The rate methodology selected by an organization needs to match a business operations. Organizations without a current or provisional NICRA. 2 CFR 200, Subpart E, Section 200.414 (g) states that any non-Federal entity that has a federally negotiated indirect cost rate may apply for a one-time extension of a current negotiated indirect cost rate for a period of up to four years. This guidance does not supersede information and requirements on the development, calculation, and application of indirect costs and indirect cost rates in, 2 CFR Part 200, Uniform Administrative Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, General Terms and Conditions for Awards to Organizations (For grants and cooperative agreements issued January 1, 2022, or later), general operating support costs to State Humanities Councils (SHC), Applicant organizations submit an NEH project budget using the, , unless otherwise instructed in the NOFO, When preparing your budget, you must treat costs that you classify as direct or indirect consistently. A copy of the IRS letter granting nonprofit status. 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. 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. NEH must use the negotiated rates in effect at the time of the initial award throughout the life of the award, except as provided in, . The Appendix I includes a sample of the USAID Negotiated Indirect Cost Rate Agreement (NICRA). If no approved rate exists, the pass-through entity may negotiate an indirect cost rate with the subrecipient or accept the de minimis rate (. The information herein is used by the organization for the development of the indirect cost rates as shown on the subsequent sections of the guide, Download Example - Statement of Total Cost Table [PDF 84 KB]. On-Site/Campus (organizations conduct activities in a space they either own or lease), Off-Site/Campus (organizations conduct activities in a space for which they do not own or lease). Perform a mathematical verification of each indirect cost rate calculation provided by the organization. Reconcile the indirect cost rate proposal to the audited financial statements. However, a cost may not be allocated as an indirect cost if any similar costs have been assigned as a direct cost. For companies with federal contract expenditures, or subcontract expenditures under a federal contract in a particular fiscal year under flexibly-priced contracts (e.g., Cost Plus Fixed Fee etc. Maintenance of membership rolls, subscriptions, publications, and related functions. The checklist below addresses the documentation to provide and steps needed when seeking a revised provisional rate and/or final rates. The base of application for this example is total costs excluding G&A expenses. Calculate the total indirect charges by multiplying your approved indirect cost rate by your direct costs. The column labelled as indirect is where you place all of the general costs of being in business. The Lobbying Cost Certificate certifies that the entity has been in compliance with the requirements and standards of 2 CFR 200.450, Lobbying. Submit your nominations for the 2024 NEH Jefferson Lecturer, NEH Jefferson Lecture in the Humanities nominations, General Guidance on Calculating Indirect Costs (PDF). Common locations include: Type of programs that rates are applicable to, Indirect Cost Rate (Allocation) Base Defined. You should prepare a project budget in coordination with your organizations Institutional Grant Administrator (IGA) and/or Office of Sponsored Projects. A NICRA establishes the following to calculate indirect costs: The rate(s) established in a NICRA are typically effective for a two- to four-year period. If chosen, this methodology once elected must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may apply to do at any time. The total costs of the project would be $100,000 + $10,000 = $110,000. Organizations with a NICRA but without an applicable rate. Applicable audited financial statements including any affiliated organizations, and 2 CFR 200, Subpart F, Section 200.500, Audit Requirements. CARS will allow your organization to document your already established federally approved indirect cost rate, or complete an indirect cost rate proposal (see State Negotiated Rate above). These costs are allocated equitably across all of your organizations activities. Determine that "pass-through" funds have been excluded from the base. Each grouping must then be allocated individually to benefitting functions by means of a base which best measures the relative benefits. Fourth, the college's indirect cost calculation should be verified by an independent accounting authority and retained on file for review by auditors, and/or federal oversight staff. 10% de minimis rate may be elected by an organization that has never received a negotiated ICR. 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. indirect cost rate agreement. Uniform Guidance (2 C.F.R. of this guide. The following is a list of some of the elements that must be provided for in the labor charging system: The direct labor amount must be supported by the organizations labor distribution report, and internal accounting system. 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). All Federal agencies are required to use the rates and methodology negotiated by USAID and the related organization. Historic federal grants available for infrastructure and clean energy can bring significant financial and compliance risks for for-profit federal grant Refer to the Notice of Funding Opportunity (NOFO) for statutory or administrative information regarding the allowability of indirect costs. This indirect cost rate allocates expenses associated with the management and administration costs that benefit the organization as a whole (e.g., accounting department, chief executive officer). Direct costs are salaries, services, and goods that are directly related to the project and are accounted for with a high degree of accuracy. Note that responsibility for each specific organization is based on the first letter of its name, i.e. Indirect Cost Rate Proposal (ICR) Checklist for First Time NICRA. ), please provide all applicable final indirect cost rate data as specified in the Federal Acquisition Regulation (FAR) 52.216-7 (d) (2) (iii) for that . Prepare the following documents, and have them signed by the Executive Director, or other designated official with the organizations signature authority (examples of each of these can be found in Section 3 of this guide. Subsequent NICRA Submissions to Establish Final and Provisional Indirect Cost Rates. 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. Determine that the proposal reconciles with the supporting audit, official budget and financial statements. Organizational structureb. 2 CFR 200, Subpart D, Section 200.333(f)(1) and (2), Retention requirement for records states the following: (f) Indirect cost rate proposals and cost allocations plans. 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. Also, added personnel activity reporting system to the paragraph under the Approved date. A predetermined rate is typically not subject to adjustment. Provide the amount of executive compensation paid to the top 5 executives. After USAID issues a final indirect cost rate, M/OAA/CAS/OCC will establish a provisional rate for the next fiscal year. Failure to obtain such prior written approval may result in cost disallowance. For example, research rates are not applicable to the scholarly research that NEH funds, except in rare circumstances. Learn more here. M/OAA/CAS/OCC provides support and guidance to Agreement Officers (AO) and Agreement Officers Representatives (AOR) at Missions regarding the negotiation of NICRAs as requested. To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be necessary to establish a number of pools of indirect (F&A) costs. Contact person information (preferably the person who prepared the ICR): Entitys internet website address, if any. Download Example - Multiple Allocation Method: Fringe benefits indirect cost rate, Overhead indirect cost rate and General and Administrative (G&A) expense rate. Provide a Certificate of Indirect Costs in accordance with 2 CFR 200, Subpart F, Appendix IV, Section D. Documentation and steps needed to finalize indirect cost rates: a. The first category is direct cost which is the cost of actually doing work for clients. Provisional rate or billing rate is a temporary ICR applicable to a specified period which is used for funding, interim reimbursement, and reporting indirect costs on federal awards pending the establishment of a final rate for the period. If an organization believes the future rates will be materially different than the previous finalized rates, it should propose the more accurate provisional rates with adequate supporting documentation and rationale. reasonable and consistently applied to direct costs, appropriate to the particular cost being distributed, and. 2. The Total Project Cost is: $150,000 Total Direct Cost (TDC) base +22,500 15.0% indirect costs on TDC base $172,500 Total Project Cost (TDC + indirect cost) Example 2 (MTDC): A PI is submitting another proposal to the NSF for the same time period and the same direct-cost amount. This paragraph applies to the following types of documents and their supporting records: indirect cost rate computations or proposals, cost allocation plans, and any similar accounting computations of the rate at which a particular group of costs is chargeable (such as computer usage chargeback rates or composite fringe benefit rates). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Indirect Cost Pool Direct Cost Base = Indirect Cost Rate The appeal must be in writing and must be postmarked within thirty (30) calendar days of receipt of the AOs final decision. The indirect cost rate is designed to provide a method for full cost recovery, and it is an equitable, logical and consistent process for allocating costs not directly associated with a single grant/contract, project or cost objective. 2 CFR 200.332 Requirements for pass-through entities, Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions for Higher Education (IHEs), Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations, State and Jurisdictional Humanities Councils, General Guidance on Calculating Indirect Costs, Chronicling America: History American Newspapers. direct salaries and wages including (or excluding) fringe benefits, direct salaries and wages including vacation, holiday, sick pay, and other paid absences, Provides the separate rates for allocating. The indirect costs rate is limited by federal statute or regulation. If indirect costs are allowed under the terms of the award, the entity will then be ready to prepare an indirect cost rate proposal beginning with the following steps: a. It is USAIDs policy that grantees that agree to an indirect cost rate ceiling that is less than the government-wide NICRA rate in a contract or grant for cost sharing or other reasons shall not recoup the amounts occasioned by the reduction in the rates on other agreements with the U.S. Government. These amounts should also tie to the general ledger labor accounts and the financial statements. For small businesses, supporting documentation can include reviewed financial statements with the associated indirect cost calculations. General & Administrative (G&A) rate. In addition, 2 CFR 200, Subpart A, Section 200.57 defines an indirect cost rate proposal as the documentation prepared by a non-Federal entity to substantiate its request for the establishment of an indirect cost rate. Employee signature and Supervisor approval of labor hours (verifiable whether your timekeeping is electronic or manual) are evident. If a sponsor's published policy mandates a lower F&A rate, an indirect cost exception (waiver) must be obtained. Fixed rates may be negotiated where predetermined rates are not considered appropriate. Report scam, The National Endowment for the Humanities, This document provides introductory guidance to NEH applicant and recipient organizations on calculating, as part of an NEH grant or cooperative agreement application budget. Description of the allocation base used in each rate calculation if it has changed. Examples include depreciation on buildings, equipment and capital improvement, interest on debt associated with certain buildings, equipment and capital improvements, and operations and maintenance expenses. If your organization has a NICRA, you may apply to your cognizant agency for a one-time extension of a current agreement for a period of up to four years, in accordance with 2 CFR 200.414 (g). If this is not the case, an organization provides a detailed forecast to support the rate they consider more accurate. In proposals and approved budgets, the total project cost is the sum of total direct costs and total F&A (indirect) costs. Facilities costs are the overall costs of operating and maintaining facilities owned or leased by the organization in which activities that may directly or indirectly support your project are taking place. A decision under this provision by the Deputy Assistant Administrator, Bureau for Management is final. ). Once established, a final indirect cost rate is used ceiling rates or amounts.c. An indirect cost rate is the result of a process to identify indirect costs and direct costs. Indirect Cost Calculation: A Base Amount is determined by adding together all direct costs (-) minus any items which are exempt from IDC costs. 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). The indirect costs allocated to each function are then distributed to individual Federal awards and other activities included in that function by means of an indirect cost rate(s). Conversely, if the organization is not successful in securing the award, no NICRA will be issued. Facilities and administrative costs Facilities costs are the overall costs of operating and maintaining facilities owned or leased by the organization in which activities that may directly or indirectly support your project are taking place. Indirect costs costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. The Negotiated Indirect Cost Rate Agreement shall not change any monetary ceiling, obligation, or specific cost allowance or disallowance provided for in each grant or contract between the parties. For each type of rate proposed provide a detailed rate calculation to include the pool of expenses, the base of application, and all unallowable costs. PIs should carefully review the program guidelines to determine how the cost-share can be met by all partners. The Certificate of Indirect costs must be accompanied by with each indirect cost rate proposal. Indirect cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived (, The cognizant agency for indirect costs is the federal agency that is responsible for establishing cost allocation plans or indirect cost proposals on behalf of all federal agencies (, ). , are incurred for the benefit or joint objectives of a specific project and organizational activities. Provide a comparative analysis of indirect cost pools and bases by detailed account to prior fiscal year actual costs. 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. Make any agreed upon changes, and request any revised, and/or supporting documentation. Where can I find information on the applicable cost principles? Certificate of Indirect Costs in accordance with 2 CFR 200, Subpart F, Appendix IV, Section D. Compile all remaining documentation identified in the indirect cost proposal checklist, such as: The following allocation bases are acceptable examples for use when indirect costs are allocated to benefiting cost objectives by means of an indirect cost rate. Each reclassification and adjustment must be explained in notes to the reconciliation schedule. Some examples of this category include central offices, such as the director's office, the office of finance, business services, budget and planning, personnel, safety and risk management, general counsel, and management information systems costs. The cost base describes the direct cost pool (types of costs and cost caps) to which the indirect cost rate is applied. UA 10.4.4A, Tanya Broadnax, Closeout Management Analyst. Indirect cost Proposal Checklist for First Time NICRA of this guide for the required documentation. depreciation on buildings, equipment and capital improvement, interest on debt associated with certain buildings, equipment and capital improvements, and operations and maintenance expenses. Administration costs include general administrative expenses that are not specific to the project but serve the entire organization. a permanent rate determined after an organizations actual costs for a current year are known. As outlined in 2 CFR 700.15, if the organization disagrees with the AOs final decision, the organization may appeal the AOs decision to the USAIDs Deputy Assistant Administrator, Bureau for Management, or designee. Organizations must have a system in place to equitable charge costs. 2 CFR 200, Subpart F, Appendix IV, Section B.5 also provides for the use of Special Indirect Cost Rates. Create your eSignature and click on the OK . Added to the last paragraph additional information from the 2 CFR 200.430 (i) addressing the standards for documentation of personnel expenses. Example Personnel Cost Worksheet regarding timesheet with comments from the 2 CFR 200 addressing the use of records to support the work performed. Note: Salaries and fringes included in this exhibit are for illustrative purposes only. The Office of Management and Budget (OMB) published Title 2 of the Code of Federal Regulations Part 200 (2 CFR 200), titled Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards to streamline the Government-wide guidance on Administrative Requirements, Cost Principles, and Audit Requirements for Federal awards. Facilities is defined as general administration and general expenses such as the director's office, accounting, personnel and all other types of expenditures not listed specifically un. Example 2: Applying a 34% Indirect Cost Rate using direct salaries and wages, excluding fringe benefits, base. An indirect cost rate is calculated as a percentage by dividing the total allowable indirect costs by an equitable distribution base, as an example: Indirect pool$150,000Distribution base$776,700Indirect cost rate19.31%. Special remarks (composition of the indirect cost pool). Administration of group benefits on behalf of members or clients, including life and hospital insurance, annuity or retirement plans, and financial aid. This method should also be used where an organizations major functions benefit from its indirect costs to approximately the same degree, and may be used where the level of Federal awards to an organization is relatively small. To prevent substantial overpayment or underpayment of indirect cost during the fiscal year, a revised provisional rate may be requested by the organization. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs, NEH must accept valid and applicable indirect cost rates (, ), or if no current or provisional negotiated rate exist, accept the de minimis rate, if requested in the application budget. If the rate agreement in effect at the beginning of the period does not cover the entire period of performance, then NEH will use the rate in effect for the last year of the negotiated rate agreement to determine indirect costs for the duration of the period of performance, Likewise, recipient organizations that issue subawards (referred to as pass-through entities) must accept subrecipients applicable federally negotiated indirect cost rates. employee benefits (e.g., payroll taxes, vacation, sick, retirement, health care, bonus, deferred compensation, insurance). Responsibility for the negotiation of indirect cost rates for sub-awardees rests with the prime recipient. 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. For local educational agencies (LEAs), issues with the limit can occur if revenues from taxes . If your organization wants to negotiate a NICRA and NEH is its cognizant agency, see Guidance for Negotiating an Indirect Cost Rate Agreement with NEH. A final indirect cost rate is not subject to adjustment. Care needs to be taken to ensure that amounts claimed do not exceed award limitations or indirect cost rate ceilings. Refer to Section 2.E. This section of the guidance applies to organizations that are requesting new provisional rates for future periods and/or the finalization of provisional rates for past periods. If your organization does not have a current negotiated (including provisional) rate or has an expired rate, your organization may choose to negotiate a rate with its cognizant agency. Georgia Tech's Facilities & Administrative (F&A) rates are established and approved by the Office of Naval Research (ONR). 2 CFR 200, Subpart F, Appendix IV, Section B.4.a, states that some nonprofit organizations treat all costs as direct costs except general administration and general expenses. The most basic formula for calculating a grantee's actual indirect cost rate is to divide total indirect costs (also called the indirect cost pool) by total direct costs (also called the direct cost base ). Other Sponsored Activities programs and projects that involve the performance of work other than instruction and organized research. Description of changes in accounting or cost allocation methods made since that last submission. 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. Indicate which, if any, of the following the organization used to establish executive compensation, and provide the following supporting documentation: Approval by the board or compensation committee. Approval for indirect costs that are requested in an . Some examples of these types of activities include: The checklist below addresses the documentation to provide and steps needed when an organization is seeking a NICRA for the first time.
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