Sponsored Program Compliance
Allocability Scenarios
The cost principle of ALLOCABILITY focuses on the relationship between a particular expense and the project that pays for it. This fundamental principle has been the focus of significant audit activity at UR and elsewhere.
To charge an expense to a project Financial Acitivy Object (FAO) [account] because that FAO has the necessary funds, or has more money in it than another FAO, will result in an UNALLOCABLE CHARGE - unless that expense benefits the project.
Particularly, when an expense is being transferred onto a sponsored FAO - from another project or from a non-sponsored FAO - it will be important to document ALLOCABILITY. This is also true for charges where the benefit to the project could appear questionable.
Here are a few examples:
Purchases late in the project period
If the funding for your project will end in a month, it is questionable that buying a computer, or any other acquisition, now will be of BENEFIT to the project. That does not mean that all such expenses are UNALLOCABLE, but it does mean that an expenditure late in the project period, e.g., within 90 days of the project end-date, will need to be carefully explained, and may require written approval from the sponsor's grant or contract officer. (See UR Guidelines on Determining the Allocability and Allowability of Equipment Purchased from Sponsored Programs Funds).
Effort for proposal preparation
The costs of proposal preparation, including time and other related expenses, can raise allocability questions. Proposal preparation costs may not be charged to sponsored projects unless the proposal is being prepared for submission to a current sponsor for a non-competing extension or continuation of its ongoing project. In those circumstances, it is appropriate to charge those proposal development costs directly to current projects. Costs for development of proposals for submission to other sponsors, or for work that does not relate to ongoing projects, is not allocable to current projects and may not be charged to those projects.
Effort while absent from campus
The Uniform Guidance requires that PI's notify the sponsor in writing and receive prior approval when the PI on a federal grant will be disengaged from the project for more than three months. Whenever a key individual charging salary to a project will be absent for an extended period, e.g., during extended periods of illness or personal business, leaves of absence, or sabbatical, the allocability of salary charges may be questioned. In some cases, the individual may be continuing to devote effort to the project, and the charges are appropriate. However, since this could be questioned, it should be carefully documented.
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