Cost Policy Training
Sponsored Project Training Program
April 30, 2012
Beverly Blakeney & Jennifer Gagnon
April 30, 2012
Sponsored Project Training Program
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Learning Objectives
Participants will review key concepts from
March cost policy training
 Participants will learn important processes
to enable the direct charging of normally
indirect costs (F&A)
 Participants will learn key implementation
tools
 Participants will become aware of available
resources
 Participants will review important
implementation dates

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What is the cost policy?
It provides guidance, using Four Cost
Principles, for directly charging costs.
 It clarifies what are normally direct costs
and indirect costs (F&A).
 It defines what is meant by “unlike
circumstances.”
 It sets out criteria for reasonable
methods for allocating direct costs
across more than one project.
 It describes a clear process and
circumstances for charging indirect costs
as a direct cost.

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What is an unlike circumstance?

Activity or use of a cost item which is
substantially greater in amount or different in
purpose than the normal use
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Unlike Circumstances Criteria

The sponsored agreement has an extraordinary
need for the item or service that is beyond the
level of services normally provided by departmental
administration.

The cost can be specifically identified to the work
conducted under the sponsored agreement and is
appropriately documented.

The cost is allowable within the context of the
University’s cost accounting standards.
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What is an allocation method?
If a cost benefits two or more
projects/activities in proportions that can
be determined without undue effort or
cost, the cost should be charged to the
projects/activities based on the
proportional benefit.
 If proportions cannot be determined due
to the interrelationship of the work, then
costs may be charged on any reasonable
basis.

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Allocation Methods
Examples of acceptable methods:
 Usage based – the cost of lab supplies is
allocated to each sponsored agreement
based on quantity used

Time based – the cost of scientific
equipment is allocated to each sponsored
agreement based on number of hours
used for each
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Allocation Methods
Examples of unacceptable methods:
 “Spending down”
 Rotating charges without establishing
relative benefit
See http://www.uvm.edu/~cntrllrs/cas/Allocation_Examples.pdf
for additional examples
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What’s up next
Expense categories
 Decision points
 Key questions
 Justification form
 Process
 PeopleSoft changes
 Resources

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Expense categories requiring
justification
Administrative & clerical salaries
 General supplies & services
 Computer supplies & services
 Utilities
 Memberships & subscriptions
 Equipment maintenance
 Work Orders
 Telephone and telecommunications
services

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Decision Points

Does PI wish to direct charge items that
are typically considered indirect?

Is proposal to federal sponsor or for a
federal subaward?

Does proposal have an Extension or
Experiment Station purpose?
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Key Questions
1. Because all projects require a certain amount of account
reconciliation, correspondence, phone calling, office
supplies, etc., how will the proposed charge(s) differ
from the standard level of support expected for all
projects?
2. How will the nature of the work differ from
departmental administrative work conducted for all
projects, and why are the charges necessary to conduct
the work of the award?
3. The cost category (e.g., office supplies) may imply that
the items are being used for administrative purposes.
How will these items be used to conduct the specific
work of the project, and what is their relevance to the
methods used in conducting the project?
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Key Questions
4. How will the proposed charges be accurately
documented and assigned to the project with a
high degree of accuracy? For example, an
administrator who is working on five or more
projects including normal department
administration work will be difficult to
document accurately the relative benefit to any
specific project.
5. How does the charge meet a specific need of
the project and what is the derived benefit?
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Sponsored Project Training Program
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Justification Form
Clearly identifies the “unlike
circumstances”
 Part of routing form & on SPA website
 Required for any federal or federal
subaward in order to direct charge an
expense that is typically considered an
indirect charge

◦ Excluding Experiment Station, Extension, and
Federal Formula Fund proposals
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Proposal Process
Pilot in May 2012
 Effective June 1, 2012

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What should a PI do if they want to direct charge
items that are typically indirect at the time of
proposal submission?
Yes or
Unknown
Yes
Is this
extension or
experiment
station
Is it a
federal
funding
source?
No
No form
necessary
but
budgeted
expenses
must follow
sponsor
and
university
rules.
No
PI must complete
justification form
and include as
many details as
possible about
the costs in
budget
justification.
No form
necessary
but
budgeted
expenses
must follow
sponsor
and
university
rules.
SPA will review
justification form
and budget
justification for
completeness,
accuracy, and
appropriateness.
Approved?
Yes
Proceed with
proposal
submission
Remove references
to direct charging
of indirect costs
from budget
narrative prior to
proposal
submission
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After Award Acceptance
Effective June 1 for award process
 Effective July 1 for expenses

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What should a PI do if he/she wants to direct charge
items that are typically indirect when an award is
processed (for proposals submitted prior to May 1)?
Is it a
federal
funding
source?
Yes
Is this
extension or
experiment
station
No
No form
necessary
but
budgeted
expenses
must follow
sponsor
and
university
rules.
PI must complete
justification form.
Yes
No form
necessary
but
budgeted
expenses
must follow
sponsor
and
university
rules.
SPA will review
justification form
for completeness,
accuracy, and
appropriateness.
Approved?
Yes
SPA will enter
approved admin
salaries in PS
project team page
& create
appropriate F levels
after July 1 so
charging of the
requested items
can occur.
Direct charging of
requested items is
not allowed.
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What should a PI do if they want to direct charge
items that are typically indirect after award
acceptance?
Is it a
federal
funding
source?
Yes
Is this
extension or
experiment
station
No
No form
necessary
but
budgeted
expenses
must follow
sponsor
and
university
rules.
PI must complete
justification form.
Yes
No form
necessary
but
budgeted
expenses
must follow
sponsor
and
university
rules.
SPA will review
justification form
for completeness,
accuracy, and
appropriateness.
Approved?
Yes
SPA will enter
approved admin
salaries in PS
project team page &
create appropriate
F levels so charging
of the requested
items can occur.
Direct charging of
requested items is
not allowed.
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Process for non-federal awards
Cost principles apply
 Sponsor guidelines and university policy
must be followed
 Justification form is not required to direct
charge costs that are typically considered
indirect

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Other Implementation Tool:
PeopleSoft

Project team page, DA DC role
◦ Grants > Awards > Project
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PeopleSoft
◦ New budget accounts (F level), effective
7/1/2012







General supplies & services
Agricultural supplies & services
Lab & research supplies
Utilities
Memberships & subscriptions
Work orders
Telephones & telecommunications services
◦ Expense account changes, effective 7/1/2012
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PeopleSoft
The following expense types are typically charged as an indirect
cost to sponsored projects but in unlike circumstances, may be
direct charged. These expense categories correspond with F
level budget accounts and will be set up on an as-needed,
award-specific basis for federal and federal flow through
awards after all steps of the cost policy justification process
taken place:
 General supplies & services
 Computer supplies & services
 Utilities
 Memberships & subscriptions
 Equipment maintenance
 Work Orders
 Telephone and telecommunications services
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Key Dates

May 1
◦ Pilot for proposals

June 1
◦ Proposals will start using new form to justify
budgeting normally classified indirect costs as
direct costs

July 1
◦ Policy goes into effect
◦ Key date for expenses
◦ PeopleSoft account changes
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Reference materials & resources

Available now!
◦ Cost Accounting Services web site:
http://www.uvm.edu/~cntrllrs/cas/
 Direct cost allocation examples
 Additional details about direct vs. F&A costs and
unlike circumstances
 Cost policy FAQs
◦ Justification form
◦ Invite SPA & CAS to faculty meetings to help
spread the word
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Reference materials & resources

Coming soon
◦ Matrix of PeopleSoft budget & account
changes
◦ Closeout report changes – project team page
information
◦ List of administrative/clerical job titles
◦ Memo to faculty members
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Questions?
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Learning Objectives
Participants will review key concepts from
March cost policy training
 Participants will learn important processes
to enable the direct charging of normally
indirect costs (F&A)
 Participants will learn key implementation
tools
 Participants will become aware of available
resources
 Participants will review important
implementation dates

April 30, 2012
Sponsored Project Training Program
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