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Research CCHIP #005

CLARIFICATION OR CHANGE IN PROCEDURE (CCHIP)

Accounting for Unallowable Costs on Sponsored Projects

OVERVIEW

The purpose of this policy is to ensure that expressly unallowable or mutually agreed to be unallowable costs do not get charged to sponsored projects. In the event unallowable costs are charged to sponsored projects, they shall be removed in a timely manner regardless of whether they were erroneously charged to the sponsored project or subsequently disallowed as a result of internal or external audit or review.

It is the responsibility of the Principal Investigator (PI) or designee to ensure that only allowable costs are charged to sponsored projects.

DEFINITIONS

Administration – General administration & general expenses, departmental administration, sponsored projects administration, student administration and services, and all other types of expenditures not listed specifically under one of the subcategories of facilities.

ChartField – The individual components, or fields, that when combined make up the ChartField String, which defines the accounting structure.

Cost Overruns – Costs in excess of the amount awarded by the sponsoring agency for the work proposed. After-End-Date Charges – Costs incurred for the project after the closing date of the award.

Expressly Unallowable Cost – A particular item or type of cost which, under the express provisions of an applicable law, regulation, or sponsored project, is specifically named and stated to be unallowable.

F&A Costs – Facilities & Administrative costs means costs that are incurred for common or joint objectives that cannot be identified readily and specifically with a particular sponsored project, instructional activity, or any other institutional activity. F&A costs are synonymous with indirect costs.

Facilities – Depreciation and use allowances, interest on debt associated with certain buildings, equipment and capital improvements, operation and maintenance expenses, and library expenses.

Research Initiative Accounts – Any ChartField funded from F&A cost distributions or closeouts of fixed- price contracts or grants.

Sponsored Project – Any grant, contract, or other agreement between the аÄÃÅÁùºÏ²ÊÄÚÄ»ÐÅÏ¢ and a sponsoring agency.

Unallowable Cost – Any cost which, under the provisions of any pertinent law, regulation, or sponsored project, cannot be included in prices, cost reimbursements, or settlements under a Government sponsored project to which it is allocable. Unallowable costs can result from cost overruns, after-end-date charges, unallowable CAS exceptions, an audit or review, etc.

Unallowable Cost Accounting Standards (CAS) Exceptions – Costs of an indirect nature, as defined by аÄÃÅÁùºÏ²ÊÄÚÄ»ÐÅÏ¢in its Cost Accounting Standards Board Disclosure Statement (DS-2), which are being charged directly to a project.

CLARIFICATION OR CHANGE

Costs expressly unallowable or mutually agreed to be unallowable shall be identified and excluded from any billing, claim, application, or proposal applicable to a Government sponsored project. Similarly, costs which specifically become designated as unallowable as a result of a written decision furnished by an auditor or official pursuant to the sponsored project shall be identified if included in or used in the computation of any billing, claim, or proposal applicable to a sponsored project. 

PROCEDURES

Refer to the following аÄÃÅÁùºÏ²ÊÄÚÄ»ÐÅÏ¢procedures related to accounting for unallowable costs on sponsored projects:

• CCHIP #001: Timeline for Processing Cost Transfers on Sponsored Projects
• CCHIP #002: Determining Costs Applicable to Sponsored Projects
• CCHIP #003: Direct Charging Administrative & Clerical Costs to Sponsored Projects

Sponsored Research

• Inform the PI or designee to prepare an expenditure transfer to remove any unallowable costs (whether Sponsored Research Post Award determines a cost to be unallowable or learns of unallowable costs as a result of an internal or external audit or review).
• Request an appropriate ChartField from the PI or designee to remove any unallowable costs if the PI or designee does not prepare an expenditure transfer within 4 weeks.
• Prepare and process the necessary paperwork to remove any unallowable costs if the PI or designee does not prepare an expenditure transfer within 4 weeks.
• Provide a copy of the processed expenditure transfer form to the Department or Dean when a departmental account is used to remove the unallowable costs.

Principal Investigator (or designee)

• Charge only allowable costs to sponsored projects.
• Prepare and process the necessary paperwork to remove any unallowable costs within 4 weeks of being notified by Sponsored Research.
• Prepare and process the necessary paperwork to remove any unallowable costs promptly after the error occurs, but no later than 90 days following the date of occurrence, if the error is discovered by the PI or designee.
• Provide Sponsored Research with an appropriate ChartField to remove any unallowable costs.

In the unlikely event the PI or designee does not provide Sponsored Research with an appropriate ChartField, personnel in Sponsored Research is authorized to remove the unallowable cost by transferring it to:

• The PI’s research initiative account
• The Department’s account
• The Dean’s account

The table below offers examples of unallowable costs and activities, but is not all-inclusive.

COST (ACTIVITY)	COMMENTS
Advertising and Public Relations Costs	Unallowable – except costs related to the recruitment of personnel or procurement of goods and services for the performance of the sponsored project
Alcoholic Beverages Alumnae Activities Bad Debt	Unallowable Unallowable Unallowable
Commencement and Convocation Costs	Unallowable
Donations and Contributions	Unallowable
Entertainment Costs	Unallowable
Fines and Penalties	Unallowable – except costs incurred as a result of compliance with a sponsored project or authorized in advance of payment by the sponsoring agency
Fund Raising and Investment Costs	Unallowable – except costs related to the physical custody and control of monies & securities
Goods or Services for Personal Use	Unallowable
Housing & Personal Living Expenses for аÄÃÅÁùºÏ²ÊÄÚÄ»ÐÅÏ¢Officers	Unallowable
Lobbying	Unallowable
Losses on Other Sponsored Agreements or Contracts	Unallowable
Memberships, Subscriptions and Professional Activity Costs	Unallowable – if in any civic or community organization, country club, social or dining club
Patent Costs	Unallowable – unless required by the sponsored project or sponsoring agency
Pre-award or Pre-agreement Costs	Unallowable – unless approved by sponsoring agency
Severance Pay	Unallowable – if in excess of USF's normal severance pay policy or unless required by law, by employer-employee agreement, or by established policy that constitutes in effect an implied agreement on USF’s part
Student Activity Costs	Unallowable – unless specifically provided for in the sponsored project
Taxes	Unallowable – if exemptions are available to аÄÃÅÁùºÏ²ÊÄÚÄ»ÐÅÏ¢or afforded to the Federal government via an exemption certificate made available to USF

CONTACT

Please address your comments or questions regarding this CCHIP to Sponsored Research Compliance.

RELATED REFERENCES

CCHIPs
Cost Accounting Standards Board Disclosure Statement (DS-2)

AGENCY GUIDELINES

(Federal awards issued prior to 12.26.14)
(Federal awards issued on or after 12.26.14)

EFFECTIVE DATE

This CCHIP is effective as of the date of revision and rescinds all previous versions pertaining to the Accounting for Unallowable Costs on Sponsored Projects.

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ISSUED: August 24, 2007
LAST REVISION: August 16, 2018