Administrative and Clerical Type Expenses on Federally Sponsored Projects
Section D.1 of OMB Circular A-21 states:
“Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect costs.”
Section F.6.b of OMB Circular A-21 states:
“– The salaries of administrative and clerical staff should normally be treated as F&A costs.
– Items such as office supplies, postage, local telephone costs, and memberships shall normally be treated as F&A costs.”
Potential Audit Findings
· Charges for normal departmental administrative support inappropriately charged to federal projects as direct costs
· Pens, paper, clerical salary, postage, memberships, etc. are direct charged to grants in normal circumstances as opposed to unlike circumstances
· Departmental charges distributed to multiple grants
· Departmental or institute business manager allocated to multiple grants
· Large research centers/institutes do NOT distinguish unlike circumstances and charge administrative costs direct
Methods for Managing Risk
- Refer to the applicable policies and procedures and know who to ask questions.
- Campus Policy - Direct Charges to Federally Sponsored Projects
- Consult with your post-award administrator at the Office of Grants & Contracts or the Office of Financial Compliance on questions and specific examples in determining whether specific situation qualifies for “an unlike circumstance”
- Review budgets at the pre-award stage to ensure appropriate administrative expenses are budgeted or administrative expenses are not inappropriately budgeted
- Ask the PI about the project objectives and activities in determining the types of administrative support that may be needed
- Determine whether the administrative support would be considered normal departmental support (should not be included in the project budget) or an “unlike”, project-specific and above-and-beyond normal departmental support (may be included in the project budget)
- Work with faculty and administrative staff to determine if administrative expenses qualify as ‘like” or “unlike” circumstances.
- Provide sample allocation methods for supplies with joint use to assist personnel with proper allocation of expenses. For example: PI has 3 projects that need Chemical A to perform tests for the grants. One project (project X) uses 80% of the chemical while the other 2 projects (projects Y and Z) use 10% each.
DO: The department allocates 80% of the cost of chemical A to project X and 10% to Y and 10% to Z based on usage.
DON’T: The department allocates 100% of the cost of chemical A to project X as it has a larger budget and uses the majority of the chemical.
- Establish practices for monitoring compliance:
- At the time of each purchase, review and revise allocation methods for supplies with joint use to ensure appropriateness.
- Interview people with administrative type job titles who are direct charged to sponsored projects to determine job responsibilities and ensure direct charging is appropriate.
- Review and respond to the Quarterly Report of Sensitive and Administrative Type Expenses on Federally Sponsored Projects to ensure administrative type expenses are justified, documented or reallocated appropriately.
EXCEPTIONS – Direct Charging of Administrative and Clerical Costs May Be Appropriate in the following 2 situations.
1) Project activity explicitly budgets for and justifies that individuals are involved in administrative roles above and beyond normal administrative support provided by the department. These projects are typically considered “major” projects as defined by OMB Circular A-21.
Section F.6.b of OMB Circular A-21 further states:
“Direct charging of administrative and clerical support 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. “Major Project” is defined as a project that requires an extensive amount of administrative or clerical support, which is significantly greater than routine level of such services provided by academic departments.
Exhibit C of OMB Circular A-21 – Examples of “major projects” where direct charging of administrative or clerical staff salaries may be appropriate.
- Large, complex programs such as GCRC, Primate Centers, Program Projects, environmental research centers, engineering research centers, and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions.
- Projects which involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting (such as epidemiological studies, clinical trials, and retrospective clinical record studies).
- Projects that require making travel and meeting arrangements for large numbers of participants, such as conferences and seminars.
- Projects whose principal focus is the preparation and production of manuals and large reports, books, and monographs (excluding routing progress and technical reports). Examples of administrative costs that may be incurred for these types of projects unlike any other projects may include duplicating and postage expenses, network and printer supplies, word processor salary, etc.
- Projects that are geographically inaccessible to normal departmental administrative services, such as research vessels, radio astronomy projects, and other research field sites that are remote from campus.
- Individual projects requiring project-specific database management; individualized graphics or manuscript preparation; human or animal protocols; and multiple project-related investigator coordination and communication.
These examples are not exhaustive nor are they intended to imply that direct charging of administrative or clerical salaries would always be appropriate for the situations illustrated in the examples. For instance, the examples would be appropriate when the costs of such activities are incurred in unlike circumstances, i.e. the actual activities charged direct are not the same as the actual activities normally included in the institution’s F&A cost pools or, if the same, the indirect activity costs are immaterial in amount.”
The “major project” classification does not guarantee “the major project exception” and does not guarantee allowability of all administrative type expenses. The key is that the type of administrative expenses must be tied to the project activity that makes the project “major project”. For examples, administrative salary may be allowed on a conference grant if that person’s duty is to make travel arrangements and register participants for the conference. On the other hand, administrative salary may not be directly charged to a conference grant if that person’s duty is procurement and fiscal management for the grant.
2) The cost can be specifically identified to the technical scope of work conducted under the project and is appropriately documented. The project does not need to be major for those costs to qualify as technical costs and to be charged directly. They must, however, meet the other award requirements in order to be directly charged. Examples:
- Employee with administrative title is involved with interviewing study subjects for project A.
- Project B requires completion of surveys by 100 middle school teachers. The surveys consist of 10 pages of questions that are mailed to each participant’s home address. The cost of the paper and postage for the survey can be a direct charge to project B.
OIG Audit Report: “Review of Administrative and Clerical Costs at Duke University for the Period October 1, 2002, Through September 30, 2004” January 16, 2009, Office of Inspector General, Department of Health & Human Services
Article: “Duke University and Unallowable Administrative and Clerical Costs on Federal Grants” by Amy Gannon, UCD Administrative and Business News, April 2009