It is the policy of New York University (NYU, “the University”) that all costs proposed or incurred on a sponsored project must comply with the terms and conditions of the sponsored awards in determining costs that are allowable or unallowable. At no time should unallowable costs be charged to the sponsored project. Proper accounting for unallowable costs is required to maintain the integrity of the University’s Facilities and Administrative (F&A) Cost Proposal and compliance with Federal regulations.
The purpose of this policy is to establish guidelines for defining and identifying costs that are unallowable for reimbursement from the Federal government and other external sponsors. NYU adheres to Cost Accounting Standard 505, Accounting for Unallowable Costs, other applicable government regulations including the Federal Office of Management and Budget Uniform Guidance (OMB Uniform Guidance) as well as sponsor terms and conditions in accounting for unallowable costs.
This policy is applicable to all schools, departments, units and personnel of the University involved in administering sponsored awards.
The Cost Accounting Standards Board (CASB) requires educational institutions receiving Federal funding in excess of $500,000 to comply with Cost Accounting Standards (CAS). In addition, for Federally funded awards, the University must adhere to the requirements of the OMB Uniform Guidance, in determining the allowable costs of work performed for sponsored programs and of indirect costs included in the University’s facilities and administrative cost rate calculation. The purpose of CAS 505 is to facilitate the negotiation, audit, administration and settlement of Federal awards by establishing guidelines covering:
For the treatment of allowable and unallowable costs with respect to sponsored programs, please refer to the University Costing Policy. This policy summarizes the requirements of OMB Uniform Guidance and the CAS 505 requirements.
Activities and expenses which are unallowable for reimbursement on a Federally-funded award may still be appropriate, necessary and allowable on a non-Federally funded award. Departments may still incur these activities/expenses but they must be coded as unallowable so they can be readily identified and excluded from the indirect cost calculation. However, the accounting treatment prescribed by CAS 505 requires specific identification of these costs in the accounting records or memos and prescribes methods to prevent these costs from being included in any proposal, billing or claim that applies to a Federally funded award.
Unallowable costs are identified and segregated using the following methods:
Appendix A provides the rules prescribed by OMB Uniform Guidance and recommended procedures for selected items of cost. Some of these items are unallowable as direct or indirect costs for sponsored programs (e.g., alumni activities). Others require special treatment (e.g., student administration and services). Therefore, these items must be segregated to ensure compliance with CAS 505.
Effective Date Supersedes 09/01/13 Issuing Authority Sponsored Programs Administration Responsible Officer Assistant Vice President for Post-Award Administration
Direct or indirect expenses that are not reimbursable under either Federal regulations or the terms and conditions of a sponsored award.