Description of changes in accounting or cost allocation methods made since that last submission. NSF reviews the following when organizations submit an indirect cost rate proposal for the first time: NSF reviews the following items each time an organization submits its subsequent annual indirect cost rate proposals: Proposal & Award Policies & Procedures Guide (PAPPG), National Center for Science & Engineering Statistics (NCSES), Budget, Performance & Financial Reporting, Research Involving Live Vertebrate Animals, Proposal and Award Policies and Procedures Guide (PAPPG), Information for organizations without negotiated indirect cost rate agreements, Indirect cost rate proposal submission procedures, Checklist of required documents forindirect cost rate negotiation. Any limitations placed upon the full recovery of indirect costs, i.e. 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. Organization legal name, address, telephone number. Identification and description of unusual factors that affect the proposed rates, any memoranda of understanding, or any advance agreements that may affect the proposed rate(s). (i.e., capital expenditures and major contracts and subgrants). This method should also be used where an organization has only one major function encompassing a number of individual projects or activities, and may be used where the level of Federal awards to an organization is relatively small. PDF NIFA - Consolidated on 7/1/2021 Indirect cost proposals must follow the applicable cost principles: 2 CFR Part 200, Appendix IV for nonprofit organizations, and the FAR Part 31.2 for commercial organizations. Indirect Costs Allocation for Federal Grant Awards - LSL CPAs 3. Breakdown of indirect salaries by position title, amount and indirect percentage. Download Appendix I through Appendix V [PDF 238 KB], Indirect Cost Rate Guide for Non-Profit Organizations. Labor hour changes are initialed, dated, authorized, and documented. NSF awardees have the following responsibilities related to the indirect cost rate proposal review process: Organizations for which NSF is the cognizant agency are required to submit indirect cost rate proposalswithin six monthsafter the close of each fiscal year during which the awardee has federal award funding, unless other written arrangements are made. Responsibility for the negotiation of indirect cost rates for sub-awardees rests with the prime recipient. 4. Awardees with provisional rates are required to submit a final indirect cost proposal to their cognizant federal agency for rate negotiation withinsix monthsof the close of each fiscal year. In any instance where an indirect cost rate other than that specified in the NICRA is used in an award, the grantee is required to acknowledge the above stipulations by providing a written acknowledgement to USAID. Listing of all grants and contracts that were active during the fiscal year, including total dollar amount, period of performance, and indirect cost limitations. Conferences except those held to conduct the general administration of the non-Federal entity, Maintenance, protection, and investment of special funds not used in operation of the non-Federal entity. 10% De minimisThe 10% De minimis rate may be elected by an organization that has never received a negotiated indirect cost rate. See also 2 CFR 200, Subpart E, Section 200.442, Fundraising and investment management costs, and. The base of allocation for this example is total costs excluding indirect expenses. Financial statements must be reconciled to the indirect cost rate calculations. Completed certificate of indirect costs, signed by an organization representative who has the authority to contractually bind the organization. or https:// means you've safely connected to the .gov website. 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. Statement of Treatment of Paid Absencesb. Based on various information available (e.g., historical cost information and the level of funding being requested), the branch negotiates the funding of indirect costs, typically as a rate. For small businesses, supporting documentation can include reviewed financial statements with the associated indirect cost calculations. . one which results in an accurate measure of the benefits provided to each activity of the organization. The AOs decision is final unless the recipient appeals the decision. Indirect costs are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity (2 CFR 200.1).. ( a) General. Is the budget submitted with the application the official budget or an estimate? How does the effective date apply to negotiated indirect cost rates? Review the organization chart for a visual picture of the flow of responsibility, identification of areas of common costs, and the location of those areas in which federally-funded activity exists. PDF Example of an Indirect Cost Rate Agreement Contact Frank North at LSL CPAs. Employees have sole access for entering own time. A copy of the current approved indirect cost agreement from the Cognizant Federal Agency must be attached. These organizations generally separate their costs into three basic categories: (i) General administration and general expenses, (ii) fundraising, and (iii) other direct functions (including projects performed under Federal awards). Determine if USAID is the federal cognizant agency, i.e. Indirect Costs | Research Administration - UMass Amherst UA 10.4.1D, Angelina Ball, Sr. While you do not need an approved indirect cost rate to apply for a grant, you should be aware of . 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. This category must also include its allocable share of fringe benefit costs, operation and maintenance expense, depreciation, and interest costs. 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. Indirect Cost Negotiations | HHS.gov These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and be incorporated into the official records of the non-Federal entity. Example Personnel Cost Worksheet regarding timesheet with comments from the 2 CFR 200 addressing the use of records to support the work performed. The .gov means its official. Contact support for local programs; Delivering your project. However, the rate may change throughout the life of the grant award if a new rate is negotiated (a grant awards period of performance typically spans multiple fiscal periods). 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. Indirect Cost Rate Proposal (ICR) Checklist for First Time NICRA. A budget modification is required as indicated in Chapter 3.5 Adjustment to Awards. These amounts should also tie to the general ledger labor accounts and the financial statements. The first set of procedures is for an organization seeking its first NICRA and the second set is related to the issuance of subsequent NICRAs. Submit a draft NICRA to the organization for their review of the indirect cost rates methodology, and obtain their concurrence. The grantee 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. An indirect cost rate is simply a device for determining fairly and conveniently within the boundaries of sound administrative principles, what proportion of indirect cost each program should bear. 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. Often an entity will have a fringe rate, overhead rate and G&A rate or just a fringe rate and another single indirect cost rate (overhead/G&A). Some nonprofit organizations treat all costs as direct costs except general administration and general expenses. If the awardee and NSF are unable to reach an agreement on an indirect cost rate, disallowed indirect cost pool expenses, or the appropriate indirect cost rate base of allocation, a unilateral rate agreement may be issued by NSF. A .gov website belongs to an official government organization in the United States. Recipients that have never had a federally negotiated indirect cost rate may alternatively elect to request the 10% de minimis rate as described in 2 CFR 200.414(f). Direct costs are identified specifically with a particular final cost objective, such as a Federal award, or other internally or externally . Assure that the indirect cost rate calculation is in accordance with the accepted rate methodology. When will the new DS-2 form based on the updated Uniform Guidance be available? 2 CFR 200, Subpart F, Appendix 4, Section C.2.f. What is an indirect cost rate? Cost Rate Policy for Federal Formulary and Discretionary Grants . Perform a mathematical verification of each indirect cost rate calculation provided by the organization. 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. January 1, 2023. ; Homeschooling Guidance, Reminders and Resources (added 05-Jul-2023) Guidance . If a state's plan satisfies the requirements of the Social Security Act, the federal government acting through HHS helps fund the program according to a matching formula. General & Administrative (G&A) rate. Therefore, the organization should have internal controls in place regarding labor costs incurred that are evident, well defined, regularly maintained and updated as necessary, and verify effectiveness. Review the financial statements and audit report for any indication of activities which may have been omitted from the indirect cost proposal, i.e., the omission of restricted fund costs or the existence of an affiliated organization receiving supportive service from the parent organization. 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. 2 CFR 200, Subpart F, Appendix IV, Section B.2.a., states that where an organization's major functions benefit from its indirect costs to approximately the same degree, the allocation of indirect costs may be accomplished by (i) separating the organization's total costs for the base period as either direct or indirect, and (ii) dividing the total allowable indirect costs (net of applicable credits) by an equitable distribution base. Note: Due to limitations of funds provided under assistance awards, grants and cooperative agreements, additional funds will not be provided to cover increases in indirect costs, regardless of the type of rate used. These procedures are broken down into two sections. Indirect Costs - Guide Sheet - Office of Justice Programs General Rule: EPA Policy. A list of subawards under your prime awards (required for Modified Total Direct Cost (MTDC) base only). Statement of employee benefits, including a schedule showing the actual costs of applicable employee fringe benefit expenses. Allocation of salaries and wages, including a schedule of positions, functions and annual salaries for the people who charge time to an indirect cost function. Indirect Cost Rates Applicable to USDA Federal Awards | USDA The Appendix III includes the indirect cost proposal (ICP) checklist for nonprofit entities which identifies the required documentation to be provided by each non-profit organization. Organizations generally charge indirect costs to federal awards by developing and applying an indirect cost rate, which is used consistently across an organization's awards. A 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. Although there are different methodologies available for allocating costs, the methodology used should result in an equitable distribution of costs to programs. What is in your Notice of Award (NoA)? Additional effort and cost required to achieve a greater degree of accuracy. Indirect Cost Rate Guide for Non-Profit Organizations 2 CFR 200, Subpart F, Appendix IV, Section C.1.b., c., d., and e identifies and defines the following indirect cost rates: ProvisionalA provisional rate or billing rate is a temporary indirect cost rate applicable to a specified period and is used for interim billings pending the establishment of a final rate for the period. The Lobbying Cost Certificate certifies that the entity has been in compliance with the requirements and standards of 2 CFR 200.450, Lobbying. See Appendix II of this guide titled, Frequently Asked Questions, for additional information on the 10% De minimis rate. Submit a draft NICRA to the organization for their review of the indirect cost rate methodologies, and obtain their concurrence. The rate should be expressed as the percentage which the total amount of allowable indirect costs bears to the base selected. Also, added personnel activity reporting system to the paragraph under the Approved date. Sample Indirect Cost Rate Proposals The following is an example of Indirect Cost Rate Proposal methodologies using the Single Rate Method and Two Rate Method. 1. The checklist below addresses the documentation to provide and steps needed when seeking a revised provisional rate and/or final rates. All Federal agencies are required to use the rates and methodology negotiated by USAID and the related organization. . As of November 1, 2016 the following changes have been made to the OCC Guide for Non-Profit Organizations. Examples of unallowable activities include: services to members, maintenance of membership rolls, public relations, lobbying, and fund raising. An organization can either use the de minimis ICR . Ensure removal of any types of cost previously determined to be unallowable either by a grants or contracts officer or under previous indirect cost rate negotiations. The purpose of this spreadsheet is to identify effected awards, gauge materiality and identify any indirect cost limitations. Refer to Section 2.E. Treatment of paid absences and signed statement of treatment of paid absences if it has changed. Zero emission vehicle grants. The rate is based on an estimate of the costs to be incurred during the period. Document meeting, telephone conversations, and e-mails. Indirect cost rates are also known as indirect rates or Facility and Administrative rates (F&A rates). Availability of data on square footage, number of transactions, employees, purchase orders, etc.e. 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. Ensure unallowable costs are not included in the indirect cost pools; unallowable costs may need to be included in the direct cost base. The allocation base selected by the non-profit organization must be: Per 2 CFR 200, Subpart F, Appendix IV, Section C.2.b., organizations that do not have a NICRA with the Federal government are required to provide their initial indirect cost proposal immediately but no later than 3 months after the effective date of the Federal award which first incorporates indirect cost rates. When an organization seeks reimbursement for indirect costs, total lobbying costs shall be separately identified in the indirect cost rate proposal and thereafter treated as other unallowable activity costs in accordance with the above procedures and Attachment A of 2 CFR Part 230. Try to keep the allocation as simple as possible. [PDF 259 KB]. 3. To prevent substantial overpayment or underpayment of indirect cost during the fiscal year, a revised provisional rate may be requested by the organization. Indirect Cost Rate Agreement (if applicable) 14 Employee Compensation Waiver 14 Page 4 of 25 . Provide detailed indirect cost rate calculations based on estimated costs for the applicable fiscal year. If the U.S. Department of Labor (DOL) provides the preponderance of direct Federal funds to the organization, DOL would normally be the Federal cognizant agency. The rate methodology selected by an organization needs to match a business operations. Q-16. Federal Register :: Guidance for Grants and Agreements PDF Charging of Direct and Indirect Costs under Federal Grants/Cooperative Level of Federal fundingvalue= c. Reports generated from their accounting systemd. 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. At the end of the 4-year extension, the non-Federal entity must re-apply to negotiate a rate. These limitations will be specified in the NSF award letter or the negotiated indirect cost rate agreement, or NICRA. When expenses are shared among programs, or among functions within the organization (e.g., management, accounting, legal affairs), they are defined as indirect costs. Grants.gov The SF-424 must be submitted in Grants.gov. Review changes in the indirect cost rate allocation bases for propriety, if applicable. Tracking and recovering those costs are among the biggest challenges that any grant administrator will face. the dated Theindirectcostrate(s)contained ay herein 18,2000 areforuse ongrants andcontractswiththeFederalGovernmenttowhich OM B Circular A-122 appliessubjecttothelimitationscontained theCircularandSection II-A, below. F. Indirect Cost Proposal Checklist for Subsequent NICRAs of this guide for the required documentation. discretionary grants and cooperative . 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. For commercial, for-profit companies and nonprofit organizations, the Federal agency that provides the most funding is the cognizant agency responsible to establish indirect cost rates (see FAR 42.003(a) and 2 CFR 200 Appendix IV, (c)(2)). Determine that the itemized costs in the indirect cost pool pertain to functions that are supportive of all direct activity. A one-time extension of a currently negotiated rate may be approved for up to a 4-year period. Example - List of Grants with the Period-of-Performance, Organization ABCFederal Listing of AwardsIndirect Cost Proposal for the fiscal year endedDecember 31, XXXX, GrantorGrant/CooperativeAgreementNumberGrant/CooperativeAgreementAmountPeriod ofPerformanceIndirect CostLimitationsor CAPLimitations *Award Type, USAIDAID-612-G-12-00074$5,000,00001/01/10-12/31/13NoneGrant, USAIDAID-HPR-G-14-00002$300,00001/01/11-06/30/12NoneGrant, USAIDAID-342-A-12-00123$3,500,00007/01/11-06/30/145% of Total AwardCooperative Agreement, USAIDAID-GDF-A-15-00030$1,000,00001/01/11-12/31/12NoneCooperative Agreement. Therefore, the organization must agree in writing not to recoup the reduction in the rates on other awards with the U.S. Government - the reduction must be taken from other non-governmental sources of revenues. adopted Behavioral Health Indirect Cost Rate (ICR) policy for Federal formulary and . Maintenance of membership rolls, subscriptions, publications, and related functions. Indirect Cost Determination Guidance for State and Local Government Some issues that may be raised by an M/OAA/CAS/OCC indirect cost rate negotiator during, or after, the review of an indirect cost rate proposal, usually result from non-profit organizations not following the required procedures. Each reclassification and adjustment must be explained in notes to the reconciliation schedule. The organization must maintain a time distribution system for use by employees whose time is charged to more than one cost objective. It also provides awardee personnel with a record of the awardees practices in the event of personnel changes (only changes to accounting practices or allocation methods need be submitted after the first year). Establish a final ICR for a prior fiscal year. 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. 200.414(f). For awardees that have never received a negotiated indirect cost rate agreement or do not hold a current NICRA,2 CFR 200.414(f)allows the use of an indirect cost rate of10% of the project's modified total direct costs(MTDC). If the organization subsequently wins the award a NICRA will then be issued. NSF ensures that the proposal is promptly reviewed and, if accepted, that a rate is negotiated and the subsequent NICRA is sent to the awardee for signature. If the foreign entity has an award issued from Washington, M/OAA/CAS/OCC will negotiate and issue the issuance of a NICRA. 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.