Upon acceptance of an award, the groups and/or individuals identified in this GIM are responsible for ensuring that all direct and indirect costs (also referred to as Facilities & Administrative (F&A) costs), are presented appropriately in proposal submissions and allocated appropriately on awards.
This policy is based on:
- Federal Government Cost Accounting Standards (CAS) as disclosed on the UW’s Disclosure Statement (DS-2), which describes the UW’s cost accounting practices.
- Federal Government policies as stated in the Code of Federal Regulations.
- Washington State policies such as the Revised Code of Washington (RCW) and other applicable policies and regulations.
- UW policies as codified in the Administrative Policy Statements, Executive Orders, and GIMs.
All direct costs proposed and charged to an award must meet cost principles of being allowable, reasonable, allocable, and consistently treated.
Any costs considered Facilities & Administrative (F&A) costs, otherwise known as indirect costs, cannot be directly charged to a federal award unless certain conditions are met to justify the direct charging of the cost and prior sponsor approval is sought and obtained, consistent with the sponsor’s definition of prior approval.
Costs that are normally recovered under F&A may be directly charged to non-federal awards if permitted by the sponsor’s policies, award terms and conditions, or are otherwise approved by the sponsor.
Definition of Direct & Indirect Costs
The UW’s definitions of direct and indirect are aligned with those of federal government:
- Direct costs provide direct benefit to an award and can be easily assigned with a high degree of accuracy.
- Indirect costs are those incurred for a common or joint purpose benefitting more than one funding source and are not readily assignable to the funding sources.
More information on the UW’s Indirect Cost calculation and application can be found in GIM 13.
Examples of Indirect Costs
Indirect costs usually include but are not limited to the following:
- Administrative and Clerical Salaries
- Office supplies
- Basic local telephone services on campus (include installation, monthly charges, basic instruments)
- Cellular phones, pagers, and related service charges
- Routine copying charges
- UW Technology Fee
- Journals and subscriptions
For off-campus, Applied Physics Lab (APL), and Regional Primate Center awards the following costs can be incurred as direct costs without prior approval from the Sponsor:
- Office supplies
- Basic local telephone & internet services on campus (include installation, monthly charges, basic instruments)
- Routine copying charges
The PI is responsible for ensuring direct costs charged to an award meet the four cost principles:
- Allowable: permitted by the Sponsor, UW, Washington State, and the federal government
- Reasonable: reflects the action that a prudent person would take given the prevailing circumstances at the time the cost was incurred
- Allocable: provides a direct benefit to the award; it is necessary to complete the award
- Treated consistently as a direct or indirect cost in similar circumstances
The PI is responsible for identifying alternative funds to cover any unallowable costs incurred on an award.
If the sponsor requires institutional approval for budget changes, the PI prepares the request and submits it through the Office of Sponsored Programs (OSP).
The PI shall have the necessary staff, systems, processes and other resources to carry out adequate internal controls and to reasonably ensure that all direct costs charged to an award are consistent with this policy and GIM 2.
Provide support to the PI in ensuring they have the necessary resources to carry out adequate internal controls and ensure all costs on awards are in compliance with this GIM. Ensure appropriate internal controls are in place.
Work with central units to address issues related to lack of internal controls and disallowed costs.
Grant and Contract Accounting (GCA)
- Provides consultation on post-award financial matters.
- Works with PI and Sponsor to ensure any financial report/invoice aligns with award requirements and as reflected in the UW financial system.
- Has the right to exclude unallowable costs from a financial report/invoice.
Office of Sponsored Programs (OSP)
Reviews proposals consistent with GIM 1. OSP certifies, as necessary, to the sponsor that the UW will be accountable for the appropriate use of award funds. As UW’s authorized official, OSP reviews and submits prior approval requests for budget changes to the sponsor.
The UW’s Internal Audit provides independent assurance to the Board of Regents and UW leadership regarding the adequacy and effectiveness of internal controls over compliance, information systems, fiscal management, and operations.
Management Accounting and Analysis
Management Accounting and Analysis (MAA) develops and negotiates the UW Indirect (Facilities and Administration – F&A) Rate with the Federal Government. This entails calculating and negotiating the indirect cost rates (F&A rates).
- GIM 13: Facilities and Administrative Rates (F&A)
- Proposal Budgets
- Four Cost Principles
- Prior Approvals
- Award Changes
- UW Knowledge Navigator: Direct Expense and Nominal Indirect Expense
- Code of Federal Regulations 2 CFR 200.413 – Direct Costs
- Code of Federal Regulations 2 CFR 200.414 – Indirect Costs
Details on changes to this GIM are available from the Office of Sponsored Programs, email@example.com