Allowable Expenses

Policy No: 
3.4
Type of Policy: 
Administrative
Effective Date: 
December 2014
Last Revised: 
December 2014
Review Date: 
December 2017
Policy Owner: 
Office of Grants and Contracts Accounting
Contact Name: 
Sandra Mason
Contact Title: 
Sr. Director Office of Grants and Contracts Accounting;
Contact Email: 
sandra.mason@business.gatech.edu
Reason for Policy: 

Direct charges to sponsored projects are allowable if they can be identified specifically to a particular sponsored project and are not treated as a facility or administrative (F&A) cost item. F&A cost items, such as office supplies, departmental administration, facility costs, andffdsfs general purpose equipment are charged to sponsored projects via the appropriate F&A rate. Typical costs charged directly to a sponsored agreement are the compensation of employees for performance of work under the sponsored agreement, including related fringe benefit costs; the costs of materials consumed or expended in the performance of the work; and other items of expense incurred for the sponsored agreement. The cost of materials supplied from stock or services rendered by specialized facilities or other institutional service operations may be included as direct costs of sponsored agreements, provided such items are consistently treated and are charged under a recognized method of computing actual costs. Policies and procedures developed by the Office of Grants and Contracts Accounting are based on the Federal government’s Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements (2 CFR Part 200) Subpart E “Cost Principles”. Individual sponsored awards may contain terms and conditions that are more specific and that are either more or less restrictive than 2 CFR Part 200 Subpart E. In these cases, the individual award/agreement will be used to determine the allowability of expenses posted directly to the associated sponsored project(s). In all cases, expenses must be accounted for in accordance with applicable Georgia Tech operating procedures.

Policy Statement: 

From OMB 2 CFR Part 200.403: The factors affecting allowability of costs under these principles are:

  • They must be necessary, reasonable, and allocable;
  • They must conform to any limitations or exclusions set forth in the principles or in the Federal award as to types or amount of cost items;
  • They must be consistent with policies and procedures that apply uniformly to both Federally-financed and other activities of the non-Federal entity;
  • They must be accorded consistent treatment as either a direct or indirect cost;
  • They must be determined in accordance with generally accepted accounting principles (GAAP);
  • They must not be included or used to meet cost sharing or matching requirements of any other Federally-financed program; and
  • They must be adequately documented

If any activity/expense cannot meet the above criteria, it may not be charged directly or indirectly to a sponsored project, regardless of its purpose.

Policy Terms: 

Reasonable
…does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost (200.404)

Allocable
…the goods or services involved are chargeable or assignable to that award in accordance with relative benefits received (200.405)

Consistently Treated
…may not be charged as a direct cost if any other like cost has been allocated or charged as an indirect cost (200.403)

Allowable
conforms to limitations or exclusions set forth in the sponsored agreement and these principles as to types or amounts of cost items

The following expense types are typically “unallowable” as a direct charge to a sponsored project (list not all-inclusive):

  • Office supplies
  • Telephone toll charges / hand-held communications device charges
  • Dues and membership fees
  • Administrative or clerical salaries*
  • Postage
  • First Class or Business Class travel
  • Entertainment, including alcohol

* Salaries of administrative and clerical staff may be charged directly only if all of the following conditions are met:

  1. They are integral to the project or activity;
  2. Individuals involved can be specifically identified with the project or activity;
  3. Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency; and
  4. The costs are not also recovered as indirect costs.

The following expense types are typically allowable as a direct charge to a sponsored project (2 CFR Part 200.453):

  • In the specific case of computing devices, charging as direct costs is allowable for devices that are essential and allocable, but not solely dedicated, to the performance of a Federal award.

Facilities and Administrative (F&A) (or indirect) costs are charged to sponsored projects via the Institute’s F&A rate. Typical F&A cost items include office supplies, departmental administration, facility costs, general purpose equipment, and others as listed above (list not all-inclusive). See G&C “Facilities & Administrative Rates” for additional information.
If it is determined that the individual award/agreement allows direct charging of costs normally expensed as F&A costs (e.g., postage, local telephone, office supplies, membership dues, and general purpose equipment), a Cost Accounting Standards (CAS) Exception Form must be completed, certified, and kept on file in the project files of the PI’s home academic department. This form must be properly supported by pertinent award/agreement documentation. The CAS Exception Form can be found on the Grants and Contracts website.
Certain allowable non-sponsored expenses may be unallowable for purposes of the F&A Cost study. Examples include fines/penalties, commencement expenses, and fund-raising activities. Unique project numbers are used to identify unallowable activities.

Procedures: 

Georgia Tech authorizes the principal investigator (PI) and the properly authorized unit designee (financial manager and staff) to have primary responsibility for the management of sponsored agreement funds. The actions of these authorized individuals are documented using manual/electronic signatures and/or a system password. It is the responsibility of PIs, unit heads and staff delegated signature authority by unit heads to ensure that only allowable charges are posted as direct expenses to sponsored projects. Unit financial managers are in the most knowledgeable position with up-to-date information regarding the status of their respective sponsored projects. As such, local management’s signature approval of a financial transaction indicates:

  • Approval for the action requested
  • Goods or services are directly related to the project scope
  • Charges are allowable according to the approved project budget
  • Charges have been incurred within the project time period
  • Charges have been incurred in accordance with GIT financial and accounting policies and procedures
  • Charges have been incurred in accordance with Terms and Conditions of the sponsored agreement
  • Funds are available in the designated projects

Quarterly Compliance Reviews
The Office of Grants and Contracts Accounting will perform a quarterly “Sponsored Project Allowable Costs” compliance review to accomplish the following objectives:

  1. Provide means for monitoring compliance with 2 CFR Part 200 and implementing adequate internal controls to ensure that departmental business managers are monitoring compliance with respect to expenditures charged to sponsored projects.
  2. Implement systematic queries of sponsored project charges to evaluate the appropriateness of direct costs charged to projects.

The Office of Grants and Contracts Accounting conducts regularly scheduled training sessions pertaining to allowable and unallowable costs.

Contact the Grants and Contracts Accounting Department for specific guidance related to managing sponsored projects at Georgia Tech.

Responsibilities: 

Each Georgia Tech PI is responsible for effectively overseeing and managing his/her sponsored projects based to a considerable extent upon his/her knowledge of the field of study and his/her capabilities to conduct the projects in an efficient and productive manner. Monthly “PI Sponsored Project Review” reports are provided directly to PIs by the Office of Grants and Contracts Accounting to permit timely reviews and approval/confirmation of all charges posted to his/her assigned sponsored projects. PIs are to perform periodic reviews of these charges to provide proper financial oversight. Additional information pertaining to “PI Sponsored Project Review” reports is available on the Grants and Contracts website.

List the units or individuals who are responsible for aspects of the policy (e.g., colleges, departments, offices, faculty, students, employees, etc.). Summarize the major responsibilities – the “what” not the “how” of the responsibility. Details of “how” should be in the procedures section.

Enforcement: 
To report suspected instances of noncompliance with this policy, please visit Georgia Tech’s EthicsPoint, a secure and confidential reporting system, at: https://secure.ethicspoint.com/domain/en/report_custom.asp?clientid=7508
Policy History: 
Revision DateAuthorDescription
12-26-2014Office of Grants and Contracts AccountingUpdate to conform to Office of Management and Budget Uniform Requirements issued 12-26-2013
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