5.3 Direct Charging Administrative Salaries
1. Administrative and Clerical Salaries
Federally Sponsored Projects
Direct charging of administrative salaries to federally sponsored projects is appropriate only if ALL of the following conditions are met:
- Administrative or clerical services are integral to a project or activity. The requirement that the cost is integral means the services are essential, vital, or fundamental to the project or activity.
- Individuals involved can be specifically identified with the project or activity.
- Such costs are explicitly included in the budget or have the prior written approval of the federal awarding agency. A budget justification must be included in the proposal.
- The costs are not also recovered as indirect costs.
Any other administrative costs that are required to perform the technical scope of work may be directly charged as long they provide technical benefit to the sponsored project.
The Uniform Guidance is effective for federally sponsored agreements and new funding increments awarded on or after December 26, 2014.
Non-federally Sponsored Projects
Direct charging of administrative or clerical salaries to a non-federally sponsored project is appropriate if the services benefit the sponsored project. Some non-federal sponsors may have specific requirements for direct charging of administrative costs. Such requirements need to be addressed in proposals.
2. Specific Identification
One of the criteria for charging an administrative salary directly to a sponsored project is called specific identification. This requires a cost to be specifically tied to a particular sponsored project or activity. The administrator must show how the project benefited from the expense.
Documentation or a system is required to show items purchased were used only on that project. A method of accounting for time, or percent of effort, is required to identify the benefit of the administrative and clerical personnel effort to the federal sponsored project.
Questions frequently arise regarding benefit and allocability; therefore, further documentation may be necessary and is recommended. Documentation of allocability is done at the time the cost is incurred. It requires a methodology that allocates costs based on some common characteristic such as head count, square feet, or some other approach that reasonably estimates the benefit received by the projects. If actual usage deviates from the estimate when the cost is incurred the administrator should reallocate the expenses appropriately. Comments describing allocability to the project can be included on a Stanford Express order. A method of accounting for supplies and expenses is required in order to identify the benefit of the supply or expense to the federal sponsored agreement. Clear justifications at the time of the charge and quarterly certification of expenses by the PI are needed to meet this requirement.
If an individual cost specifically 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 an individual cost specifically benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the cost may be allocated to benefited projects on a reasonable basis. This requires a methodology, documented at the time the cost is incurred, that allocates costs based on some common characteristic such as headcount, square feet, or some other criteria that reflects the benefit received by the projects. The criteria shall be consistently applied regardless of the projects' available funding.
Administrative expenses may not be distributed or rotated among sponsored agreements. Departments shall not use any type of pooled allocation method to charge administrative expenses to federal sponsored agreements except from a service center with approved rates.
3. Keep in Mind When Managing Administrative Salaries
- Administrative and clerical salary charges are normally treated as F&A (Facilities & Administrative), or indirect costs.
- Was the salary described, budgeted, and justified as Integral to the project in the proposal? Was it awarded as integral?
- The Integral designation ONLY applies to federal projects or non-federal applying a special condition – limiting administrative charging
- How can the expenses be specifically identified with the project?
- If the administrative and clerical salaries are not integral, do not charge administrative salaries to your federal awards. All new awards will have Admin ET’s blocked by OSR (Office of Sponsored Research) unless the expense was proposed as integral.