The statements must be reconciled to the indirect cost rate(s) calculation. For local educational agencies (LEAs), issues with the limit can occur if revenues from taxes . Each reclassification and adjustment must be explained in notes to the reconciliation schedule. 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. ), please provide all applicable final indirect cost rate data as specified in the Federal Acquisition Regulation (FAR) 52.216-7 (d) (2) (iii) for that . The direct funding of indirect costs.b. Download Example - Time Distribution Report [PDF 48 KB], The sample table identifies the actual direct costs, fringe benefits, overhead, and General and Administrative (G&A) expenses on the organizations fiscal year, and should reconcile to the organizations financial statements. Indirect costs, also referred to as, facilities and administrative costs (F&A). Below are some samples of common allocation bases: This method is acceptable provided each joint cost is prorated using an acceptable base. Review severance payments for reasonableness. The appeal must be in writing and must be postmarked within thirty (30) calendar days of receipt of the AOs final decision. 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. Agreement (NICRA), a description of the base used to calculate indirect costs along with the amount of the base, and the total indirect costs requested; OR (b) For those applicant states that meet the requirements to use the 10 percent de minimis rate as described in 2 C.F.R. 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. MTDC is defined at 2 CFR 200.68 as being: "All direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). The Negotiated Indirect Cost Rate Agreement shall not change any monetary ceiling, obligation, or specific cost allowance or disallowance provided for in each grant or contract between the parties. Download Example - Multiple Allocation Method: Fringe benefits indirect cost rate, Overhead indirect cost rate and General and Administrative (G&A) expense rate. NSF's Indirect Cost Rate Policies - Funding at NSF | NSF - National A list of subawards under your prime awards (required for Modified Total Direct Cost (MTDC) base only). Organized Research research and development activities of an institution that are separately budgeted and accounted for as scientific research and generally not scholarly inquiry of the type most often supported by NEH. Responsibility for the negotiation of indirect cost rates for sub-awardees rests with the prime recipient. 2 CFR 200, Subpart F, Appendix 4, Section C.2.f. When an organization considers the final indirect cost rate to be a reasonable estimate of its rate for coming year, it will be established as the new provisional rate. Contact person information (preferably the person who prepared the ICR): Entitys internet website address, if any. Administration is defined as general administration and general expenses such as the director's office, accounting, personnel and all other types of expenditures not listed specifically under one of the subcategories of Facilities (including cross allocations from other pools, where applicable). Indirect costs, also referred to as facilities and administrative costs (F&A), are incurred for the benefit or joint objectives of a specific project and organizational activities. The G&A expenses are those that have been incurred for the overall general executive and administrative offices of the organization and other expenses of a general nature which do not relate solely to any major function of the organization. (A) An indirect cost pool of $200,000 (B) A salary and fringe total of $300,000. arrow-right A Negotiated Indirect Cost Rate Agreement (NICRA) is a formal written agreement between your organization and its cognizant federal agency describing how the organization will calculate indirect 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. Timekeeping is performed in accordance with company policies and procedures. Indirect costs represent administrative expenses associated with the cost of doing business that are not readily identified project activities. Indirect rates are used for Incurred Costs Proposals. Frequently Asked Questions (FAQs) | U.S. Department of Labor - DOL 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. The proposed allocation base(s) is subject to negotiation and approval by USAID. 2 CFR 200, Subpart F, Appendix IV, Section C.2.g states that the result of each negotiation must be formalized in a written agreement between the cognizant agency for indirect costs and the nonprofit organization. Breakdown of indirect salaries by position title, amount and indirect percentage. The decision to use either method will depend on the grantee's accounting system. Indirect Cost Rates when dealing with federal contracts in general For awards that incorporate these indirect cost rates, the organization needs to promptly submit adjustment billings/vouchers or final vouchers for all cost reimbursement grants, contracts or other agreements. a permanent rate determined after an organizations actual costs for a current year are known. Provide a comparison, by major cost element, of the proposed provisional rates to prior year final and year-end actual rates. of this guide. Examples include. Reconciliation schedule for each indirect cost pool and allocation base showing each reclassification and adjustment to the financial statements to arrive at the cost pools and allocation bases. In your application, you must include your project budget and the base, rate, and amount of indirect costs you will recover during period of performance. Labor hour changes are initialed, dated, authorized, and documented. If a sponsor's published policy mandates a lower F&A rate, an indirect cost exception (waiver) must be obtained. Lobbying Cost Certificate in accordance with 2 CFR 200, Subpart E, Section 200.450(c) 2 (vi)b. The costs of a financial statement audit off a non-Federal entity so does not currently have a Confederate award could be included inside the indirect cost . Approval for indirect costs that are requested in an . ______ Yes. After USAID issues a final indirect cost rate, M/OAA/CAS/OCC will establish a provisional rate for the next fiscal year. 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 final rate is used to adjust indirect costs claimed based on a provisional 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. Report scam, The National Endowment for the Humanities, This document provides introductory guidance to NEH applicant and recipient organizations on calculating, as part of an NEH grant or cooperative agreement application budget. Title & Location, Name & Responsibility, Email Address, Telephone number, Supervisory Contract Specialist:UA 10.3.OC, Ramon E. Santos, rsantos@usaid.gov 202-916-2557, Contract Specialist:UA 10.3.2F, Catrina Burgess, B,M,N,U, cburgess@usaid.gov 202-916-2563, Contract Specialist:UA 10.3.1C, Devon Rodriguez, G,L,P,Q,R, derodriguez@usaid.gov,202-916-2558, Contract Specialist:UA 10.3.2D, Guli Hall, A,E,F, guhall@usaid.gov, 202-916-2562, Contract Specialist:UA 10.3.2C, Heartwill Doughan, C,J,O, hdoughan@usaid.gov, 202-916-2561, Contract Specialist:UA 10.3.1D, Natasha Young, S,T,V,Y,Z, nayoung@usaid.gov, 202-916-2559, Contract Specialist:UA 10.3.1C, Rami Khyami, I, rkhyami@usaid.gov, 202-916-2557, Contract Specialist:UA 10.3.1F, LaToya Dorsey, D,G,H,K,W, ldorsey@usaid.gov, 2020-916-2560, Management Analyst:UA 10.4.4A, Tanya Broadnax, Closeout Management Analyst, tbroadnax@usaid.gov, 202-916-2597, Administrative Assistance:Offisite, Alexis Johnson, Closeout Contract Specialist, AlexJohnson@usaid.gov, 202-907-1175, Administrative Assistance:UA 10.4.1D, Angelina Ball, Sr. Employees have sole access for entering own time. The most common cost bases used to calculate and allocate indirect cost rates are modified total direct costs and total direct salaries (with or without fringe benefits associated with those salaries). 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. The Negotiated Indirect Cost Rate Agreement shall specify: (a) the final rate(s), (b) the base(s) to which the rate(s) apply, and (c) the period(s) for which the rate(s) apply. What is the difference between Modified Total Direct Costs and Total 2 CFR 200, Subpart F, Appendix IV, Section B.2.e. Instruction teaching and training activities of an institution except for research training. As of November 1, 2016 the following changes have been made to the OCC Guide for Non-Profit Organizations. If adequately supported, a revised provisional rate will be issued. An indirect cost rate represents the ratio between the total indirect costs and benefiting direct costs, after excluding and or reclassifying unallowable costs, and extraordinary or distorting expenditures. All Federal agencies are required to use the rates and methodology negotiated by USAID and the related organization. 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. To update a 1977 study of indirect cost rates in Association of Research Libraries (ARL) member institutions, the Systems and Procedures Exchange Center (SPEC) contacted several member libraries and the National Association of College and University Business Officers (NACUBO) in 1980 for current information and documents. UA 10.4.1D, Angelina Ball, Sr. MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. When calculating indirect costs, select the appropriate cost base, as established in the NICRA, to determine the direct costs to be multiplied by the applicable negotiated indirect cost rate. These costs are allocated equitably across all of your organizations activities. Federal award recipients that recover administrative overhead costs through the use of an indirect cost rate (ICR) must submit an annual ICR proposal to: The organization must have an established accounting system prior to being awarded a grant or contract with a federal government agency. Provide any input related to any anticipated changes in business volume, organizational structure, and/or indirect rate structure for the new fiscal year. USAID predominantly uses the provisional and final indirect cost rate methodology when negotiating rate agreements. reasonable and consistently applied to direct costs, appropriate to the particular cost being distributed, and. Nonetheless, 2 CFR 200, Subpart F, Appendix IV, Section C.2.c. The site is secure. 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. If an extension is granted the non-Federal entity may not request a rate review until the extension period ends. Additional effort and cost required to achieve a greater degree of accuracy. This Indirect Cost Rate Guide (Guide) has been prepared to assist non-profit organizations to understand the requirements for the determination of indirect cost rates for application on cost reimbursable grants and other agreements awarded by the United States Agency for International Development (USAID). Although there are different methodologies available for allocating costs, the methodology used should result in an equitable distribution of costs to programs. If a small business has clearly established indirect cost rates, pools and bases that an external CPA firm has validated, this should be sufficient for the recognition of indirect cost rates under the award. 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. This extension will be subject to the review and approval of the cognizant agency for indirect costs. Project information available. Example: Consider a sponsored project award with these instructions: The total award is $100,000; Equipment is budgeted at $20,000; The indirect cost rate is 15%, excluding equipment The result of this process is an indirect cost rate which is used to distribute indirect costs to individual Federal awards. A copy of the organizations severance policy. The measurement selected should be based on relative benefits received, and should be able to replicate the process. When the U.S. Agency for International Development (USAID) provides the majority of a non-profit organizations Federal funding, it is the cognizant Federal agency for negotiating the organizations indirect cost rates. Added to item 7. in the Indirect Cost Rate Proposal (ICR) Checklist for First Time NICRA comments on documentation to be provided by small business to support the proposed indirect cost rate. Submission requirements are located on page 2 of the Uniform Budget Template as well as 2 CFR 200 Appendices IV, V & VII. Include the level of transaction testing performed by the independent auditor on direct and indirect costs claimed. In some instances, a single indirect cost rate for all activities of an organization or for each major function of the organization may not be appropriate, since it would not take into account those different factors which may substantially affect the indirect costs applicable to a particular segment of work. An organization is required to provide written notification to the indirect cost negotiator prior to implementing any changes which could affect the applicability of the approved rates. Provide a comparative analysis of indirect cost pools and bases by detailed account to prior fiscal year actual costs. An example of how to calculate matching funds is as follows: (a) Take the amount of grant funds requested and divide it by .75. . 2 CFR 200, Subpart F, Appendix IV, Section B.3.a, states that where an organization's indirect costs benefit its major functions in varying degrees, indirect costs must be accumulated into separate cost groupings. Defines the costs that compose the indirect cost pool. Once NEH issues an award, it is not obligated to make adjustments due to increases in your organizations indirect cost rate agreement. Download Example - DStatement of Treatment of Paid Absence, Lobbying Cost Certificate, and Certificate of Indirect Cost [PDF 47 KB]. If this is not the case, an organization provides a detailed forecast to support the rate they consider more accurate. The version and contents of the tool will be updated periodically. Submit a draft NICRA to the organization for their review of the indirect cost rates methodology, and obtain their concurrence. Entitys written policy for allocating and identifying direct and indirect costs, i.e. Treatment of paid absences and signed statement of treatment of paid absences. Each grouping must then be allocated individually to benefitting functions by means of a base which best measures the relative benefits. Cost-Sharing: Frequently Asked Questions - Office of Research Include the level of transaction testing performed by the independent auditor on direct and indirect costs claimed. Indicate which, if any, of the following the organization used to establish executive compensation, and provide the following supporting documentation: Approval by the board or compensation committee. Promotion, lobbying, and other forms of public relations. All direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). Predetermined or fixed rates may replace provisional rates at any time prior to the close of the organization's fiscal year. 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. The indirect cost rates will then be reviewed for propriety by M/OAA/CAS/OCC and the Contracting/Awarding officer will be advised of approved rates after negotiation with the organization. costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. The cognizant agency is typically the federalawarding agency that provides the largest amount of direct funding (as listed on the schedule of expenditures of Federal awards, see 200.510(b)) to a non-Federal entity unless OMB designates a specific cognizant agency for audit. Cost Policy Statement Sample - jksm.eu.org The AO must place a copy of the final decision in the award files. IMPORTANT NOTE: Under 2 CFR 200 Appendix III C. 7., rates are fixed for the life of the sponsored agreement. ), you may choose to use a de minimis rate of 10% of modified total direct costs (MTDC). If that event does not occur, a final rate will be established and upward or downward adjustments will be made based on the actual allowable costs incurred for the period involved. Fixed rates may be negotiated where predetermined rates are not considered appropriate. Of the $150,000, $40,000 is for a subcontract to WSU. The Overhead, Special Cost, and Closeout Branch (M/OAA/CAS/OCC), within the Cost Audit Support Division, Office of Acquisition and Assistance, within the Bureau for Management is the central unit authorized to negotiate indirect cost rates with concerns awarded contracts, grants or cooperative agreements by USAID. If applicable, a reconciliation spreadsheet should be provided to support the organizations claimed labor cost. 2. Conversely, if the organization is not successful in securing the award, no NICRA will be issued. 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. Failure to obtain such prior written approval may result in cost disallowance. Submit your nominations for the 2024 NEH Jefferson Lecturer, NEH Jefferson Lecture in the Humanities nominations, General Guidance on Calculating Indirect Costs (PDF). The 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Prior year audited financial statements including any affiliated organizations, and the single audit in accordance with 2 CFR 200, Subpart F, Section 200.512(a)(1). Calculating Indirect Cost Recovery | UCOP Generally, an organization uses the prior years final indirect cost rates as the new provisional (until amended) rates when an organization believes the final rates represent a reasonable estimate of the next years expected actual rates. Common locations include: Type of programs that rates are applicable to, Indirect Cost Rate (Allocation) Base Defined. To the extent that indirect costs are reasonable, allowable and allocable, they are a legitimate cost of doing business payable under a U.S. Government contract or grant. Determine whether these unallowable or non-allocable items should be added to the distribution/allocation base. This category must also include its allocable share of fringe benefit costs, operation and maintenance expense, depreciation, and interest costs. Depreciation schedule if depreciation is included as indirect costs. PDF Charging of Direct and Indirect Costs under Federal Grants - UMD F. Indirect Cost Proposal Checklist for Subsequent NICRAs of this guide for the required documentation. Include the level of transaction testing performed by the independent auditor on direct and indirect costs claimed. Tutorial 3: What are indirect rates and how do I develop them? The purpose of the CPS is to establish a clear understanding between the organization and the federal government as to what costs will be charged directly and what costs will be charged indirectly. 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. PDF Understanding Indirect Costs - The Grantsmanship Center This checklist is also included in Appendix IV, Indirect Cost Rate Proposal Checklist for Subsequent NICRAs, and includes the basic instructions to complete and send your revised provisional or final indirect cost rate proposal. Determine that the proposal reconciles with the supporting audit, official budget and financial statements. Review changes in the indirect cost rate allocation bases for propriety, if applicable. Examples include general administration and general expenses such as the director's office, legal, accounting, and administrative personnel. Leave absence such as vacation, holiday, sick leave, and other paid absences were included in salaries. Download Example - Simplified Allocation Method [PDF 42 KB]. It is the ratio between the total indirect costs of an applicant and some equitable direct cost base. You can find 3 variants; a drawn, uploaded or typed signature. The accounting system must provide adequate internal controls to safeguard assets, insure fund accountability by cost category, assure accounting data accuracy and reliability, promote operating efficiency, and comply with Government requirements and accounting procedures. This section of the guidance applies to organizations that are requesting new provisional rates for future periods and/or the finalization of provisional rates for past periods. cost allocation methodology. Facilities costs are the overall costs of operating and maintaining facilities owned or leased by the organization in which activities that may directly or indirectly support your project are taking place. Description of the allocation base used in each rate calculation. , are incurred for the benefit or joint objectives of a specific project and organizational activities.

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