Questions 1-4, please! STANFORD UNIVERSITY: Indirect-Cost Allocation, Indirect-C

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Questions 1-4, please!

STANFORD UNIVERSITY: Indirect-Cost Allocation, Indirect-Cost Recovery ceived or other equitable relationship. The test of allowa bility of costs under these principles are: (a) they must be reasonable; (b) they must be allocable to sponsored agree ments under the principles and methods provided herein; (c) they must be given consistent treatment through application of those generally accepted accounting principles appropri ate to the circumstances; and (d) they must conform to any limitations or exclusions set forth in these principles or in the sponsored agreement as to types or amounts of cost items. re In 1990, an extensive audit was conducted on Stanford University's cost allocations for federally funded research. The federal government follows a policy of reimbursing universities for the full costs of conducting federally sponsored research. In statement to investigators, Stanford President Donald Kennedy provided some historical perspective: After WWI, the United States made the decision t convert its wartime research efforts into a great expanded basic research program located in our univer sities, where the training of the next generation of scien tists takes place. Originally, federal support of basic research in universities developed along the lines of an Unless a university and its cognizant government agency agree on a different method of cost determination, the method ology in the circular applies. Indirect-cost rates are negotiated each year between universities and their cognizant federal agencies, such as the National Institutes of Health and the National Science Foundation. The agencies are also responsi ble for auditing university contracts. The Department of Defense (DoD) is the cognizant agency for Stanford, with its Office of Naval Research (ONR) negotiating cost rates and the istance model"; academic scientists wanted to work on fundamental problems and the government (in the first instance, the Office of Naval Research) wanted to get it done.... Federal support for university research has made possible an extraordinarily broad array of valuable advances in fields from microbiology to engineering, from particle physics to genetics. At Stanford, federal research support has played a critical role in stunning advances including such non-invasive technologies as magnetic resonance imaging; the discovery of the first reliable cure for Hodgkin's disease;. .and a series of basic discover- Defense Contract Audit Agency (DCAA) conducting audits. Stanford's 1988-1989 operating expenses were about $355 million. In that year, Stanford received $78 million in indirect reimbursement from the government. Some of the indirect-cost pools included for reimbursement were economy-class air travel related to a specific research project; depreciation on the university's yacht Victoria, alcoholic beverages and entertain ment costs advertising; organized fund-raising costs; costs of ies essential to modern genetic engineering.b Indirect Cost Recovery

Explanation / Answer

1) though most federal procurements are subject to the 'full and open competetion' requirements where all responsible sources must be permitted to compete, subcontracting with the federal govermment can be quite profitable bit roles rules and requirements of subcontracting are uncertain. These uncertainties are exaggerated by the fact many subcontracts are awarded in a "hurry up" context, where negotiations between the prime and subcontractor might be conducted by telephone, fax or email under rushed circumstances. Subcontractors are often saddled with uncertain contract terms because they feel they have to "take it or leave it.

2) direct cost:- allowable cost that can be identified specifically with particular grants and directly assigmed with high degree of accuracy.

indirect cost:- allowable cost that are incurred for common or joint objective and therrfore cannot be indentified readilh or specifically with ome grant or proportinately charged to multiple grants i.e payroll salaries

allocable cost:- The cost must have a direct benefit and be directly attributable to the project or activity

being performed. For example, a Project Manager purchases a piece of equipment in order to

conduct a grants. This piece of equipment is allocable to that project and can be charged as a

direct cost to the project.

unallocable:- UNALLOCATED COSTS represents corporate costs not associated either directly or indirectly in providing a product or service for sale. Unallocated costs are not included in the calculation of COST OF GOODS SOLD.

3) Direct Costs (Allowable as Budgeted Items) Indirect Costs (Not Allowable as Direct Costs)

Salaries/Wages & Fringe Benefits:

Faculty, other professionals, technicians, post doc associates, research associates, graduate and undergraduate students Salaries/Wages & Fringe Benefits:

Clerical and administrative assistants, fiscal manager, secretaries, and directors (see Considerations for Administrative Salaries on Sponsored Awards)

Materials and Supplies:

Project related research and scientific supplies. Any equipment or software that does not qualify under the equipment definition Office Supplies/Books & Journals:

Pens, pencils, paper, staples, transparencies, toner cartridges, diskettes, printer paper, word processing and spreadsheet programs (see Considerations for Books & Journals)

Equipment:

Equipment used for scientific, technical, and research purposes that costs greater than $5,000 and has a useful life of at least one year (see Direct Charges for Computing Devices) Equipment:

General office equipment such as copiers, printers, office computers, and fax machines

Facilities:

Project specific space rental for off-campus facilities from a third party. Use of specialized equipment for which there is a commonly applied charge Facilities:

Utilities, building use, grounds maintenance, renovations, and alterations of University property whether on- or off-campus

Travel:

Transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business of the institution related to the project Travel:

Costs of entertainment, and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities)

Telephone:

Long distance calls, phone surveys or calls to project participants Telephone:

Local calls, cell phones, installation and maintenance

Maintenance & Repairs:

Requires justification that the expenditures are required and directly related to the specific award (e.g., less expensive than buying new) Maintenance & Repairs:

Maintenance and repairs to general purpose equipment, buildings, and grounds

Advertising:

Recruitment of research subjects or for job openings approved for a specific project Advertising:

Public relations to promote unit/department/college

Publications:

Project specific and project related. Copying included only when charges can be tracked Publications:

General printing and copying

Memberships, subscriptions and professional activity:

Membership in business, technical, and professional organizations; related to and supportive of the project. Subscriptions to business, professional, and technical periodicals; related to and supportive of project Memberships, subscriptions and professional activity:

Membership in any civic or community organization

Membership in any country club or social/dining club or organization (see Considerations for Subscriptions, Dues & Memberships)

Freight/express deliveries and Postage:

Justification required that cost needed to transport project material in a timely way Freight/express deliveries and Postage:

Routine or internal courier

Consulting:

Project specific Consulting:

General, management, financial

Miscellaneous Costs:

Subcontract costs, recharge center charges, and training costs Miscellaneous Costs:

Computer network charges and utilities.

Participant Support Costs:

Participant support costs were traditionally allowed only by certain federal agencies or funding announcements. Under the Uniform Guidance, these costs are allowed with prior written approval of the funding agency, provided they are programmatically justified. The budget justification should describe the purpose for the costs and the way in which they will directly benefit the proposed project’s scope of work. These costs must be excluded when calculating the Modified Total Direct Costs (MTDC) to de termine the overall project’s F&A costs.  

4) government incurred indirect costs because this means that govt. pays for any buildings facilities i.e infrastructure water electricity maintainence etc. thus this can also be in favour of society and public waelfare

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