Direct Charging of Expenses
When a sponsored project includes a portion of your salary, or that of another university employee, that portion will be charged to the research index. Payroll forms that include a research index are forwarded to Sponsored Programs Accounting for approval before going to the payroll office.
Faculty and Other Salaries
Salaries, wages and fringe benefits are allowable costs to federal and non-federal sponsored projects, so long as they reflect the level of effort expended on the project and are documented by the University Payroll Certification System. Salaries and fringe benefits are paid at the university's approved rates. Read more about how to apply these charges to a sponsored project.
Clerical and Administrative Salaries & Wages
As stated in Federal regulations, clerical and secretarial salaries should generally be assigned to federal sponsored agreements as Facilities and Administrative (F&A) costs. Direct charging of these costs may be appropriate where the administrative or clerical support is significantly greater than the routine level of such services provided by academic departments. See the list of examples when such charges may be appropriate.
Fringe benefits are automatically generated when payroll is charged. In order to determine the fringe benefit rate that is charged to your index please use the current approved fringe benefit rate, found on the Research Facts and Figures Page. The rate that is charged to your account is the lower of the effective rate at the time of proposal or the current rate.
Non Salary Expenditures
Federal regulations outline federal cost principles and requirements. Michigan Tech projects must adhere to these standards for federally sponsored projects. In addition, non-federal awards must be treated consistently. Please become familiar with the basic requirements for both and with some examples. We have also provided a number of forms and flow charts to help you understand the method for charging expenses to a sponsored account. (top)
In describing a system to track effort on federal projects, Federal regulations state the following:
"In the use of any method for apportioning salaries, it is recognized that, in an academic setting, teaching, research, and service administration are often inextricably intermingled. A precise assessment of factors that contribute to costs is not always feasible, nor is it expected. Reliance, therefore, is placed on estimates in which a degree of tolerance is appropriate."
Salaries and wages are charged to sponsored agreements using three methods. Departments are responsible for allocating the expenses to the appropriate project. All effort is certified by the department and all adjustments are authorized by the principal investigator and any other appropriate administrator.
- Pre-planned effort - Faculty, staff and student effort is determined on a semester basis and earnings are charged as a percentage of time to sponsored agreements. Use one of these forms: Request for Account Distribution Change, Employee Status Change Form (Gold Forms), or Student Requisition/Status Change Form (Pink Form), for use to start or stop payroll for graduate or undergraduate students (or provide any other change in status).
- Time sheet overrides – Staff and students can override any pre-planned distribution on a biweekly basis by charging specific hours to any sponsored agreement.
- Adjustments – Faculty, staff and student earnings can be reallocated to the appropriate project on an after-the-fact basis. Use the Reallocation of Payroll form. Also see the Reallocation of Expenditures policy. Faculty and professional staff approve after-the-fact payroll certification forms on a semester basis. Graduate students, undergraduate students and hourly employees approve such forms on a monthly basis. (top)
The costs would need to meet the federal criteria for direct charging—i.e. "be identified specifically with a particular sponsored project . . . relatively easily with a high degree of accuracy," and the special circumstances would need to be justified to the satisfaction of the awarding agency in the grant application or contract proposal.
The following examples are illustrative of circumstances where direct charging the salaries of administrative or clerical staff may be appropriate.
- Large, complex programs, such as general clinical research centers, program projects, environmental research centers, engineering research centers, and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions.
- Projects that involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting, such as epidemiological studies, clinical trials, and retrospective clinical records studies.
- Projects that require making travel and meeting arrangements for large numbers of participants, such as conducting conferences and seminars.
- Projects whose principal focus is the preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports).
- Projects that are geographically inaccessible to normal departmental administrative services, such as seagoing research vessels, radio astronomy projects, and other research field sites that are remote from the campus.
- Individual projects requiring project-specific database management; individualized graphics or manuscript preparation; human or animal protocol; Institutional Review Board (IRB) and multiple project-related investigator coordination and communications. (top)
The following list represents administrative and clerical activities that should not normally be direct charged to sponsored programs.
- Departmental administrators (general departmental duties)
- Accounting and budgeting
- Processing vouchers
- Processing payroll forms
- Routine travel related planning
- Routine data entry
- Routine telephone answering
- Routine database maintenance
- Typing of newsletters and brochures
- Data correction and organization
- Routine processing and tracking of purchase orders
- Typing of applications for awards
These examples are not exhaustive nor are they intended to imply that direct charging of administrative or clerical salaries would always be appropriate for the situations illustrated in the examples.
Where direct charges for administrative and clerical salaries are made, care must be exercised to assure that costs incurred for the same purpose in like circumstances are consistently treated as direct costs for all activities. (top)
Federal regulations outline federal cost principles and requirements. Michigan Tech projects must adhere to these standards for federally sponsored projects. In addition, non-federal awards must be treated consistently. The basic requirements are:
- Costs must be reasonable and necessary for the performance of the sponsored agreement. Failure to adequately document a cost could result in a disallowance of a legitimate charge.
- For costs benefiting more than one sponsored project, the relative benefit must be approximated through the use of reasonable basis reflecting use or level of service. Costs should be allocated to the "users" in proportion to the benefits received.
According to the Basic Considerations Section of OMB Circular A-21, "Any costs allocable to a particular sponsored agreement under the standards provided in this Circular may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns, or other fund considerations to avoid restrictions imposed by law, or by terms of the sponsored agreement or for other reasons of convenience."
The awarding agency guidelines and/or University policy may be more restrictive than the guidelines discussed in this document.
The following are examples of costs that are considered indirect costs that normally should not be direct charged to Sponsored Programs:
- Office Supplies (including general purpose computers & standard computer software)
- Local Telephone Costs (including line charges, network connections & cell phones)
- Postage or Delivery Costs
- Proposal Preparation Costs
- Security Costs
- Library Costs (top)
When charging a sponsored program index there are several steps to be followed and several questions to ask before processing expenses. These flowcharts will guide you through those steps and questions.
The Financial Services and Operations web site provides a guide on what forms to use to charge expenses or receive reimbursement. Some of the most-needed forms for sponsored programs include:
- Purchase Orders
- Purchase Order processing (with budget checking procedure flow chart)
- Invoices (non P.O. expenses)
- Invoice Processing flow chart
- Journal Voucher/Inter-Account Bill Processing
- Journal Voucher/Inter Account Bill Processing Flow Chart
- Credit Card
- Reallocation of Expenditures
- Fabricated Equipment Procedures and Form
- Independent Contractors/Consultants