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Business and Financial Policies and Procedures

Frequently Asked Questions

Q. What costs require prior approval?

A. Consult the terms and conditions of the individual award, the funding program, agency grant guidelines, including Federal Research Terms and Conditions and agency-specific terms and conditions, and the Uniform Guidance.

The full list of costs requiring prior written approval is provided in the Uniform Guidance, § 200.407. Individual agencies participating in the Federal Research Terms and Conditions may have alternative treatments.

Q. What constitutes prior approval?

A. Some sponsors have deviated from the prior approval requirements specified in the Uniform Guidance, §200.407 and may have more or less restrictive terms; therefore, refer to sponsor-specific policies to determine prior approval requirements for your sponsored award.

As it pertains to the prior approval requirements specified in the Uniform Guidance, §200.407, prior approval is generally defined as follows:

  • At the proposal stage, items requiring prior approval must be itemized in the proposal budget and explained in the budget justification. In rare cases, the justification may be documented in the scope of work. Sponsor acceptance of the budget and issuance of the notice of award constitutes prior approval.
    • Modular budgets (funding is requested in specific increments, such as modules of $25,000 total direct costs, without specific budget line items), which are most commonly used by the National Institutes of Health (NIH), conflict with the Uniform Guidance's prior approval requirement for certain costs at the proposal stage. While sponsors such as NIH will not ask for these details, they are important to keep on hand when calculating the F&A costs base and writing the internal budget justification, as well as for audit purposes.
  • After an award has been issued, if costs were not included in the original budget, prior written approval must be received from the federal awarding agency or pass-through entity prior to incurring costs. These requests must include a budget and budget justification, and should be submitted to the appropriate central office at your campus:
    • UIUC - Grants and Contracts Office
    • UIC - Office of Research Services
    • UIS - Office of Research Administration

Additional details regarding budget revisions can be found in the Uniform Guidance, §200.308.

Q. Can I charge administrative or clerical salaries directly to my sponsored project?

A. The salaries of administrative and clerical staff should normally be treated as indirect costs. Direct charging of these costs may be appropriate only if all of the following conditions are met:

  • Administrative or clerical services are integral* to a project or activity;
  • Individuals involved can be specifically identified with the project or activity;
  • Such costs are explicitly included in the budget (by employee name(s) or specific position title(s)) or have the prior written approval of the federal awarding agency; and
  • The costs are not also recovered as indirect costs.

*Integral is defined as essential to the completion of the project's goals and objectives, rather than necessary for the overall operation of the institution. Services are essential when they are vital or fundamental to the project or activity. In general, minimal effort contributions are not likely to be considered essential.

You may not include the salaries of administrative personnel conducting activities such as financial reconciliations, general clerical work, and proposal preparation, as these costs support overall institutional operations and must be treated as indirect (F&A) costs.

Items to consider when determining if direct charging of administrative personnel costs may be appropriate:

  • How is this project an exception as opposed to other similar projects?
  • What is required that makes this direct charge necessary and how is it above and beyond the normal level of support?
  • What specific circumstances is this project experiencing that makes this different?

To directly charge the salaries of administrative and clerical staff, the budget justification in the proposal must include a narrative that explains how the services are integral to the project. If it was not included at the time of the proposal, the costs must still meet the four requirements listed above and you must work with your campus central office to obtain prior written approval from the federal awarding agency or pass-through entity before the costs are incurred. Departments must discretely identify and charge each individual engaged in supporting a particular grant or contract, and not charge out costs from a clerical pool.

The Urbana Campus has implemented a review process for direct charging of administrative or clerical salaries to sponsored projects. As part of the review process, departments must obtain approval from the "Cost Accounting Standard Exception Group." For further details, go to the Office of Sponsored Programs website.

Q. Can I charge books/reference materials to my sponsored project?

A. Books, journals, and reference materials must be justified in order to be treated as a direct cost to the sponsored project. Federal policy, UG Appendix III, Section B8 - Library Expenses, indicates if an organization has a library, books and journals generally should be provided as part of normal library services and treated as F&A costs. Books and reference materials are normally found in the University library and are generally treated as part of the F&A costs (not charged directly to sponsored projects). Publications that provide a general benefit to research and teaching activities are not allowable as a direct cost. Purchasing a copy of the publication for convenience (i.e., notes will be written in the book rather than in a lab notebook) or for the purpose of "keeping current" in a research field are not justifications for direct charging of the cost to a specific sponsored project.

Q. Can I charge food to my sponsored project?

A. In general, food is unallowable on sponsored projects; however, there are some cases where it may be permitted and support must be provided to demonstrate a direct benefit to the project. 

Below are examples of situations where food may be allowable on the sponsored project:

  • Business Meal - In general, meals are allowed when the meeting is of a technical nature, not operational. Supporting documentation must include a formal agenda including a program or speakers and a list of participants. 
  • Conference Snacks and Refreshments - Reasonable snacks and refreshments may be served at a training program, meeting, or conference directly related to the sponsored project.

Below are examples of situations where food is unallowable on the sponsored project:

  • Social Event/Reception - A social event is any event with alcoholic beverages served, available, or present. Reception means an informal gathering which is not mandatory for all event participants to obtain necessary information. Social events and receptions are expressly prohibited and are considered to be an unallowable cost.
  • Departmental Snacks and Refreshments - Snacks and refreshments for general departmental meetings and training are unallowable.

Q. Can I charge office supplies directly to my sponsored project?

A. In general, office supplies are utilized in support of routine administrative activities and should be treated as F&A costs. The only exceptions are those wherein the purchase of the supplies is extensive in nature and can be specifically identified to the project. Office supplies may be charged directly to the project only when it can be demonstrated the items were (a) consumed completely in the course of the project and (b) used only in the conduct of the project and are not used for any other purposes.

Below are examples of situations where office supplies are allowable on the sponsored project:

  • Office supplies used for large volume surveys.
  • Office supplies used as laboratory supplies which should be appropriately classified as laboratory supplies, such as envelopes used for research sample storage.

Below are examples of situations where office supplies are unallowable on the sponsored project:

  • Items for personal use, such as facial tissues, hand soaps/sanitizers/lotions, disinfectant wipes, first aid products, cups/glasses/tableware/napkins are not allowable on sponsored projects unless unusual and documented circumstances support the direct charging of these items.
  • Items that would likely be used for other purposes or not entirely consumed in the course of the project - wall clocks, calendars, waste cans, paper punches, University stationery, staplers, and the like - should not be charged directly to sponsored projects.
  • Items to "restock" supplies that were consumed in the course of the project's work in order to have an inventory of supplies on hand to use for other projects are unallowable.

The Urbana Campus has implemented a review process for reviewing and approving exceptions to normal costing treatment for office supplies. For further details, go to the Office of Sponsored Programs website

Q. Can I charge computers or laptops directly to my sponsored project?

A. Computing devices costing less than $5,000 that are essential and allocable may be charged as direct costs. The Uniform Guidance (Section 200.453) states that it is not necessary for the computing device to be solely dedicated to the performance of an award. Similar to OMB Circular A-21, a computing device will only be allowable as a direct cost if it is necessary, reasonable, consistently treated, and properly allocated. However, this does not mean that a laptop or iPad can be charged to every sponsored project.

This means the computing device must be:

  1. Essential for the purposes of carrying out a specific objective of the sponsored project;
  2. Above and beyond what is provided by the department; and
  3. Charged to the sponsored project in some reasonable proportion relative to how much it is used for the award.

In addition, devices may not be purchases for reasons of convenience or preference. Computing devices must be itemized in the proposal budget and specifically addressed in the budget justification.

Computing devices purchased during the last six months of a project are subject to additional scrutiny and approval.

The Urbana Campus has implemented a review process for reviewing and approving exceptions to normal costing treatment for computers or laptops. For further details, go to the Office of Sponsored Programs website.

Q. Can I charge memberships and subscriptions to my sponsored project?

A. The costs of the University's membership in business, technical, and professional organizations, and subscriptions to business, technical, and professional periodicals are allowable when they provide a direct benefit to the project.

The cost of memberships in any civic or community organization is allowable with the prior approval of the federal awarding agency or pass-through entity. These costs must be itemized in the budget and described in the budget justification, or receive prior-written approval before the incurrence of such costs.

The cost of membership in any social organizations, such as country or dining clubs, or organizations whose primary purpose is lobbying remains unallowable. Individual membership and subscription costs are also unallowable.

Q. Can I charge costs after the end of the period of performance of my sponsored project?

A. Appropriate costs incurred prior to end of the period of performance, but not yet posted in Banner are allowable. However, additional costs cannot be incurred after the period of performance except limited final reporting costs, such as the cost of printing and publications or sharing of research results as required by the sponsor. As a reminder, the general closeout period is 90 days after the end of the project, with some sponsors having more or less restrictive closeout periods. See the University's Sponsored Projects Closeout Policy for more details.

Q.Can I charge dependent care costs to my sponsored project?

A. The University's travel policy does not allow for the reimbursement of temporary dependent care costs while traveling. Therefore, these costs remain unallowable on the University's sponsored awards since the Uniform Guidance requires consistent treatment across all fund types.

Last Updated: June 1, 2016 | Approved: Senior Associate Vice President for Business and Finance - June 2016

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