6. Definitions

"Allocable costs"

  • A cost is allocable to a particular project if the goods or services involved are chargeable or assignable to such project in accordance with relative benefits received or other equitable relationship. Subject to the foregoing, a cost is allocable to a sponsored program if (1) it is incurred solely to advance the work under the sponsored program; (2) it benefits both the sponsored program and other work of the institution, in proportions that can be approximated through use of reasonable methods, or (3) it is necessary to the overall operation of the institution and, in light of the principles provided in this Circular, is deemed to be assignable in part to sponsored projects. Where the purchase of equipment or other capital items is specifically authorized under a sponsored agreement, the amounts thus authorized for such purchases are assignable to the sponsored agreement regardless of the use that may subsequently be made of the equipment or other capital items involved.

  • Any costs allocable to a particular sponsored program under the standards provided in OMB A-21 may not be shifted to other sponsored programs in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience.

  • Any costs allocable to activities sponsored by industry, foreign governments or other sponsors may not be shifted to federally-sponsored programs.

  • Allocation and documentation standard.

    1. Cost principles. The recipient institution is responsible for ensuring that costs charged to a sponsored agreement are allowable, allocable, and reasonable under these cost principles.

    2. Internal controls. The institution's financial management system shall ensure that no one person has complete control over all aspects of a financial transaction.

    3. Direct cost allocation principles. If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then, notwithstanding subsection b, the costs may be allocated or transferred to benefited projects on any reasonable basis, consistent with subsections d.(1) and (2).

"Allowable costs"

The tests of allowability of costs under OMB A-21 are: (a) they must be reasonable; (b) they must be allocable to sponsored agreements under the principles and methods provided herein; (c) they must be given consistent treatment through application of those generally accepted accounting principles appropriate 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.

"Commercial goods and services"

are “commercial” if offered and sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific products, tasks performed, or outcomes to be achieved, and under standard commercial terms and conditions (e.g. warranties).

"Competition"

All procurement transactions shall be conducted in a manner to provide, to the maximum extent practical, open and free competition. The recipient shall be alert to organizational conflicts of interest as well as noncompetitive practices among contractors that may restrict or eliminate competition or otherwise restrain trade. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, invitations for bids and/or requests for proposals shall be excluded from competing for such procurements. Awards shall be made to the bidder or offeror whose bid or offer is responsive to the solicitation and is most advantageous to the recipient, price, quality and other factors considered. Solicitations shall clearly set forth all requirements that the bidder or offeror shall fulfill in order for the bid or offer to be evaluated by the recipient. Any and all bids or offers may be rejected when it is in the recipient's interest to do so.

"Conflict of Interest"

A potential conflict of interest occurs when there is a divergence between an individual's private interests and his or her professional obligations to the university such that an independent observer might reasonably question whether the individual's professional actions and decisions are determined by consideration of personal gain, financial or otherwise. A conflict of interest depends on the situation, not on the character or actions of the individual. For purposes of this policy, a conflict of interest exists when the university, through procedures described herein, determines that a significant financial interest could directly and significantly affect the design, conduct or reporting of sponsored projects.

"Cost and Price Analysis"

Some form of cost or price analysis shall be made and documented in the procurement files in connection with every procurement action. Price analysis may be accomplished in various ways, including the comparison of price quotations submitted, market prices and similar indicia, together with discounts. Cost analysis is the review and evaluation of each element of cost to determine reasonableness, allocability and allowability.

"Direct Cost"

Expenditures are direct costs when they can be easily and accurately identified for individual projects. Direct costs are divided into categories, such as, salaries, fringe benefits, travel, supplies or equipment, and are accounted for as separate line items (object codes) within each account.

"Equipment"

is an article of non-expendable tangible asset having a useful life of more than one year, and an acquisition cost which equals or exceeds $5,000. Items that cost less than $5,000 or have a useful life of one year or less are considered supplies. In some cases, a purchased item may be a system made up of separate or separable parts, but it must be sold as a system by the vendor in order to qualify as a single piece of equipment. Merely grouping individual items on one purchase order does not constitute purchase of an “equipment” system.

Headquarters

Headquarters are defined as the place were the individual/employee spends the largest portion of regular work days or working time, or the place to which the individual/employee returns on completion of special assignments, or as the Foundation Executive Director may define in special situations.

  1. Where an office building or similar definite place constitutes the individual/employee’s headquarters, no subsistence expenses shall be allowed at any location within 25 miles (one-way) of said headquarters as determined by the normal commute distance.

  2. Where the major portion of an individual/employee’s working time is spent within a specifically assigned or limited geographical area, no subsistence expenses shall be allowed at any location within 25 miles from any point in this assigned areas as determined by normal commute distance.

"Honoraria"

Generally, honoraria are paid to person of scholarly or professional standing in conjunction with an academic activity or service when: 1) no legal obligation to pay exists, and 2) propriety forbids setting a fixed price for the service. Honorarium payments generally are not allowable charges to federal funds unless a grant or contract specifically authorizes such payments. Under these circumstances, honoraria may be paid for lectures, speaking engagements, panel participation, manuscript review, workshops, and seminars if there is direct benefit to the project.

"Human Subject"

means a living individual about whom an investigator (whether professional or student) conducting research obtains

  1. Data through intervention or interaction with the individual, or
  2. Identifiable private information.

Intervention includes both physical procedures by which data are gathered (for example, venipuncture) and manipulations of the subject or the subject's environment that are performed for research purposes. Interaction includes communication or interpersonal contact between investigator and subject. Private information includes information about behavior that occurs in a context in which an individual can reasonably expect that no observation or recording is taking place, and information which has been provided for specific purposes by an individual and which the individual can reasonably expect will not be made public (for example, a medical record). Private information must be individually identifiable (i.e., the identity of the subject is or may readily be ascertained by the investigator or associated with the information) in order for obtaining the information to constitute research involving human subjects.

"Indirect Cost"

Indirect Costs (overhead) are additional costs incurred by the Foundation and the University in support of sponsored programs. These costs differ from direct costs in that it is difficult or impractical to identify and attribute them accurately on an individual project basis. Typical examples of the types of indirect costs are space-related costs, such as, utilities and maintenance and general administrative costs. Indirect cost recovery partially supports various Foundation services, such as accounting, project financing, special reports required by sponsors, reports to public regulatory agencies (including IRS, State of California and Chancellor's Office), accounts payable (including payment of project bills each month), sponsor billing and collections (including processing of letters of credit), purchase and inventory of equipment, personnel and payroll administration, cashiering (some projects involve individual cash payments), travel and other project advances and reconciliation, insurance and auditing. The Foundation also annually engages an independent firm to audit the accounts and financial statements and certify that internal accounting controls are in accordance with federal and professional standards.

"Indirect Cost Rate"

In the case of sponsored projects, uniform predetermined rates is established through negotiation with the federal government and are verified in government audits.

"IRB approval"

means the determination of the Institutional Review Board (IRB) that the research has been reviewed and may be conducted at an institution within the constraints set forth by the IRB and by other institutional and federal requirements.

"Major Metropolitan Cities"

includes cities with a population over 700,000 as of the most current estimated documented by the U.S. Census Bureau at http://quickfacts.census.gov/qfd/index.html.

"Noncommercial Goods & Services"

Goods and services are considered “noncommercial” if they are generally not available in the commercial marketplace or require research and/or development. Examples of noncommercial goods are specialized equipment or systems built to user-provided specifications and substantial modifications of commercial goods with new or different functionality. Examples of noncommercial services are research, consulting, and independent contractor services. Subcontracts to perform a portion of the sponsored program are also noncommercial services.

"Pre-award"

refers to the activities related to applying for grants and contracts. The University Office of Research and Sponsored Programs (ORSP) assists prospective PIs by providing the following services: search funding opportunities, proposal development, and COI/IRB/IACUC/Hazardous Materials review.

"Post-award"

refers to management and conduct of a grant or contract after an award has been made. The Foundation assists the PI in most administrative post-award activities which include: contract negotiation, budget revisions, purchasing, human resources, accounting, compliance, and risk management, insurance services, payroll, etc.

"Reasonable costs"

A cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved therefor, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made. Major considerations involved in the determination of the reasonableness of a cost are: (a) whether or not the cost is of a type generally recognized as necessary for the operation of the institution or the performance of the sponsored agreement; (b) the restraints or requirements imposed by such factors as arm's-length bargaining, Federal and State laws and regulations, and sponsored agreement terms and conditions; (c) whether or not the individuals concerned acted with due prudence in the circumstances, considering their responsibilities to the institution, its employees, its students, the Federal Government, and the public at large; and, (d) the extent to which the actions taken with respect to the incurrence of the cost are consistent with established institutional policies and practices applicable to the work of the institution generally, including sponsored agreements.

"Sponsored Program Administrator"

means the entity designated to administer the Sponsored Program.

"Theft-sensitive items"

are non-equipment items whose acquisition cost is below the threshold of $5,000, but which are tracked in inventory for control purposes. Theft-sensitive items which must be tracked include: cellphones, PDAs, netbooks, laptop computers, and desktop computers.

"Travel Status"

An individual/employee is not on official travel status unless: 1) he/she has Foundation approval for the travel; and 2) the approved travel requires the individual/employee to travel more than 25 miles from their headquarters. No travel reimbursements shall be made (with the sole exception of mileage reimbursement and related toll/parking fees) unless the claimant was on official travel status.

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