, chilled water, plant operations, maintenance and repairs, health and safety, grounds maintenance, security, etc.
- General Administration - Includes the Vice President's Office, Fiscal Services, Accounting, payroll, Personnel, purchasing, etc.
- Sponsored Projects Administration - Grants and Contracts office Administration, Cost Studies, and the Office of Research
- Library - Includes Library costs identified as supporting sponsored programs from the following libraries:
--Howard Tilton Memorial Library
--Business School Library
--Rudolph Matas Library
- Student Administration - (Note: not generally allocated to sponsored programs)
- Departmental Administration - Includes Dean's office, Faculty Administrative salaries, administrative and clerical salaries, office supplies, and other non-salary costs that will be addressed later
The following are the accounting practices and procedures for assigning expenditures to federally sponsored programs as direct or indirect costs. This will provide the framework for consistently charging costs throughout Tulane. It is the responsibility of the Principal Investigator to comply with these procedures for direct charging federally sponsored programs. To understand potential issues that may arise in a federal review, we have included the section of the regulations that addresses departmental costs and whether they should be recovered as direct or indirect.
Section F.6.b of OMB Circular A-21 revised as of May 8, 1996:
"In developing the departmental administration cost pool, special care should be exercised to ensure that costs incurred for the same purpose in like circumstances are treated consistently as either direct or Facilities & Administrative (F&A) costs. For Example, salaries of technical staff, laboratory supplies (e.g., chemicals), telephone toll charges, animals, animal care costs, computer costs, travel costs, and specialized shop costs shall be treated as direct costs wherever identifiable to a particular cost objective. Direct charging of these costs may be accomplished through specific identification of individual costs to benefiting cost objectives, or through recharge centers or specialized service facilities, as appropriate under the circumstances. The salaries of administrative and clerical staff should normally be treated as indirect costs. Direct Charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and individuals involved can be specifically identified with the project or activity. Items such as office supplies, postage, local telephone costs, and memberships shall normally be treated as F&A costs."
Tulane accounting practices for charging academic departmental costs (direct and indirect) to federal projects are outlined on the Office of Research Administration's Web Page:
- Salaries and Wages
- Non-Salary Expenditures