POLICIES & PROCEDURES
Policy On Charging Costs Directly To Federally Sponsored Projects - 99-04
March 1, 1999

Purpose:
This policy is being implemented to assure FAU's compliance with the Circular A-21 from the Office of Management and Budget (OMB) and the Cost Accounting Standards.

Background:
OMB Circular A-21 requires that costs incurred for the same purpose and in like circumstances must be treated consistently as either direct or indirect costs.

Policy:
Effective July 1, 1999, the following costs will normally be treated as indirect costs and will not be allowed to be charged directly to federal sponsored agreements:

• Clerical, secretarial, and administrative salaries
• General postage
• Basic telephone charges
• Office supplies
• General purpose equipment as defined in OMB A-21 (See Attachment)
• General purpose software
• Subscriptions
• Institutional and individual membership

Exceptions will be granted under the following circumstances:

• Projects with a high demand for the above items as described in the budget narrative may be granted exceptions.
• Exceptions may be approved by Sponsored Programs or Research Accounting upon receipt of appropriate written justification by the PI or specific authorization from the grantor.
• Long distance telephone charges directly related to the grant should be charged to the grant.

J. General provisions for selected items of costs.

16. Equipment and other capital expenditures.

a. For purposes of this subsection, the following definitions apply:

(1) "Equipment" means an article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost which equals or exceeds the lesser of the capitalization level established by the organization for financial statement purposes, or $5,000. The unamortized portion of any equipment written off as a result of a change in capitalization levels may be recovered by continuing to claim the otherwise allowable use allowances or depreciation on the equipment, or by amortizing the amount to be written off over a period of years negotiated with the cognizant agency.

(2) "Capital expenditures" means the cost of the asset including the cost to put it in place. Capital expenditure for equipment, for example, means the net invoice price of the equipment, including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is acquired. Ancillary charges, such as taxes, duty protective in transit insurance, freight, and installation may be included in, or excluded from, capital expenditure cost in accordance with the institution's regular accounting practices.

(3) "Special purpose equipment" means equipment which is used only for research, medical, scientific, or other technical activities.

(4) "General purpose equipment" means equipment, the use of which is not limited only to research, medical, scientific or other technical activities. Examples of general purpose equipment includes office equipment and furnishings, air conditioning equipment, reproduction and printing equipment, motor vehicles, and automatic data processing equipment.

b. The following rules of allowability shall apply to equipment and other capital expenditures:

(1) Capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except where approved in advance by the sponsoring agency.

(2) Expenditures for special purpose equipment are allowable as direct charges with the approval of the sponsoring agency.

(3) Capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as direct charges, except where approved in advance by sponsoring agency.

(4) Capital expenditures are unallowable as F&A costs See Section J. 12 for allowability of depreciation or use allowances on buildings, capital improvements, and equipment.

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Page updated July 2006 by Dianne Parkerson; Names updated July 2008