Medical University of South Carolina
Direct and Facilities and Administrative
Costing Policies and Procedures
Table of Contents
Contents. These direct costing policies should be used by Medical University
of South Carolina's faculty and staff as the basis for complying with the provisions
of the Federal Cost Accounting Standards and the Office of Management and Budget
(OMB) Circular A-21. These policies and procedures are organized into the following
The operation of any enterprise involves
costs that pertain to a specific project, as well as general costs. This policy:
(i) governs all direct and F&A
(indirect) cost charged to Federal and non-federal grants and contracts; and
(ii) has been prepared to ensure
that the Medical University maintains adequate control over the charging of
costs to grants and contracts awarded to the University. For administrative
and accounting purposes these costs are grouped into two categories -- direct
and Facilities and Administrative (indirect). Many costs, however, are not discretely
direct or Facilities and Administrative (indirect) and may appear in either
category, depending on the circumstances. Such is the case in charging costs
to federally sponsored projects at colleges and universities. The basic regulations
for determining costs charged to federally sponsored projects at educational
institutions are set forth in Office of Management and Budget (OMB) Circular
A-21: Cost Principles for Educational Institutions. The Circular
established principles for determining costs applicable to sponsored agreements,
contracts, and other agreements with educational institutions.
Effective May 8, 1996, Circular A-21 was revised to incorporate four Cost Accounting Standards applicable to educational
institutions. These were issued by the Cost Accounting Standards Board (CASB)
on November 8, 1994, and the A-21 revision extended the standards to
all sponsored agreements. Also, the revision required certain large institutions
to disclose their cost accounting practices by the submission of a disclosure
statement (DS-2) prescribed by CASB. The MUSC DS-2 was sent to the Department
of Health and Human Services on April 30, 1999.
The policy has incorporated the Federal costing
principles, Cost Accounting Standards, and generally accepted costing principles
of non-federal sponsors. Circular A-21 citations, the parenthetical notation
at the end of each reference to A-21 indicates the location of the reference
in Circular A-21.
STATEMENT OF GENERAL PRINCIPLES
MUSC believes that the following principles should guide its compliance with
the requirements of OMB Circular A-21 and the Cost Accounting Standards.
1) Research at MUSC. The Medical University supports a research process by
which new knowledge is acquired for the benefit of society. It recognizes
that the scientific method is associated with outcomes that are often difficult
to predict and is a creative process which is fundamentally evolutionary in
nature. The Medical University accepts responsibility for creating a uniform
definition of rules of conduct relating to management of government and non-government
sponsored projects and assuring compliance with the rules of such projects.
The Medical University does so in recognition of the trust that society places
in the scientific enterprise.
2) MUSC's responsibilities. The Medical University accepts responsibility
for developing a set of operating principles and guidelines which comply with
A-21 and CAS which, among other things, clearly delineates those research
and training related expenses which it identifies as direct vs. facilities
and administrative (indirect). It takes responsibility for disseminating this
information to all Medical University faculty - whether their research is
supported by governmental or non-governmental sources. It takes responsibility
for overseeing the implementation of these principles and guidelines.
3) The Principal Investigator's responsibilities. Responsibility for
scientific and budgetary decision-making in research grants, following the
Medical University's policies and procedures, should be assigned to, and accepted
by, the individual designated as the grant's Principal Investigator, following
the University's guidelines. These decisions must be documented in a manner
that assures their subsequent accurate implementation and permits auditing
by internal or external auditors. For example, if an investigator's laboratory
is supported by multiple grants with distinct specific aims, costs incurred
should be directly assigned to the benefited grants or distributed across
these grants on a reasonable basis that demonstrates the proportional benefit
provided to each of them.
4) Responsibility for compliance. Responsibility for following these
policies and procedures lies primarily with Principal Investigators, department
chairs, and business managers, with the general guidance and oversight of
the schools. The Medical University's administration is responsible for guidance
and training, and for ensuring compliance through periodic internal and external
1.2 EFFECTIVE DATE AND IMPLEMENTATION TIME-FRAME
All proposals submitted to the Office of Research and Sponsored Programs (ORSP) after 7/1/98 must comply fully with these guidelines. Proposals submitted before 7/1/98 could either have been awarded or are pending award as
1) In the case where the award has already been made, the costs must be incurred
as proposed by the investigator and as awarded by the sponsor. In particular,
if costs were proposed direct which are now defined as F&A under these
guidelines, the costs could continue to be incurred for the remaining project
period with the explicit understanding by the PI that the costs are necessary
for the conduct of that project. On these awards, where costs normally treated
as F&A were proposed and budgeted by the sponsor as direct costs, the
PI will be required to have a line item budget established in the accounting
system thru Grants and Contracts Accounting, for the remaining project period
based on the originally proposed and awarded budget.
2) In the case where the award has not been made, the costs to be awarded
must comply with these guidelines. If costs were proposed inconsistently with
theses guidelines, the budget needs to be revised to reflect them. This may
or may not require notifying the sponsor, depending upon how the award was
negotiated; this will be determined on a case-by-case basis. In general, across
the board budget cuts by the sponsor would be an indication that the sponsor
does not need to be notified if the costs cut include those that were inconsistently
1.3. Consistency Requirements
The revised OMB Circular A-21 and the implementation of CAS 502, mandates
consistency in making the decision to treat a particular type of cost as direct
or Facilities and Administrative (indirect): "Costs incurred for the same
purpose in like circumstances must be treated consistently as either direct
or Facilities and Administrative (indirect) costs. Where an institution treats
a particular type of cost as a direct cost of sponsored agreements, all costs
incurred for the same purpose in like circumstances shall be treated as direct
costs of all activities of the institution." (A-21Section D.1.)
This requirement has two purposes. One is to help insure that costs are assigned
correctly by requiring that they be assigned consistently. A second purpose
is to avoid inappropriate charges to the federal government for grants when
the grants are charged directly for specified costs - then charged again, through
the Medical University's Facilities and Administrative (indirect) cost rate,
for the same type of costs incurred for the same purpose and in similar circumstances
elsewhere in the Medical University.
While mandating consistency, A-21 does not define explicitly the "purposes"
and "circumstances" in which a given type of expense should be treated
as a direct or facilities and administrative (indirect) costs. Thus, the definition
of these terms may vary by type of cost, and by discipline, within an institution.
Moreover, the preceding sections of these interim guidelines themselves provide
institution-wide consistency insofar as they provide an institution-wide framework
of principles and criteria for the charging of costs directly to grants.
These guidelines assume:
that each department will assure that consistency is maintained within the
department (for the same type of cost incurred for the same purpose in like
that the University's administration will encourage departments with similar
funding sources and activities to achieve consistency in their charging practices.
These guidelines do not attempt to identify, at this time, groups of departments
with "similar activities." It is assumed that such identification
will evolve as the other provisions of these interim guidelines take effect
throughout the Medical University.
For every department, these guidelines provide a framework within which the
department should establish a set of costing practices and documentation that
are consistently applied. There application should be to all organized research,
whether sponsored by an outside agency or industry, or funded by the Medical
Each department in which research activity occurs must maintain a written and
current description of the basis on which it charges all categories of costs
directly to grants. This description must reflect actual practice. These descriptions
are necessary to support the certifications required as part of the Medical
University's indirect cost proposal. We anticipate that in the near future these
descriptions will have to be on file with the Medical University administration,
for internal and external audit reviews.
2.0 General Definitions of Allowable
Direct Costs to Grants
OMB Circular A-21 defines a direct cost as: "Direct costs are those
costs that can be identified specifically with a particular sponsored project...or
that can be directly assigned to such activities relatively easily with a high
degree of accuracy." (A-21 Section D.1) This statement implicitly makes
the point that charges to a grant should support the grant's purpose and activity.
Such charges cannot be assigned arbitrarily, or for the purpose of simplified
budget management that is unrelated to the grant's purpose (refer to Medical
University's guidelines, "A Guide for Determining Allowable Costs to Sponsored
The following criteria must be considered in determining the allowability of
a cost charged to sponsored grants and contracts:
1) Cost must be reasonable. A cost is considered reasonable if the nature
of the goods or services acquired and the amount involved reflect the action
that a prudent person would have taken under the circumstances prevailing
at the time the decision was made to incur the cost.
2) Costs must be allocable to sponsored agreements under the principles
and methods of Circular A-21. A cost is allocable to a particular sponsored
project if the goods or services involved are chargeable or assignable to
the project in accordance with the relative benefits received.
3) CAS and the revised Circular A-21 emphasize the importance of consistent
application of cost accounting principles. Costs incurred for the same
purpose in like circumstances must be treated consistently as either direct
or Facilities and Administrative (indirect) costs. Where the Medical University
treats a particular type of cost as direct cost on a sponsored agreement,
all costs incurred for the same purpose in like circumstances must be treated
as direct cost for all activities of the institution. Consistent treatment
of costs is necessary to avoid inappropriate charges to the Federal government
or other sponsors when sponsored agreements are charged directly for specified
costs, then charged again, through the Medical University's indirect cost
Principal Investigators, and in some specific instances central administration
officials, should review costs to ensure that they are allowable and allocable
to a project. Size, nature and complexity of sponsored agreements, although
not the final determining factor, are in the aggregate important considerations
in determining unlike circumstances. Due to the unique requirements of each
sponsored agreement, unlike circumstances are determined on a case by case basis.
2.1 Additional Criteria for Determining Direct
1) The cost must be included in the awarded budget, or the cost must be permitted
within rebudgeting authority granted by the sponsor (refer to rebudgeting
policy). When preparing proposals for sponsored projects, the P.I. usually
submits a detailed budget. This budget includes line items such as salaries
and wages, fringe benefits, travel, supplies and other direct costs. The award
reflects the approved budgeted items and becomes a part of the agreement between
the Medical University and the sponsor. Only those costs that are included
in the budget or rebudgeted costs allowed by the sponsor should be charged.
If the cost requires institutional and/or sponsor prior approval after the
award is made, the approval must be secured before the cost is incurred.
2) The cost must not be restricted by the sponsor. Costs that are
restricted or unallowable as indicated in the award notice or sponsor guidelines
may not be charged to a sponsored project.
2.2. Direct Costs
The following costs are examples of acceptable direct costs, as long as they
meet the A-21 requirements cited above and are "identifiable to a particular
cost objective [sponsored agreement]," A-21 Section F.6.b.. If a cost cannot
be so identified, it cannot be directly charged. The "particular cost objective"
requirement means that costs cannot be directly charged if they are incurred
for the benefit of research in general, or in the interests of the researcher
in general. Purchases for a specific sponsored agreement must identify the grant
account number on the invoice, requisition, purchase order, or other payment
documents such as IITs.
1) A researcher's or a technician's salary and fringe benefits are allowable
direct costs, when the salary charged is supported by their certified monthly
or quarterly effort reports.
2) Laboratory supplies, related technical costs, long-distance telephone
charges, shipping costs (not ordinary postage), photocopy
costs, animal care costs, computer costs,
travel costs, technical and scientific equipment (and related maintenance
agreements), and specialized shop costs should be
treated as direct costs (see documentation guidelines below).
3) Supplies drawn from a central storeroom or inventory may be charged directly
to a sponsored agreement if their applicability to the sponsored agreement
is recorded at the time of withdrawal. All such costs must be charged to sponsored
agreements based on anticipated usage at the time of withdrawal.
4) Normally, administrative and clerical costs cannot be charged directly
to grants. Limited and specified exceptions are described in Sections 3.1
2.3 Documentation Guidelines For Direct Costs
1) The cost must be identified with an activity in the sponsored project
to which the cost is charged:
a) Long-distance telephone and fax costs should be linked to the sponsored
agreement by means of a manual log or grant-specific access code.
b) Purchases for a specific grant must identify the grant's fund number
on the requisition, purchase order, invoice statement, etc.
c) Supplies drawn from a common stock or inventory may be charged directly
to a grant if their applicability to the grant is recorded at the time or
withdrawal, by means of a manual log, for example. All such costs must be
charged to grants based on anticipated usage at the time of withdrawal.
2) Documentation of linkage of cost to activity should be done by someone
who is in a position to know this linkage; for example, the person who
is making the telephone call; the person who is taking supplies from a common
3) Documentation records must be maintained for a period of three years following
the submission date of the project's final financial status report.
Documentation in the Medical University's Financial Accounting System is acceptable
4) Only actual costs may be charged to the grant.
5) Under the guidelines set forth in Section 2.2 of these policies and procedures,
direct costs may be distributed across two or more grants.
2.4 Unacceptable Direct Costing Practices
The following direct costing practices are unacceptable because they do not
meet the OMB Circular A-21 guideline for a "high degree
of accuracy" for the assignment of costs to sponsored agreements:
1) rotation of charges among grants month by month without establishing that
the rotation schedule credibly reflects the relative benefit to each grant;
2) assigning charges to the grant with the largest remaining balance;
3) charging the budgeted amount (in contrast to charging an amount based
on actual usage);
4) assigning charges to a grant in advance of the time the cost is incurred;
5) identifying a cost as something other than what it actually is, for example,
instructional costs charged as research costs;
6) charging expenses exclusively to sponsored agreements when the expense
has supported other activities;
7) assigning charges that are part of the normal administrative support for
grants, for example, proposal preparation, accounting, payroll; see
Sections 3.1 and 3.2 for more details.
3.0 Facilities and Administrative (Indirect) Costs
Facilities and Administrative (F&A) costs are defined in OMB Circular
A-21 as "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"
(A-21 Section E). Facilities costs include: depreciation and use allowances,
interest on debt associated with certain buildings, equipment and capital improvements,
operations and maintenance and library expenses. "Administration"
is defined as: general administration and general expenses, departmental administration,
sponsored programs administration, student services, and all other types of
expenditures not listed specifically under one of the subcategories of Facilities,
(A-21 Section F).
At the department level "salaries of administrative and clerical staff...items
such as office supplies, postage, local telephone costs, and Medical University
memberships shall normally be treated as F&A costs." (A-21 Section,
F.6.b.) Costs incurred for the same purpose in like circumstances must be consistently
treated by the University as either direct or F&A.
The Exhibit A lists a variety of costs and identifies their treatment by the Medical University
as either direct or F&A.
3.1 Charging Normally
Treated F&A Costs to Sponsored Projects
OMB Circular A-21 does not absolutely prohibit costs identified by the
Medical University as F&A from being charged directly to a sponsored agreement.
However, strict criteria must be met to process transactions to meet the allowability
of A-21 and the Cost Accounting Standards.
Costs normally treated by the Medical University as F&A may be charged
to a sponsored project when all of the following conditions are met:
1) The costs are incurred to meet the special purpose or requirements of the
sponsored agreement defined in the section below, and
2) The cost can be readily identified specifically with the project with a
high degree of accuracy; and
3) The cost is explicitly budgeted, with justification, and approved by ORSP
and the sponsor as follows:
a) The cost is separately budgeted in the proposal budget (note that
for certain fixed-price funding arrangements a detailed budget is not required
by the sponsor; however, the internal budget should reflect the cost.),
b) The budget amount reflects a realistic estimate of the cost and,
in the case of salary, the percent of effort,
c) Justification is given for the cost. In the case of federal sponsors,
the "Budget Justification" section of the proposal should state
that the costs are normally treated as F&A by the Medical University,
but are being proposed as direct due to the project's special purpose or circumstance
as described in the technical proposal and outlined in the "Budget Justification".
d) The sponsor explicitly budgets the proposed costs in the award notice. Since these costs are specifically set forth in the proposal, it is assumed
that the sponsoring agency has approved the costs as direct if the award has
been made at the proposed amount. In the case of an "across the board"
cut to the proposed budget, it is assumed that the proposed costs have been
accepted by the sponsor. In the case of budget cuts to individual cost categories,
e.g., personnel, it is the principal investigator's responsibility to notify
ORSP of any budget changes made during the award process that eliminated these
costs from the awarded budget.
The determining factor in treating F&A costs direct is that they are or
will be incurred for a different purpose or in a different circumstance. In most cases, a project that requires more of the
same type of costs that are normally treated F&A would not meet the criteria established by the Medical University or by federal sponsors
for direct charging the cost.
3.2 Special Circumstances
When Charging Normally Treated F&A Costs Direct May Be Appropriate
Administrative and Clerical Salaries
Direct charging administrative and clerical salaries by the Medical University
may be appropriate for projects funded by following types of sponsors due to
the different purpose for which the award is made. These types of sponsors include:
1) Industrial/Commercial. Projects sponsored by these organizations are performed
at least in part for the benefit of the industrial/commercial sponsor rather
than for improving the welfare of the general public. Total costs
of the project are the concern of the sponsor and generally, the sponsoring
company does not require a detailed budget. Costs are assigned to projects
as deemed appropriate by the agreement terms and the Medical University.
2) Foundations and Not-for-Profit Agencies and Associations.Typically
the funding guidelines of these organizations specify the types of costs they
will allow to be directly charged to a project.
3) State Sponsored Agreements or Contracts. The Medical University
must comply with State agency regulations and statutory requirements. Consequently,
cost must be assigned based on the sponsor's agreement and the award budget.
4) Training Grants. Since training grants are for a different
purpose (training) than a traditional research project, these project budgets
may include costs that are normally treated as F&A costs. Training grants
usually identify a line item for "institutional allowance" which
authorizes direct charging of costs normally treated as F&A if they are
reasonable, specifically identified with the project, and allowed by the sponsor's
5) Planning Grants. Research planning grants may be used for
preliminary work to determine the feasibility of a proposed line of inquiry,
and / or for other activities that will facilitate proposal development. Since
planning grants are for a different purpose (planning) than a traditional
research project, these projects budgets may include costs that are normally
treated as F&A.
Direct charging administrative and clerical salaries by the Medical University
may be appropriate also when the special nature of the project requires
different administrative and clerical skills than those required for routine
departmental administrative activities. Examples include:
1) Projects that are geographically inaccessible to normal departmental administrative
services, for example, a project that takes place in site(s) that is / are
remote form the main campus in Charleston.*
2) Projects with major logistical requirements such as making
travel and meeting arrangements (conferences and seminars) for large numbers
3) Large, complex programs such as Program Projects,
Center Grants and other sponsored agreements that entail assembling and managing
teams of investigators.*
4) Projects which involve extensive data accumulation
and analysis, such as epidemiological studies, clinical trials, and
retrospective clinical records studies.*
5) Projects whose principal focus includes the preparation
and production of manuals, large reports, books and monographs,software and
multimedia materials (excludes projects that only require routine
progress and technical reports).
6) Individual projects requiring project-specific database
management; individualized graphics or manuscript preparation; human or animal
subject protocols; and other project specific regulatory protocols.
7) Other Sponsored Activities (not research or instruction). Projects
which are beyond the traditional instructional and research responsibilities
of an academic unit. These activities primarily provide services beneficial
to individuals and groups external to the institution. Examples include activities
such as public services, workshops, community development, clinical studies
and projects supported by funds passed through by State agencies.
8) Other. The above categories are not exhaustive. ORSP will
review the specific nature of a sponsored agreement on a case-by-case basis
to determine if direct charging administrative and clerical salaries is appropriate.
Costs Other Than Administrative and Clerical Salaries
Costs other than administrative and clerical salaries that are normally treated
as F&A by the Medical University may be charged direct if incurred for a
different circumstance and purpose. The purpose and nature of the cost will
be the determining factor. Examples include: postage if the project requires
large mailing; animal food or animal cages if the costs are required by the
project and are not part of the animal care per diem rate; telephone line charges
if the project requires extensive telephone surveys and the lines are dedicated
to the project; etc. These guidelines will apply to all sponsored agreements,
including traditional research grants such as R01s on a case-by-case basis.
Budgets, Rebudgeting and Cost Transfers
4.1 Budgets (see also Medical University's
Proposal Submission policy)
Budget submissions should be realistic estimates of cost requirements. The
estimates should have documented justification in the Principal Investigator's
files. The design of the budget should express the intent of the Principal Investigator
and should not be designed by an administrator without the Principal Investigator's
participation and approval.
4.2 Rebudgeting (see also Medical
University's Rebudgeting policy)
Rebudgeting within a grant, after the grant is awarded, is allowed if there
is a legitimate need to redirect budgeted costs. All rebudgeting must conform
to the sponsoring agency's and/or Medical University's rebudgeting guidelines.
Rebudgeting is not allowed for the purpose of relieving financial pressure
on a department's unrestricted budget, or on other grants, or to assign costs
that could not otherwise be assigned.
4.3Cost transfers (see also Medical University's
Cost Transfer policy)
Cost transfers from one grant to another are permitted in order to link a cost
more appropriately with the benefit it is providing.
Cost transfers from one grant to another are not permitted in order to solve
funding problems or for other reasons of convenience, A-21 Section C.4.b.
For audit purposes, an adequate explanation for all rebudgeting and cost transfer
actions must be on file in the department.
Cost Allocation Guidelines
Allocation of a Direct Cost Across Two or More Grants
5.1 General Statement
1) This section applies to the allocation of scientific and technical costs,
and also to administrative costs that qualify as direct costs under Sections
2.0 and 2.1 above. (Administrative costs are not normally directly charged
to grants. Exceptions must meet the standards of Sections 3.1 and 3.2).
2) Whenever a cost can be identified with and charged to a specific grant
without administrative difficulty, it should be so charged. The allocation
guidelines below apply when identification with a specific grant is administratively
3) With respect to the allocation of salary and fringe benefit costs across
two or more grants, such allocation does not eliminate the requirement for
accurate and timely submission of the Position Employee Action Request (PEAR)
forms (refer to Effort Reporting policy for details).
5.2 Allocation Guidelines
OMB Circular A-21 states: "If a [direct ]cost benefits two or more [grants]
in proportions that can be determined without undue effort or [administrative
expense], the cost should be allocated to the [grants] based on the proportional
benefit. If a cost benefits two or more [grants] in proportions that cannot
be determined because of the interrelationship of the work involved, then...the
costs may be allocated or transferred to benefited projects on any reasonable
basis..." , A-21 C.4.d (3).
The preceding language from A-21 provides two kinds of flexibility for allocating
an allowable direct cost across two or more grants. In these guidelines, they
are called the proportional benefit rule and the interrelatedness rule. They
are described in more detail below. In general, these two rules are distinguished
(i) The proportional benefit rule can apply across two or more grants whether
or not they are technically and scientifically related, but the distribution
of the cost across the grants must be reasonable in proportion to the benefit
(ii) The interrelatedness rule can apply only across two or more grants
that are scientifically and technically related, and that meet other stipulations,
but the distribution of the cost does not have to reflect the distribution
of the corresponding benefit.
(In practice, it is likely that the proportional benefit rule will be used
more widely, since it does not require demonstration of a scientific and technical
relationship among the grants in the designated group.)
When either of these rules is applied, the required close linkage of cost
with grant activity, as described in Sections 2.0, 2.1, and 2.2 continues
to apply. The process and documentation guidelines described in these sections
continue to apply.
Under the provisions of this section, the difference is that these requirements
apply to a specified group of grants, not to a single grant. Specifically:
- The cost in question should be specifically identifiable to the group
of grants relatively easily, and with a high degree of accuracy.
- Credible documentation of this identification must be maintained by
- Administrative costs cannot normally be charged to such groups of grants
unless the costs clearly meet the criteria specified in Section 3.1 and
6.0Proportional Benefit Rule
This rule is used when:
1) the cost in question qualifies as a direct cost under Sections 2.0, 2.1,
and 2.2, and
2) the cost pays for something that benefits two or more grants; and
3) without undue effort or administrative expense, a proportional distribution
of the cost can be devised. For the grants in question, this distribution
must reflect, roughly but plausibly, the proportional distribution of the
benefits that the cost has paid for. The Principal Investigator, or someone
designated by the Principal Investigator must approve the method.
Examples of acceptable methods:
1) cost distribution of allowable direct costs used by grants A, B, and C,
according to each grant's expenditure percentage of the total expenditures
in all three grants;
2) distribution of the same cost, according to the each grant's employee
FTE share of the total employee FTEs in all three grants;
3) Distribution of administrative costs according to the methods described
in a or b above; (Note: such costs must first meet the guidelines described
in Sections 3.1 and 3.2 above.)
Other methods may be acceptable and should be discussed with ORSP for approval.
A method is not acceptable if it does not distribute the cost to the
sponsored agreements in roughly the same proportion that the benefits are distributed.
Examples of unacceptable methods include (also noted in Section 2.3 of these
1) rotating charges among grants by month, without a periodic comparison
of the charges with actual or estimated proportional benefits to the grants;
2) assigning charges to the grant with the largest remaining balance;
3) in budgets, allocating budgeted costs that are not realistic, or do not
represent the Principal Investigator's intent.
7.0 Interrelatedness Rule
This rule applies when a cost is clearly a direct cost for a group of projects,
but the cost cannot be assigned by proportional benefit due to the interrelatedness
of the work involved. The interrelatedness rule provides greater flexibility
in assigning costs, but the conditions for its use are more stringent.
Two conditions must be met. First, the interrelatedness of the grants must
be established. Second, the impracticality of charging the cost directly to
a single grant, or using the proportional distribution rule, must be established.
1) Identifying an interrelated group of grants. Establishing that
a group of grants is "interrelated" is accomplished either by disclosure
of scientific overlap when "other support" is described in the initial
grant application, or by the documentation of the Principal Investigator,
with the approval of the Investigator's academic supervisor. A fundamental
criterion of interrelatedness is a close scientific and technical relationship
among the grants.
For all grants, federal and non-federal, each of the following conditions
must be met in order to establish "interrelationship" among a group
a) The grants are scientifically and technically related,
b) There is no change in the scope of the individual grants in the group,
relative to the scope described in the grant proposals,
c) Establishing interrelationship will not be detrimental to the conduct
of work approved under each individual grant,
d) Establishing interrelationship will not be used to circumvent the terms
and conditions of an individual grant, and
e) Grants awarded under Public Health Service (PHS) auspices (including
all NIH grants) require two additional conditions (see the PHS Grants Policy
Statement, pages 7-20, 21):
i) The projects are under the direction of the same Principal Investigator.
ii) All grants in the interrelated group have been funded by the same
PHS funding office, for example, by the same Institute, and
f) Approval to use the interrelatedness rule must be obtained from ORSP
Note: For National Science Foundation (NSF) grants, the interrelatedness of
grants with more than one Principal Investigator must be approved by appropriate
NSF Grants and Program Officers.
2) Distributing interrelated costs. An interrelated cost may be distributed
among the grants in an interrelated group on "any reasonable basis."
For PHS grants that meet the criteria above, a cost that benefits a set of
interrelated grants may be charged to any one or all of them in any proportion
that, in the judgment of the investigator, constitutes a "reasonable
A - MUSC DIRECT
AND FACILITIES AND ADMINISTRATIVE (F&A) COST REFERENCE TABLE
Direct & Indirect Working Group
Velma Graham- Team Coordinator
For further inquiries or comments, please contact our Web