As recipients of federal funding, higher education institutions must comply with policies that define costs as either direct or indirect. These policies are established to promote responsible stewardship and accountability for sponsored program funding.
All costs proposed or incurred on a sponsored project must comply with sponsor terms and conditions, New York University (NYU) policies and procedures, and applicable federal, state and local regulations.
In addition to programmatic efforts, the Principal Investigator (PI) is ultimately responsible for ensuring appropriate financial management and compliance with sponsor terms and conditions.
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Charges to federal awards must comply with the following criteria:
Direct costs are those expenses that directly further the programmatic objectives of the award. Examples of direct costs include: salaries and benefits, materials and supplies, travel, subcontracts, scientific equipment, service center charges, and other operating expenses. Direct costs cannot be assigned arbitrarily and should adhere to the sponsor’s restrictions.
Facilities and Administrative Costs are also described as F&A or Indirect Costs. F&A expenses are common expenses that are not specifically identifiable to a sponsored project, but rather support the project indirectly. Examples of F&A expenses include space costs, utilities, general and departmental administration costs.
For direct charging of costs which are typically indirect, the cost must meet the criteria of the “special purpose or circumstance” test.
If a cost benefits two or more sponsored projects, the allocation should be reasonable and based on the proportional benefit received by each project. The criteria for the allocation of costs to two or more sponsored agreements are as follows:
F&A is calculated daily in Peoplesoft based on direct expenditures, as well as the appropriate base; i.e., modified total direct cost.