Administration costs include general administrative expenses that are not specific to the project but serve the entire organization. Follow up, after reviewing the indirect cost proposal, with questions, and/or concerns and may request additional documentation, and/or narrative responses, in support of the proposal (for more detailed steps see Section 2.G., Indirect Cost Proposal M/OAA/CAS/OCCs Review Procedures, of this guide.). Reimbursement of indirect costs are subject to the submission of an indirect cost rate proposal, availability of funds, statutory and administrative restrictions, and the approval of the USAID Grant Officer or authorized representative. The hours recorded in the timesheet are reconciled to payroll and job cost system. Indirect Cost Rates in Research Libraries. SPEC Kit 64. Consistency in charging specific items of cost.b. Administration of group benefits on behalf of members or clients, including life and hospital insurance, annuity or retirement plans, and financial aid. Send the appeal to the Deputy Assistant Administrator, Bureau for Management, U.S. Agency for International Development, Management Bureau, 1300 Pennsylvania Ave, NW, Washington, D.C. 20523. Examples include depreciation on buildings, equipment and capital improvement, interest on debt associated with certain buildings, equipment and capital improvements, and operations and maintenance expenses. Timekeeping is performed in accordance with company policies and procedures. NSF's Indirect Cost Rate Policies Organization legal name, address, telephone number. Each indirect cost pool must then be allocated individually to benefitting functions by means of a base which best measures the relative benefits. The cost base describes the direct cost pool (types of costs and cost caps) to which the indirect cost rate is applied. If no approved rate exists, the pass-through entity may negotiate an indirect cost rate with the subrecipient or accept the de minimis rate (. Indirect Cost Rate Guide for Non-Profit Organizations Stick to the step-by-step recommendations below to eSign your nicra form: Select the document you would like to sign and click on the Upload button. USAID predominantly uses the provisional and final indirect cost rate methodology when negotiating rate agreements. Grantees that already have a NICRA and wish to finalize indirect cost rates for a prior period are required to submit their audited financial statements and single audit in accordance with 2 CFR 200, Subpart F, Section 512(a)(1) and certified indirect cost rate proposal to USAID within the earlier of 30 days after receipt of the auditors report, or nine months after the close of each fiscal year. If any litigation, claim or audit is started before the expiration of the 3-year period, the records shall be retained until all litigations, claims or audit findings involving the records have been resolved. The statements must be reconciled to the indirect cost rate(s) calculation. Indirect Cost: Definition and Example | Office of Management To prevent substantial overpayment or underpayment of indirect cost during the fiscal year, a revised provisional rate may be requested by the organization. PIs should carefully review the program guidelines to determine how the cost-share can be met by all partners. They should also support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Applicable audited financial statements including any affiliated organizations, and the single audit in accordance with 2 CFR 200, Subpart F, Section 200.512(a)(1). A sample is as follows: The Agreement Officer (AO) decides any dispute between the organization as defined in 2 CFR 200.86, and USAID arising under an assistance award. To facilitate equitable distribution of indirect expenses to the cost objectives served, your organization may need to establish a number of pools of indirect costs. Examples include salaries and benefits for staff and consultants working on the project, project-related travel, and supplies and equipment used on the project. The .gov means its official. Review severance payments for reasonableness. After USAID issues a final indirect cost rate, M/OAA/CAS/OCC will establish a provisional rate for the next fiscal year. The proposed allocation base(s) is subject to negotiation and approval by USAID. Be aware that the NICRA does not change any monetary ceiling, obligation or specific cost allowance or disallowance provided for in each award between the parties. 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, if you do not have a current or provisional negotiated rate (except for local governments claiming central service costs under. Availability of data on square footage, number of transactions, employees, purchase orders, etc.e. TDC Example: If a sponsor requires 10% TDC indirect cost rate and the direct costs total is $100,000, then the indirect costs would be calculated as: $100,000 x 0.10 = $10,000. ( g) Any non-Federal entity that has a current federally-negotiated indirect cost rate may apply for a one-time extension of the rates in that agreement for a period of up to four years. The fringe benefits base of application is total direct and indirect labor dollars. If your organization does not have a current negotiated (including provisional) rate or has an expired rate, your organization may choose to negotiate a rate with its cognizant agency. A predetermined rate may be negotiated for use on Federal awards where there is reasonable assurance, based on past experience and reliable projection of the organization's costs, that the rate is not likely to exceed a rate based on the organization's actual costs. Other Sponsored Activities programs and projects that involve the performance of work other than instruction and organized research. Cost-Sharing: Frequently Asked Questions - Office of Research If the organization subsequently wins the award a NICRA will then be issued. Costs must be consistently charged as either indirect or modified total direct costs, and may not be double charged or inconsistently charged as both. NEH must accept valid and applicable indirect cost rates (2 CFR 200.414 (c)(1)), or if no current or provisional negotiated rate exist, accept the de minimis rate, if requested in the application budget. Statement of Treatment of Paid Absencesb. Frank Fico, CPA on LinkedIn: Six Important Considerations for For The Appendix II includes a list of some frequently asked questions by organizations on areas such as the OMB Super Circular (2 CFR 200); establishing indirect cost rates and a NICRA; the time period for establishing a NICRA; direct versus indirect costs; and award modification based on the NICRA. Download Example - Multiple Allocation Method: Fringe benefits indirect cost rate, Overhead indirect cost rate and General and Administrative (G&A) expense rate. The CPS should be tailored to fit the specific policies of each organization. The AO must place a copy of the final decision in the award files. Make any agreed upon changes, and request any revised, and/or supporting documentation. The selection of an appropriate base for allocating indirect costs. Grants providing for ceilings as to the indirect cost rates or amounts will be subject to the ceilings stipulated in the grants or other agreements. Overhead rate. requires organizations to submit audited financial statements and the certified indirect cost rate proposal within six months after the close of the fiscal year. Submit a draft NICRA to the organization for their review of the indirect cost rates methodology, and obtain their concurrence. This method should also be used where an organizations major functions benefit from its indirect costs to approximately the same degree, and may be used where the level of Federal awards to an organization is relatively small. Total Federal funds involved. 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. Example 2: Applying a 34% Indirect Cost Rate using direct salaries and wages, excluding fringe benefits, base. The statements must be reconciled to the indirect cost rate(s) calculation. NEH must use the negotiated rates in effect at the time of the initial award throughout the life of the award, except as provided in 2 CFR 200.414(c)(1). The purpose of this spreadsheet is to identify effected awards, gauge materiality and identify any indirect cost limitations. Depreciation schedule if depreciation is included as indirect costs. It is a manner of assuring fair and equitable reimbursing across different businesses and organizations. The funding agency has a special rate pre-approved by SPARCS, . Once NEH issues an award, it is not obligated to make adjustments due to increases in your organizations indirect cost rate agreement. Indirect costs, also referred to as, facilities and administrative costs (F&A). 2 CFR 200, Subpart F, Appendix IV, Section B.4.a, states that some nonprofit organizations treat all costs as direct costs except general administration and general expenses. This method should also be used where an organization has only one major function encompassing a number of individual projects or activities, and may be used where the level of Federal awards to an organization is relatively small. If not, USAID does not have the authority to negotiate the organizations rates. Some examples of these types of activities include: The checklist below addresses the documentation to provide and steps needed when an organization is seeking a NICRA for the first time. The proposal and related documentation must be retained for audit. First Time Provisional NICRA SubmissionPrepare the indirect cost rate proposal by using the Indirect Cost Rate (ICR) Proposal Checklist for First Time NICRAs included in Section 2.E. For small businesses, supporting documentation can include reviewed financial statements with the associated indirect cost calculations. The cognizant agency is typically the federal, awarding agency that provides the largest amount of direct funding (as listed on the schedule of expenditures of Federal awards, see. ) Lobbying Cost Certificate in accordance with 2 CFR 200, Subpart E, Section 200.450(c) 2 (vi)c. Certificate of Indirect Costs in accordance with 2 CFR 200, Subpart F, Appendix IV, Section D. Compile all remaining documentation identified in the indirect cost proposal checklist. Schedule of all awards grouped by funding agency with majority federal funding listed on top. Some examples of this category include central offices, such as the director's office, the office of finance, business services, budget and planning, personnel, safety and risk management, general counsel, and management information systems costs. Again, for this approach, once the negotiated ICR is approved, organizations will calculate the actual 2 indirect costs on a periodic basis. Submit a draft NICRA to the organization for their review of the indirect cost rate methodologies, and obtain their concurrence. For companies with federal contract expenditures, or subcontract expenditures under a federal contract in a particular fiscal year under flexibly-priced contracts (e.g., Cost Plus Fixed Fee etc. 2 CFR 200, Subpart F, Appendix IV, Section B.2.a., states that where an organization's major functions benefit from its indirect costs to approximately the same degree, the allocation of indirect costs may be accomplished by (i) separating the organization's total costs for the base period as either direct or indirect, and (ii) dividing the total allowable indirect costs (net of applicable credits) by an equitable distribution base. The measurement selected should be based on relative benefits received, and should be able to replicate the process. Tutorial 3: What are indirect rates and how do I develop them? A predetermined rate is typically not subject to adjustment. If you have never received a negotiated indirect cost rate, you may elect to charge a de minimis rate of 10 percent of modified total direct costs. 2 CFR 200.332 Requirements for pass-through entities, Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions for Higher Education (IHEs), Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations, State and Jurisdictional Humanities Councils, General Guidance on Calculating Indirect Costs, Chronicling America: History American Newspapers. Indirect Costs | Research Administration and Compliance Treatment of paid absences and signed statement of treatment of paid absences. Provide the amount of executive compensation paid to the top 5 executives. If a sponsor's published policy mandates a lower F&A rate, an indirect cost exception (waiver) must be obtained. Leave absence such as vacation, holiday, sick leave, and other paid absences were included in salaries. Assure that the indirect cost rate calculation is in accordance with the accepted rate methodology. Modified Total Direct Costs, excludes equipment, capital expenditures, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Cost Policy Statement Sample - jksm.eu.org Added to the last paragraph additional information from the 2 CFR 200.430 (i) addressing the standards for documentation of personnel expenses. These amounts should also tie to the general ledger labor accounts and the financial statements. (i.e., capital expenditures and major contracts and subgrants). Guidance for Negotiating an Indirect Cost Rate Agreement with NEH, Reviewing and Calculating Indirect Costs using a NICRA. The AOs decision is final unless the recipient appeals the decision. The decision to use either method will depend on the grantee's accounting system. To calculate the rate SACS Form ICR divides an LEA's general administration costs (the numerator of the calculation) by its operating costs (the denominator). Indirect Costs$22,500Budget Grant Amount$350,000 Total Direct Salaries ICR calculation is 10% of $225,000. Applying the correct indirect cost rate requires an understanding of the structure of your NICRA. Examples include salaries and benefits for staff and consultants working on the project, project-related travel, and supplies and equipment used on the project. An adjustment is also made for the difference between the rate approved for use in a year and the amount of indirect costs actually expended. When preparing your budget, you must treat costs that you classify as direct or indirect consistently. Grantees that already have a NICRA are required to submit their audited financial statements and single audit in accordance with 2 CFR 200, Subpart F, Section 512(a)(1) and certified indirect cost rate proposal to USAID within the earlier of 30 days after receipt of the auditors report, or nine months after the close of each fiscal year. (Base Amount) x (Indirect Cost Rate) = Total Indirect Costs. In cases in which an organization has only negotiated a research rate (see below for an explanation of rate types), the organization may apply the de minimis rate. Review and analyze direct costs for the determination of: Review the grant budget and payments, or grantee records, for a determination of: (if deemed feasible under the circumstances), Check with the appropriate Agreement Officer for any problems he/she may be aware of relating to the charging of costs. A fixed rate, however, must not be negotiated if (i) all or a substantial portion of the organization's Federal awards are expected to expire before the carry-forward adjustment can be made; (ii) the mix of Federal and non-Federal work at the organization is too erratic to permit an equitable carry-forward adjustment; or (iii) the organization's operations fluctuate significantly from year to year. This paragraph applies to the following types of documents and their supporting records: indirect cost rate computations or proposals, cost allocation plans, and any similar accounting computations of the rate at which a particular group of costs is chargeable (such as computer usage chargeback rates or composite fringe benefit rates). Some nonprofit organizations treat all costs as direct costs except general administration and general expenses. Although there are different methodologies available for allocating costs, the methodology used should result in an equitable distribution of costs to programs. Part 200): 2 C.F.R Part 200 establishes uniform administrative requirements, cost principles, and audit requirements for Federal awards to non-Federal . ). An indirect cost rate is simply a device for determining fairly and conveniently within the boundaries of sound administrative principles, what proportion of indirect cost each program should bear. Each reclassification and adjustment must be explained in notes to the reconciliation schedule. IDHS: 402 Suicide Prevention First Responders (24-444-22-2873) Award Amounts: Maximum amount $200,000. Determine if USAID is the federal cognizant agency, i.e. a 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 a rate adjustment in future years. Refer to Appendix V for a sample of a deviation letter from the NICRA. If you choose the de minimis, you must use the rate consistently for all federal awards until your organization chooses to negotiate its own indirect cost rate. To facilitate equitable distribution of indirect expenses to the cost objectives served, your organization may need to establish a number of pools of indirect costs. Locations for where the organization will perform most of the substantive work of the project. As of November 1, 2016 the following changes have been made to the OCC Guide for Non-Profit Organizations. [PDF 259 KB]. indirect cost rate agreement. Provide detailed indirect cost rate calculations based on estimated costs for the applicable fiscal year. If the de minimis . A NICRA establishes the following to calculate indirect costs: The rate(s) established in a NICRA are typically effective for a two- to four-year period. PredeterminedA predetermined indirect cost rate is applicable to a specified current or future period, usually the organization's fiscal year. If your organization does not have a current negotiated (including provisional) rate or has an expired rate, your organization may choose to negotiate a rate with its cognizant agency. A final indirect cost rate is not subject to adjustment.

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