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Divisional and Departmental Costing Guidelines

The funding provided by the federal government and other agencies to conduct sponsored research is essential to enabling the campus to effectively pursue its mission.

Continuing to receive federal funding through sponsored awards requires the campus to fully comply with federal regulations governing the accounting and reporting of costs incurred on sponsored awards. Accordingly, the consistent application of the campus' single set of accounting and reporting policies and practices applicable to all funds is of critical importance.

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  • Key standards

    Important information to know about costs incurred on federally-sponsored awards.

    • Validity. A cost must meet all of the following criteria:
      • Necessary for the performance of the award
      • Adequately documented to enable substantiation of validity and reasonableness
    • Proper classification. A cost must be correctly classified as either direct, indirect ("Facilities and Administration") or unallowable as specified in the Federal Office of Management and Budget (OMB) Circular A-21, Cost Principles for Educational Institutions.
      • Unallowable costs must be identified and accounted for separately from direct or indirect costs.
      • A cost incurred for the same purpose must be classified the same way on a federally-funded or non-federally-funded award.
    • Consistency. The same accounting practices must be used
      • In estimating costs on an award proposal and in reporting on costs incurred on the award
      • Between awards from the same or different sponsoring agencies.
    • Reporting period. The same accounting period must be used for estimating costs on an award proposal and for accounting for and reporting on actual costs.

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  • Applicability

    Campus policies and practices covering the accounting and reporting of costs apply to all financial transactions, both extramurally- and non-extramurally-funded.

    • Individuals administering sponsored awards must know how to correctly code financial transactions.
    • Recharge centers must comply with all cost accounting standards.


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  • Cost categories

    Here are the three categories of costs used to classify expenses.

    • Direct Costs: costs identifiable with a specific research, instruction, or other institutional activity.
      • Examples: student services, financial aid, or public service
      • Direct costs are usually chargeable to sponsored awards
    • Indirect, or Facilities and Administrative Costs: costs not specifically identifiable with a specific sponsored project or other direct activity.
      • Examples: office supplies, janitorial expenses, network charges
      • Indirect costs may not typically be charged directly to a sponsored project.
      • Certain costs, usually considered indirect, may be directly charged to a sponsored award under certain, specific circumstances. Refer to Appendix: Function Codes for more information.
    • Unallowable Costs: a cost not directly chargeable to a federally-sponsored award or includable in the indirect cost pool.
      • Examples: Donations, scholarships, legal fees
      • Specific account codes are used to record these costs to exclude them from campus indirect cost calculations.

    Refer to Appendix: Cost Category Examples for more examples of each cost type.


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  • XECG Contract and grant cost transfers

    A cost transfer occurs when an expense, associated with a sponsored award or not, is transfered from one FOAPAL to another. It may only be made under one of the following conditions:

    • To correct an erroneous recording.
        • Example: an incorrect FOAPAL was used to code the original invoice or purchase order.
    • To reflect the redirection of goods or services between a research program and a non-research program. An authorized department administrator must certify each of the following things:
      • The original (direct charge) expense is valid and the proper FOAPAL was used at the time to record it.
      • The original accounting for the charge is no longer valid.
      • The new FOAPAL is the proper one.
        • Example: a case of beakers originally ordered for and charged to a teaching program is transferred to a sponsored research project.
    • To redistribute certain high volume, low cost expenses incurred by multiple departments, but charged to a single, departmental FOAPAL.
      • Departmental usage logs or records must be maintained to support the redistribution of expenses. Refer to the Records Management Manual for information about retention guidelines.
        • Examples of redistributable costs: copy machine rental costs, telephone charges, mailing charges, office supplies expenses

    Requirements. A cost transfer must comply with all of the following requirements.

    • The transfer amount must be related to a specific expenditure or individual unit of measure.
    • The transfer amount must be the same as what was originally recorded in the general ledger, or, as applicable, it must be an appropriate pro-rata portion of the original cost.
    • The disbursement document reference code associated with the recording of the original charge, such as a purchase order or invoice number, or payroll report date, must be provided.
    • A detailed justification for making the cost transfer must be provided.

    Preparing a Cost Transfer: When preparing a cost transfer, try to prepare it from the point of view of an auditor. Will the Document Text fully explain why this transfer was done? Is there complete and adequate transparant description explaining the purpose and necessity of the transfer?

    Document Text: If you have a printed journal, or access to FIS, you can see this information. This is the initial information reviewed by auditors. The correct process is to note the “5-Ws” within the Document Text:

    • Who and Where: Identify who is initiating the transfer. For transfers between fund sources, please note that the PI’s written authorization (which should address why this expense benefits the project and is consistent with its scope of work) is attached as part of the backup. Also, include the name of the department/divisional person who approved the transfer, and phone #.
    • What and Why: Why was the original fund charged for this expense? What is the reason for this specific transfer?
    • When: Certify that this transfer is within the federal 120 day guideline. If not, an adequate explanation must be provided for the delay.

    Description Line: This will appear as a line item in your reports. Using the following format insures a clear audit trail. Original Expense Name (abbreviate) with Original Expense Date (MM/DD/YY).

    • Document Reference Number: Enter the Original DOC#. If you have a PO# and and Invoice #, always use the Invoice #.

    EMF strongly recommends as a campus practice not to transfer an expense to a federal fund if the expense is a relatively small dollar amount but risky in terms of its allowability. Instead, find another non-federal source that would be appropriate for the expense. This practice should especially be applied to potential transfers of over 120 days from the original expense. See below for more information for transfers over 120 days.

    Reference: EMF Cost and Budget Transfer Guide

    Note: EMF has noted an increasing number of explanations for transfers that do not adequately meet federal audit standards. EMF will be recommending refresher training to anyone who repeatedly submits inadequate or incomplete explanations. In extreme cases, EMF will rescind the person’s access to the XECG rule code until the training has been taken.

    • A divisonal or departmental research accountant must review and approve each cost transfer for policy and sponsored award term compliance.
    • The transfer amount must be recorded using the appropriate form or financial system.
      • Transfer of Payroll Expense
      • Non-payroll expenditure adjustment request
      • Financial journal
    • The transfer must be recorded in the general ledger within 120 days from the close of the month in which the original charge first posts. For example, if the original document posted erroneously on Jun 15th, the transfer should take place prior to October 14, and so on.
    • An adjustment is allowed beyond the 120-day period only if all of the following conditions apply:
      • The adjustment was unavoidable under the circumstances.
      • A fully documented account of the events resulting in the need to make the adjustment is provided.
      • For an adjustment to a sponsored award, the explanation must be signed by the principal investigator, department head, or other authorized academic official.
    • The division or department responsible for the transfer must retain all supporting documentation, including but not limited to written PI approvals for the transfers.
    • To obtain access for processing XECG transfers, see the EMF Contact list for a trainer. See also the procedure outlined in the EMF Cost and Budget Transfer Guide.

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  • Proposal budgets

    Important things to know about estimating costs on a sponsored award proposal budget.

    • A reasonable and consistently applied method of estimating costs must be used.
    • The way costs are estimated must be identical to the way actual costs are accounted for on the award.
    • Only costs that are allowable, allocable, reasonable, and normally treated as direct costs may be included as "Direct Costs."
    • All costs must be supported by adequate documentation, such as the following:
      • Equipment: Vendor catalogs and quotes
      • Supplies and Materials: Vendor catalogs or quotes, or supported departmental data based on other, similar projects
      • Subcontracts and Consultants: Subcontractor or consultant cost proposals
      • Travel: Travel policy reimbursement rates, travel agency quotes, automobile rental rate quotes
      • Publication: Journal price quote
      • Recharge: Rate approved by UCSC Direct Costing Committee
      • Refer to the Recharge Costing Process/Review topic for more information.
      • For some costs, documentation may consist only of the University policy that specifies how that cost is estimated.
      • For a cost not meeting an agency's criteria for inclusion in a proposal budget, justification for incurring the cost must be provided.

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  • Cost sharing

    Important information to know.

    • Mandatory cost sharing occurs when a sponsoring agency requires the campus to pay for some of the costs incurred on a sponsored award, as a condition of the agreement.
    • Voluntary cost sharing occurs when a department or program provides matching funds from gifts, departmental funds, or other discretionary sources to voluntarily pay for some of the costs incurred on a sponsored award.

    Accounting

    The accurate calculation of campus facilities and administrative (indirect) cost rates depends on the accurate accounting of cost sharing.

    • A project expense that is cost shared is recorded to a FOAPAL different from the sponsored award's FOAPAL.
      • For example, an expense that is to be cost shared, originally recorded to a research FOAPAL (function code 44), may be transferred to an instruction FOAPAL (function code 40).
    • The cost of effort not funded by the sponsoring agency but recorded as a cost to the sponsored project, is considered cost sharing.
      • The campus effort reporting system cannot track unfunded effort
      • Unfunded effort costs must be separately identified in the accounting system.

    Responsibilities

    Several campus units play important roles in ensuring compliance with agency cost sharing requirements.

    1. Office of Sponsored Projects
      • Proposal Stage
        • Identifies mandatory and voluntary cost sharing
          • Identifies funding sources used to pay cost share
          • Distributes cost sharing information to the appropriate divisional research accountants (DRA) and campus units
          • Obtains appropriate authorization for all cost sharing commitments
          • Informs Principal Investigator of relevant OMB A-21 provisions and Cost Accounting Standards
      • Post-Award Stage
        • Distributes cost sharing data to the appropriate DRA and to Extramural Funds Accounting (EMF)
    2. Divisional Research Accountants (DRA)
      • Proposal Stage
        • Reviews and approves all cost sharing commitments
      • Post-Award Stage
        • Monitors and tracks compliance with cost sharing requirements of the proposal or award
          • Prepares cost sharing contribution reports
          • Verifies cost-sharing data on quarterly PAR reports matches supporting documentation
          • Maintains documentation supporting the data provided on cost sharing reports
    3. Extramural Funds Accounting Office (EMF)
      • Post-Award Stage
        • Distributes cost sharing contribution reports to DRAs
        • Reports cost sharing to appropriate external agencies
        • Certifies the validity and accuracy of reported cost sharing

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    4. Charging costs

      An expense charged to a sponsored award must meet all of the following criteria:

      • Necessary. The expense must be necessary to the performance of the award.
        • A cost allowable on one project may not be allowable on another with different performance requirements.
      • Substantial Benefit. Each expense must substantially benefit the project.
        • Expenses applicable to one award or activity cannot be charged or transferred to another unrelated award or activity.
      • Consistent Classification. An expense incurred for the same purpose in a like circumstance must be consistently classified as either a direct or indirect cost.
        • A cost identifiable to a specific cost objective is treated as a direct cost.
        • A cost not identifiable to a specific cost objective is treated as an indirect cost.
        • Example: if a department directly charges long distance telephone charges to an award, then all other long distance charges should be charged to an Instruction or Departmental Administration FOAPAL.
      • Properly allocated. An expense benefiting more than one award must be allocated to each award in proportion to the benefit received using a reasonable allocation method.
        • Example: hours or quantity used.
      • Documented. Each expense must be adequately documented to ensure its validity and reasonableness.
        • Documentation may not be required if a specific type of transaction is explicitly approved in the award budget.
        • Examples: Budget justification, a listing of vendors and their bids for a needed product or service, a note from a PI, a note to an award file that includes the calculations supporting a particular charge.

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    5. Recharge costing

      A campus department ("recharge unit") providing products or services to another department or program obtains reimbursement of its costs through a recharge.

      • Recharges may only be charged to the benefiting program or activity.
      • Recharge rates must be uniformly charged to all campus purchasers of goods or services.
      • Each recharge rate charged must be based on recovering all costs associated with providing the good or service.
      • All recharges charged directly to a sponsored award must be approved annually by the campus Direct Costing Committee (DCC).

      Campus Recharge Units

      • Break-even operation. A recharge unit operates on a break-even basis, as measured over any three-consecutive-year period.
        • Annual pricing adjustments are made to eliminate any accumulated year-end surplus or deficit.
      • Normal operating cost recovery. Product and service price calculations are based on normal operating costs.
        • Normal operating costs include wages, employee benefits, supplies, materials, and equipment depreciation.
        • No markup beyond normal costs is usually allowed.
        • In certain, limited circumstances, a markup may be charged. Refer to 3. Dual-rate pricing structure below for more information.
      • Dual-rate pricing. Recharge units may establish a dual-rate pricing structure that allows for an additional pricing level that includes a markup beyond normal cost.
        • The markup allows a unit to accumulate funds to replace inventorial equipment or to cover certain other costs not allowed to be charged to a federally-sponsored award.
        • A federally-sponsored award may only be charged the lower rate, markup-free price.
        • The Direct Costing Commitee (DCC) must approve all recharge pricing, single-rate or dual-rate.
      • Subsidies. The campus or recharge unit may provide funding to subsidize a recharge activity for one of the following reasons.
        • To offset general unit expenses
        • To reduce prices of products or services
        • To pay for certain costs of the recharge activity
      Unallowable costs. The table below lists the account codes used to record costs that may not be included in pricing charged to federally-funded projects.
      Account Code Description
      001265 Administrative Recharges
      001240 Advertising (Non-Fed Chargeable)
      001280 Donations & Contributions
      001340 Legal Fees
      005010 Medical Services
      001210 Memberships -Non Fed Chargeable
      001040 Scholarships


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    6. Project cost overdrafts

      A cost overdraft occurs when total sponsored project costs exceed the amount budgeted.

      • The responsible division must eliminate the overdraft by taking one of the following actions:
        • Fund (reimburse) the overdraft using an unrestricted fund source.
        • Transfer excess project costs to a non-federal FOAPAL, having the same function code as that used for the sponsored award.
          • Example: a department may transfer a sponsored project (Function 44) cost overdraft to another Function 44 FOAPAL having an appropriate funding source, such as "19900" or "07427"
          • The same transfer may not be made to a FOAPAL with a "40" instructional function code.

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    7. Effort reporting (PAR certification)

      General Information

      Completion of a PAR fulfills an OMB A-21 requirement to certify that the effort (i.e. work) by individuals on a project is commensurate with the personnel expenses that were charged against the project.

      Even if a PI is not paid from the award, it is still important to certify their effort on a project with a PAR. This is a necessity when there is committed cost sharing. In general, when there is effort cost sharing on an award, there should also be an associatiated PAR to certify the effort for each project being cost shared.

      • If one is not being produced for someone, please send that name to the PAR Administrator in EMF to ensure that subsequent PAR reports will be produced for that person.

      Each employee whose salary is partially or fully charged to a sponsored project must certify the level of effort devoted to the project by completing a Personnel Activity Report (PAR).

      PARs are generated from payroll data and sent to appropriate staff and faculty based upon fund codes that identify federally-sponsored awards.

      The employee completing a PAR fills in the percent of actual effort related to each FOAPAL. The percentage should total 100%.

      If the payroll information on the PAR form is not correct, a payroll adjustment may be necessary. The effort reported on the PAR form should match the effort for Federal funds. If cost sharing effort is being reported, usually 19900 funds, this would not apply.

      Corrections changing the distribution by 5% or more require the preparation of a payroll expense transfer, accompanied by a revised PAR.


      Certification

      PAR forms are signed by the employee or a responsible official. Faculty or professional employees usually complete and sign their own PAR forms. PARs for academic personnel cannot be signed by an adminstrative employee.

      Upon completion, the original (yellow copy) of the PAR is retained by the department and the white copy is returned to Extramural Fund Accounting Office.


      Frequency

      PAR certification reports must be submitted for the quarters ending March 31, June 30, September 30, and December 31. PARs processing generally lags one quarter behind the reporting period. This lag allows PARs to reflect any payroll transfers done during the subsequent quarter for the prior reporting period.

      • If a PAR was produced before a transfer was recorded, it should then be annotated appropriately before certification.
      • If a payroll transfer was executed after a certified PAR was returned to EMF, the divisional or departmental office should type a revised PAR for certification and submission to EMF.
      • Each Principal Investigator (PI) responsible for or professional employee with time charged to a federally-sponsored award is required to complete a PAR.
      • The PI/employee completes the bottom portion of the PAR indicating the percent of time spent on the project and signs certifying the reasonableness of that effort. Faculty and professional employees usually complete and sign their own PAR forms. PARs for academic personnel cannot be signed by an administrative employee.

      Schedule for PAR distribution:

      • Summer, February or by March 1
      • Fall, April 1
      • Winter, July 1
      • Spring, September 1

      Missing PAR report notifications are sent out twice per quarter. In December/January, the previous year is closed out. After close out, older PARS will not be reflected on the "Missing PARs" report; however, departments should continue to submit them to Extramural Funds (EMF) as the PARs are still needed for audit purposes.


      PAR Review

      1. An individual having first-hand knowledge of the work performed by an employee on a sponsored project reviews the PAR.
        • A PAR completed by a faculty or professional employee is reviewed by a responsible academic official, such as a department chairperson or dean so long as that person has direct knowledge of the actual work being performed on the project (NOT a general administrator). This designee should also have a documented delegation of authority from the PI. For non-exempt staff, a timesheet in lieu of a PAR will suffice if it shows:
          • hours worked per project
          • correct FOAPAL distribution
          • proper PI (or designee) authorization for each FOAPAL
        • A PAR completed by a non-academic employee is reviewed by a supervisor, department chairperson, principal investigator, or ORU director.
      2. The PAR reviewer verifies the following:

        • The employee worked on the project.
        • The percentage distribution of effort to the project is reasonable.
      3. The PAR is reviewed for the following:
        • Effort reporting and payroll distribution should reasonably reflect actual effort
          • Because precise reporting of effort is not always possible, reliance is placed on estimates to establish the individual's payroll distribution to fund/organization code sources.
        • After-the-fact reporting of percentage of effort should at least equal the percentage of payroll charged to the sponsored project
          • A payroll adjustment may need to be made to match percentage payroll charged with the percentage of effort.
      4. Certifying PARs is normally done by the principal investigator (PI).

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    8. Policy references

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    9. Where to get help

      Assistance is available for the following topics:

      • Proposal questions: Sponsored Projects Office
      • Recharges activities, Direct Costing Committee questions: Planning and Budget Office
      • Cost transfers, cost sharing, effort reporting, other costing questions: Extramural Funds Accounting
      • Records management: Campus Records Management Coordinator

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    10. UCSC Accounting codes
      • Funding codes (5 digit numerical codes assigned by EMF or OSP) and are unique to each award. In Contract and Grants accounting, there can be many Org codes per each fund, but the combination should be unique to each award.
      • Organization codes (6 digit numerical codes assigned by Planning & Budget) structured to facilitate expense classification consistent with federal cost accounting standards. The first two digits of an organization code represent a function code:
        • A function code (aka Program code) represents a specific type of institutional activity, such as instruction (40), research (44), or academic support (43).
        • Refer to Appendix: Function Codes for detailed descriptions of each function code.
      • Account codes (alpha-numeric) represent a type of expense or expense category. Refer to Account codes for a complete list of UCSC account codes and descriptions.
      • Activity Codes (alpha-numberic) were created for departmental/ divisional use to aid the units in tracking expenses that may require more separation from the fund. such as:

      tracking an expense category that has a different indirect cost rate than the rest of the award.

      identifying of expenses from another non-federal funding source when there is cost share required.


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    11. Allowable Nonpayroll Expenses

      Important information about non-payroll expenses. "Benefiting activities" include Instruction, Research, and Departmental Administration.

      • Advertising, Allowable (Account Codes - 001220, 001223, 001230, and U0123_)
        • This cost is charged directly to a benefiting activity if the purpose of the cost is one of the folllowing:
          • Recruitment of personnel
          • Procurement of goods and services
          • Disposal of scrap or surplus materials
          • Other specific purposes necessary to meet the requirements of a sponsored award agreement.
      • Equipment, Inventorial
        • Equipment may be purchased with federal funds only if it is necessary for the completion of the project.
        • Other alternatives, such as leasing, should be evaluated before making a purchase.
      • Lab Supplies
        • Lab supplies are charged to the benefiting activity.
      • Leases & Rentals
        • Lease costs are charged to either a sponsored award if the terms explicitly allow it, or to another benefiting activity.
      • Memberships/Subscriptions-Allowable (Account Codes - 001200 and U0120_)
        • A membership in a technical or professional organization is treated as an indirect cost.
        • A subscription to a professional or technical periodical is charged to the benefiting activity.
        • A subscription to a periodical may be charged to federally sponsored award if it is not reasonably available to the faculty member and it benefits the specific project.
      • Meetings & Conferences, Allowable (Account Codes - 001270)
        • These costs are charged directly to a sponsored award if the primary purpose of the meeting is to disseminate technical or project-related information.
        • Costs not directly charged to a sponsored award are charged to the benefiting activity.
        • Light refreshments are allowable costs if they are permitted by the funding source and the meeting or conference is business-related.
        • Specific restrictions apply to certain meeting-related costs, such as airplane travel and the purchase of alcoholic beverages.
      • Office Supplies
        • Office supplies are usually treated as a facilities and administrative (indirect) cost. However, an extensive amount of office supplies significantly greater than the routine level are charged to the benefiting activity.
      • Photocopying and Reproduction
        • Routine copying and reproduction costs are treated as indirect costs.
        • The cost of an extraordinary volume of copying are directly charged to a sponsored award or to another benefiting activity.
          • Example: reproduction of a publication or other project exclusive material
      • Postage and Mail
        • Ordinary and routine mail delivery and postage costs are treated as indirect costs.
        • The cost of an extraordinary amount of postage, such as for a mass mailing, may be directly charged to the fund source supporting the specific project
          • The sponsored award's organization code is charged for mailings associated with a contract/grant.
          • The departmental organization code is charged for departmental mailings.
        • Overnight delivery costs are directly charged to a sponsored project or other benefiting activity
      • Repairs & Maintenance
        • The following repair and maintenance costs are treated as an indirect cost.
          • Core service repair and maintenance costs for state-supported, non-leased UCSC building space.
          • Services provided to leased space maintained by Physical Plant using state funding.
          • Services provided to equipment installed as part of a State-funded capital project or which form an integral part of a central building system.
        • The following repair and maintenance costs are charged to the benefiting activity:
          • Specialized services that are provided by Physical Plant maintenance services.
          • Services provided to leased space that is not state-supported.
          • Services to all other equipment, whether fixed or moveable.
      • Scholarships and Fellowships
        • These costs are charged directly to a sponsored award under the following conditions:
          • The purpose is to provide training.
          • It is explicitly allowed by the sponsoring agency.
      • Telephones
        • Basic telephone equipment and line charges, and local telephone services are usually treated as an indirect cost.
        • Long distance and fax charges are charged to a sponsored award or other benefiting activity.
      • Travel, Allowable - In-State and Out-of State
        • Travel costs for recruiting, disseminating information at a conference, or other allowable activities are charged to the benefiting activity.
        • Travel costs associated with recruitment or other instructional activities are directly charged to an Instruction FOAPAL
        • Travel costs are directly charged to the sponsored award if allowed under the awarding agency's policies.
      • Utilities
        • Utility costs are normally treated as an indirect cost.
        • Utility costs associated with a lease agreement are charged to the benefiting activity.

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    12. Unallowable Nonpayroll Expenses

      The following types of expenses usually cannot be charged directly to a federally-sponsored award, except as noted:

      • Advertising (Account Codes - 001220, 001223, 001230, and U0123 _)
        • Exception: This cost may be charged directly to a benefiting activity if it is incurred for one of the folllowing purposes:
          • Recruitment of personnel
          • Procurement of goods and services
          • Disposal of scrap or surplus materials
          • Required to comply with sponsored award agreement terms.
      • Fines and penalties (Account Code - 009430)
        • Costs resulting from violations of, or failure to comply with, federal, state, and local laws and regulations, including University regulations, are unallowable.
        • Exception: Incurred as a result of complying with specific terms of the sponsored award agreement.
      • Donations and contributions (Account Code - 001280 and U0128_)
        • Donations or contributions made to any organization or activity are unallowable.
      • Unallowable memberships (Account Code - 001210 and U0121_)
        • Membership costs for any civic or community organization or club (country, social, or dining) are unallowable.
      • Unallowable advertising (Account Code - 001240)
        • Costs associated with events related to instruction or other institutional activities including displays, demonstrations and exhibits are unallowable.
        • These costs must be direct charged to an Instructional fund/organization code.
      • Social activities and entertainment (Account Code - 001250 and U0125_)
        • Costs incurred for alcoholic beverages, amusement, social activities, entertainment (e.g., tickets to shows or sporting events), and any related items, such as meals, lodging, rentals, transportation, and gratuities are unallowable.
        • Entertainment costs associated with such items as flowers, party balloons, or other sensitive items should be charged to an entertainment account code specifically set up to account for such expenses.
      • Legal proceedings (Account Code - 001340)
        • Costs incurred in connection with any criminal, civil or administrative proceeding are unallowable.
        • Exception: Incurred as a result of complying with specific terms of the sponsored award agreement or with the specific written direction of an authorized official of the sponsoring agency.

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    13. Allowable Payroll Expenses

      Important information to know.

      Faculty and Professional Research Salaries, Wages, and Benefits. Usually directly charged to an instruction (40XXXX) or research (44XXXX - 59XXXX) organization code.

        • These expenses must meet all of the following criteria:
          • Permitted under the terms of the sponsored award
          • Correspond to the level of effort expended on the project
          • Documented in the University effort reporting system (PARS)
          • Benefit costs must be incurred in conformity with established University policies
        • Those salary and benefit expenses related to general departmental or college activity support, such as the Dean's Office expenses, are considered indirect and may not be charged directly to a sponsored award.

      Administrative & Clerical Salaries, Wages, and Benefits.

        • These expenses usually may not be directly charged to a sponsored award.
        • These expenses may be charged directly to a sponsored award only under one of the following circumstances:
          • The sponsored award explicitly budgets for these expenses and each individual involved can be specifically identified with the project.
          • The amount of academic department or division administrative or clerical support is significantly greater than the routine level of services usually provided.
            • Satisfactory justification for directly charging these expenses must be provided to the awarding agency.


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    14. Cost Category Examples

      Direct Costs

      • Employee compensation, including benefits, for performing work under a sponsored award.
      • Expenses for goods and services used to perform work under a sponsored award.
        • May include the extraordinary use of utilities or services of specialized facilities
      • Administrative or clerical support costs, if all of the following conditions apply.
        • The amount of support is significantly greater than the routine level provided by an academic department (A-21, F.6.(b)). Examples include:
          • Preparing a mass mailing
          • Conducting a telephone survey
          • Planning and organizing large conferences
          • Project-specific computer programming and systems development
          • Extensive data entry related to a survey
          • Extensive research data collection
          • Extensive interviewing and associated transcription
        • The original or revised sponsored award budget explicitly allows for the costs to be directly charged to the award.
        • Adequate documentation exists to support the costs.

      Indirect Costs (Facilities and Administrative Costs)

      • General departmental administration
      • Contracts and grants administration
      • Development of proposals and associated activities
      • Budgeting, accounting and personnel activities
      • Routine filing, typing, copying, mailing
      • Processing vouchers and payments
      • Routine travel planning
      • Routine data entry
      • Routine telephone answering and reception
      • Newsletter/brochure preparation
      • Preparing, processing, and tracking routine purchase orders
      • Maintaining administrative databases

      Unallowable Costs and Activities

      • Lobbying costs associated with partisan political activity, including, but not limited to, lobbying, publishing, and preparing materials intended to influence legislation
      • Fundraising costs associated with campaigns, endowment drives, gift and bequest solicitations, and other activities intended solely to raise funds.
      • Commencement and convocation costs, except as they relate to the administration of student affairs or provide services to students
      • Student activity costs, including student publication production, student club operations, intramural activities
      • Alumni activities

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    15. Function Codes

      The first two digits of the organization code represent a function code, which is used to reflect a specific type of institutional activity. Here is a description of each function code:

      Activity/Function Organization Function Code
      Description
      Instruction 40xxxx Includes expenditures associated with the instructional and teaching activities of a department or division, including continuing education and summer session. Expenditures for sponsored training and research performed as part of regular instruction programs are included in this activity. The Instruction activity may include indirect costs, including departmental administrative support activities.
      Organized Activities/ Academic Support 43xxxx Includes expenditures for activities supporting academic departments, such as shops, computing facilities, and vivaria. Only direct activity costs may be charged to 43XXXX accounts.
      Research 44xxxx through 59xxxx Includes research activities funded by external agencies or by UCSC (where funds must be separately budgeted and accounted for). It includes operating expenditures for separately organized research units, including research institutes, centers, and laboratories. Only direct activity charges may be made to federally sponsored grants and contracts. Indirect activities may be charged to non-federal Research funds/organization, when allowable (e.g., non-federal discretionary gifts).
      Library 60xxxx Includes expenses incurred for the operation of the library.
      University Extension 61xxxx Includes all expenses incurred for the operation of University Extension general, professional, and other programs.
      Public Service 62xxxx Includes expenditures for non-instructional activities that benefit the general public, such as cultural activities sponsored by Arts and Lectures.
      Maintenance and Operation of Physical Plant 64xxxx Includes expenditures incurred for the administration, supervision, operation, maintenance, preservation, and protection of the institution's physical plant.
      Institutional Support 66xxxx
      72xxxx
      Includes support services benefiting common or joint departmental activities, such as accounting and other administrative services.
      Student Services 68xxxx Includes expenses incurred for the administration of student affairs and for services provided to students such as the registrar, admissions, dean of students, commencement.
      Auxiliary Services 76xxxx Includes self-supporting non-departmental, campus community activities, such as the bookstore, and housing and residential services operations,
      Student Financial Aid 78xxxx Includes expenditures for scholarships, fellowships, and stipends for students, trainees, and fellows. These costs are excluded from the indirect cost calculations.

      Example: A faculty member has a telephone she uses for both instruction-related and sponsored award-funded activities. Long-distance charges incurred in support of a sponsored award should be recorded as a direct cost in the appropriate fund/organization, if 1) funds are available and 2) the costs are allowable in the award budget. On the other hand, monthly phone equipment and line charges cannot be associated with a specific activity or award, so these costs are recorded as facilities and administrative (indirect) costs in the departmental administration FOAPAL. For academic departments, this may be either a 40XXXX or 43XXXX organization code. 40XXXX organization codes being used for departmental administration have been linked to a "43XXXX" UCOP's uniform accounting structure (UAS) code and those used for instruction are linked to a "40XXXX" UAS code for reporting purposes.


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