Fiscal Compliance

Why it matters…

University of Delaware

Multiple Guidelines

Circulars

Sponsor Guidelines

Award Document

UD Policies

• Definition:– Oversight/stewardship of financial aspect of

award• Responsible party:

– Everyone is responsible to ensure proper spending of sponsored project funds

– Principal Investigator has overall responsibility– Purchaser has secondary responsibility

Fiscal Compliance

Cost Principles

Consistently treated

Consistency in estimating, charging and reporting of direct costs and F&A

Allocable and verifiableBenefits the project Easily identified and

assignedProportional to the relative benefit received by project

Allowable under regulations or award provisionsReasonable & Necessary Allocable Within Terms & Conditions

of Award

Reasonable and necessaryPrudent person test Necessary for the

performance of the projectConsistent with established

institutions practices

ReasonableCost may be considered reasonable if the

goods/services acquired and the cost involved reflects the same action that a prudent person would have taken.

• Is necessary for the performance of the sponsored agreement

• Has been determined reasonable by the individuals concerned acting with due diligence

• Has been determined through costing policy, consistent with established institutional policies and practices

AllowableAll costs must be allowable by federal regulations,

sponsor terms and conditions, including program-specific requirements and University policy.

• Reasonable and necessary• Allocable to sponsored agreements• Given consistent treatment appropriate to the

specific circumstances at hand• In conformity to any limitations or exclusions set

forth in the sponsored agreement

Sample Allowable Costs• Compensation and related fringe benefits of

employees for performance of work under the sponsored agreement

• Costs of materials consumed or expended in the performance of the sponsored activity

• Travel (in accordance with University policy and in compliance with sponsored agreement)

• Equipment• Materials and Supplies• Consultants• Subawards

Sample Unallowable Costs• Alcoholic Beverages• Entertainment Costs• Lobbying• Goods/Services for Personal Use• Losses on Other Sponsored Agreements• Fines and Penalties• Memberships in Civic/Social Clubs• Costs with insufficient documentation• Non-travel related Meals and Refreshments (generally

not allowable direct costs) http://www.udel.edu/research/pdf/Allowability-of-meals.pdf

Example Unallowable Cost• Foreign travel – while travel is generally an

allowable expense on sponsored projects, many sponsors both federal and non-federal do not allow foreign travel to be charged to the award even if the travel were related to the sponsored activity.

Allocable

• Every incurred cost must have a direct benefit to the sponsored project being charged.

• Can be easily identified and assigned to a particular sponsored project

• If a cost benefits two or more projects in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit

Allocable Considerations• Allocated costs may not be shifted to other

sponsored agreements in order to meet deficiencies caused by overruns, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience

• Costs may not be allocated based on the remaining balance in the budget of the sponsored project

Reasonable Allocation Methods

Reasonable methods for allocating common use scientific items and supplies may include:

• Specific anticipated use per sponsored project• Full time equivalents on each sponsored project• Lab square footage• High correlation to another lab cost that is

clearly allocated

Example Unallocable Costs• Travel to conference by PI (not related to current

sponsored activities) is not allocable as a direct cost

• Salary of administrative staff to schedule meetings is not allocable as a direct cost to a specific sponsored project

• Purchase of general use supplies for entire lab group with no clear allocation method is not allocable to individual sponsored projects

• Equipment purchased at end of sponsored project

• Check with your department administrator.

• Remember the “Cost Principles.”

• Do not charge common items to a grant.

• Supporting the expense with proper invoicing and receipts are critical to the audit process.

Summary