Direct costs must align with the cost principles, including allowability (. Total F&A costs are calculated by applying the negotiated F&A rate to the appropriate base. Indirect costs, also referred to as facilities and administrative costs (F&A), are incurred for the benefit or joint objectives of a specific project and organizational activities. The Appendix IV includes a sample of a deviation letter to be issue when an indirect cost rate other than that specified in the NICRA is used in an award. Examples include costs for clerical and managerial staff, depreciation, office space rental, and utilities. For example, research rates are not applicable to the scholarly research that NEH funds, except in rare circumstances. A final indirect cost rate is not subject to adjustment. Audit adjustments need to be clearly delineated to be readily identifiable for verification by this office. Description of Cost Allocation Methodology. The accounting system must provide adequate internal controls to safeguard assets, insure fund accountability by cost category, assure accounting data accuracy and reliability, promote operating efficiency, and comply with Government requirements and accounting procedures. The National Fish and Wildlife Foundation is providing the Indirect Cost Calculator tool to assist applicants with calculating the allowable amount of indirect costs that can be included in proposal budgets, as applicable. Determine that costs that are statutorily unallowable, or for reasons of non-allocability, have been eliminated from the indirect cost pool. Once an agency is assigned cognizance for a particular nonprofit organization, the assignment will not be changed unless there is a shift in the dollar volume of the Federal awards to the organization for at least five years. The checklist below addresses the documentation to provide and steps needed when seeking a revised provisional rate and/or final rates. The purpose of this spreadsheet is to identify effected awards, gauge materiality and identify any indirect cost limitations. Prior to the preparation of an indirect cost rate proposal and supporting documentation, the cost principles established by 2 CFR 200, Subpart E, Cost Principles, should be thoroughly reviewed. Download Example - Direct Allocation Method [PDF 62 KB]. Some issues that may be raised by an M/OAA/CAS/OCC indirect cost rate negotiator during, or after, the review of an indirect cost rate proposal, usually result from non-profit organizations not following the required procedures. PIs should carefully review the program guidelines to determine how the cost-share can be met by all partners. MTDC is defined at 2 CFR 200.68 as being: "All direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). Below are some samples of common allocation bases: This method is acceptable provided each joint cost is prorated using an acceptable base. In proposals and approved budgets, the total project cost is the sum of total direct costs and total F&A (indirect) costs. Use of the tool is entirely optional. The cognizant agency is typically the federalawarding agency that provides the largest amount of direct funding (as listed on the schedule of expenditures of Federal awards, see 200.510(b)) to a non-Federal entity unless OMB designates a specific cognizant agency for audit. Facilities is defined as general administration and general expenses such as the director's office, accounting, personnel and all other types of expenditures not listed specifically un. If a small business has clearly established indirect cost rates, pools and bases that an external CPA firm has validated, this should be sufficient for the recognition of indirect cost rates under the award. SR 17 Et Al, Strategic Pavement Preservation 2023 | WSDOT The final indirect cost rates are negotiated based on the audited actual indirect cost rates. Determine whether these unallowable or non-allocable items should be added to the distribution/allocation base. Part 200): 2 C.F.R Part 200 establishes uniform administrative requirements, cost principles, and audit requirements for Federal awards to non-Federal . Frank Fico, CPA on LinkedIn: Six Important Considerations for For The ceiling indirect cost rates or the indirect cost rates cited in grants or agreements, whichever is lower, will be used to determine the maximum allowable indirect costs on the grants or agreements. Labor is the most significant cost incurred by an organization. 2 CFR Appendix II to Section 200 - Indirect (F&A) Costs Identification also Assign, and Rate . If your organization has a NICRA, you may apply to your cognizant agency for a one-time extension of a current agreement for a period of up to four years, in accordance with 2 CFR 200.414 (g). To prevent substantial overpayment or underpayment of indirect cost during the fiscal year, a revised provisional rate may be requested by the organization. (Base Amount) x (Indirect Cost Rate) = Total Indirect Costs. The most common cost bases used to calculate and allocate indirect cost rates are modified total direct costs and total direct salaries (with or without fringe benefits associated with those salaries). If no approved rate exists, the pass-through entity may negotiate an indirect cost rate with the subrecipient or accept the de minimis rate (2 CFR 200.332 (a)(4)). As described in 2 CFR 200, Subpart E, Section 200.403, Factors affecting allowability of costs, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. FixedA fixed rate is an indirect cost rate with the same characteristics as a predetermined rate, except that the difference between the estimated costs and the actual costs of the period covered by the rate is carried forward as an adjustment to the rate computation of a subsequent period. F&A costs for the first $25,000 of each consortium may be included in the modified total direct cost base, when calculating the overall F&A rate, as long as your institution's negotiated F&A rate agreement does not express prohibit it. Indirect Costs | Research Administration and Compliance Description of changes in accounting or cost allocation methods made since that last submission. (A) An indirect cost pool of $200,000 (B) A salary and fringe total of $300,000. Applicable audited financial statements including any affiliated organizations, and 2 CFR 200, Subpart F, Section 200.500, Audit Requirements. Review the financial statements and audit report for any indication of activities which may have been omitted from the indirect cost proposal, i.e., the omission of restricted fund costs or the existence of an affiliated organization receiving supportive service from the parent organization. Indirect Cost Rate Proposal (ICR) Checklist for First Time NICRA. The Benefits of Obtaining a Federally Approved Indirect Cost Rate