Costing Principles for Sponsored Awards Penn State Policies


Severance payments that are due to abnormal or mass terminations are of such conjectural nature that allowability must be determined on a case-by-case basis. However, the Federal Government recognizes its obligation to participate, to the extent of its fair share, in any specific payment. Institutional records will reasonably reflect only the activity for which employees are compensated by the institution . In the use of this method, an institution shall not be required to provide additional support or documentation for the effort actually performed.

What is a allowable expense?

Allowable expenses are essential business costs that are not taxable. Allowable expenses aren't considered part of a company's taxable profits. You therefore don't pay tax on these expenses.

Necessary and reasonable expenses incurred for routine and homeland security to protect facilities, personnel, and work products are allowable. Such costs include, but are not limited to, wages and uniforms of personnel engaged in security activities; equipment; barriers; contractual security services; consultants; etc. Capital expenditures for homeland and plant security purposes are subject to section J.18, Equipment and other capital expenditures, of this Circular.

OVCRI Main Office

Rental differential payments covering situations where relocated employees retain ownership of a vacated home in the old location and rent at the new location. The rented quarters at the new location must be comparable to those vacated, and the allowable differential payments may not exceed the actual rental costs for the new home, less the fair market rent for the vacated home times 3 years.

Allowability of write off of CWIP expenses – Tax Management India. Com

Allowability of write off of CWIP expenses.

Posted: Sat, 25 Feb 2023 04:25:04 GMT [source]

The professional Cost Principles And Allowable Expenses category shall consist of all faculty members and other professional employees of the institution, on a full time equivalent basis. Items such as office supplies, postage, local telephone costs, and memberships shall normally be treated as F&A costs. Depreciation or use allowances on buildings used for more than one function, and on capital improvements and equipment used in such buildings, shall be allocated to the individual functions performed in each building on the basis of usable square feet of space, excluding common areas such as hallways, stairwells, and rest rooms. Notwithstanding subsection , effective July 1, 1998, a cost analysis or base other than that in Section F shall not be used to distribute utility or student services costs.

600 Financing Agreements – Advance Payments

Unallowable costs involved in the determination of rates used for standard costs, or for indirect-cost bidding or billing, need be identified only at the time rates are proposed, established, revised or adjusted. The educational institution claims that the costs in question are allowable under the provisions of Office Of Management and Budget Circular A-21, Cost Principles For Educational Institutions; the auditor disagrees. The issue is referred to the Federal officer for resolution pursuant to the sponsored agreement disputes clause. The Federal officer issues a written decision supporting the auditor’s position that the total costs questioned are unallowable under the Circular. Following receipt of the Federal officer’s decision, the educational institution must identify the disallowed costs and specific other costs incurred for the same purpose in like circumstances in any subsequent estimating, cost accumulation or reporting for Government sponsored agreements, in which such costs are included.

Improper influence means any influence that induces or tends to induce a Federal employee or officer to give consideration or to act regarding a federally sponsored agreement or regulatory matter on any basis other than the merits of the matter. Severance pay is compensation in addition to regular salary and wages which is paid by an institution to employees whose services are being terminated. Costs of severance pay are allowable only to the extent that such payments are required by law, by employer-employee agreement, by established policy that constitutes in effect an implied agreement on the institution’s part, or by circumstances of the particular employment. For employees covered by the system, there will be direct cost records to reflect the distribution of that activity expended which is to be allocable as direct cost to each sponsored agreement.

Direct and Indirect (F&A) Costs means the process of assigning a cost, or a group of costs, to one or more cost objective, in reasonable and realistic proportion to the benefit provided or other equitable relationship. A cost objective may be a major function of the institution, a particular service or project, a sponsored agreement, or a F&A cost activity, as described in Section F. The process may entail assigning a cost directly to a final cost objective or through one or more intermediate cost objectives. Cognizant Federal agencies involved in negotiating facilities and administrative (F&A) cost rates and auditing should assure that institutions are generally applying these cost accounting principles on a consistent basis.

  • When the acquisition costs are unknown, reasonable estimates may be used.
  • Faculty Profiles is a search directory for Tufts faculty profiles which include bios, publications, research areas, and more.
  • Adherence to these cost accounting concepts is necessary to guard against the overcharging of some cost objectives and to prevent double counting.
  • In addition, legal and related services are limited under section J.13.
  • For nonqualified pension plans using the pay-as-you-go method, to be allowable in the current year, the contractor shall allocate pension costs in the cost accounting period that the pension costs are assigned.

Costs allowed for business interruption or other similar insurance shall be limited to exclude coverage of profit. Development effort for manufacturing or production materials, systems, processes, methods, equipment, tools, and techniques not intended for sale. Company means all divisions, subsidiaries, and affiliates of the contractor under common control. Gains and losses arising from mass or extraordinary sales, retirements, or other disposition other than through business combinations shall be considered on a case-by-case basis. Gains and losses on disposition or impairment of depreciable property or other capital assets. Be calculated in accordance with generally accepted actuarial principles and practices as promulgated by the Actuarial Standards Board.


Earnings subject to being reported to the Federal Internal Revenue Service under arbitrage requirements are excludable. Costs of insurance with respect to any costs incurred to correct defects in the non-Federal entity’s materials or workmanship are unallowable. The non-Federal entity is required to make reviews of local currency gains to determine the need for additional federal funding before the expiration date of the Federal award.

Costs of housing (e.g., depreciation, maintenance, utilities, furnishings, rent), housing allowances and personal living expenses are only allowable as direct costs regardless of whether reported as taxable income to the employees. In addition, to be allowable direct costs must be approved in advance by a Federal awarding agency. Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity. Depreciation is the method for allocating the cost of fixed assets to periods benefitting from asset use. The non-Federal entity may be compensated for the use of its buildings, capital improvements, equipment, and software projects capitalized in accordance with GAAP, provided that they are used, needed in the non-Federal entity’s activities, and properly allocated to Federal awards.

The expenses under this heading are those that have been incurred for the administration, supervision, operation, maintenance, preservation, and protection of the institution’s physical plant. The operation and maintenance expense category should also include its allocable share of fringe benefit costs, depreciation and use allowances, and interest costs. The grouping of homogeneous costs in estimates prepared for proposal purposes shall not per se be deemed an inconsistent application of cost accounting practices under subsection a when such costs are accumulated and reported in greater detail on an actual cost basis during performance of the sponsored agreement. An educational institution’s cost accounting practices used in accumulating and reporting actual costs for a sponsored agreement shall be consistent with the educational institution’s practices used in estimating costs in pricing the related proposal or application.

  • Taxes from which exemptions are available to the contractor directly, or available to the contractor based on an exemption afforded the Government, except when the contracting officer determines that the administrative burden incident to obtaining the exemption outweighs the corresponding benefits accruing to the Government.
  • All funds must be spent in accordance with Penn State policy, applicable state and federal law, and sponsor terms and conditions.
  • Payments for increased employee income or Federal Insurance Contributions Act ( 26 U.S.C.Chapter21) taxes incident to allowable reimbursed relocation costs.
  • The Institute establishes policies that, if followed, ensure consistency.
  • The purpose of this standard is to provide criteria for the selection of the time periods to be used as cost accounting periods for sponsored agreement cost estimating, accumulating, and reporting.

Schreibe einen Kommentar

Deine E-Mail-Adresse wird nicht veröffentlicht. Erforderliche Felder sind mit * markiert