Guidance for Sponsored Expenditures

Introduction
Related Policies, Guides, and Other Resources
Federal Award Cost Principles
Non-Federal Award Cost Principles
Guidance for Expensing Costs to Sponsored Projects
Federal Award-Specific Expense Types with Special Treatment
Prior Written Approval Needed

1. INTRODUCTION

This guidance is intended to support appropriate budgeting and expenditures for all sponsored projects and awards, regardless of funding source—federal or non-federal—and regardless of whether the funding supports research, training, service, or other activities. It aligns with the federal Uniform Administrative Requirements (2 CFR 200), applicable State of Texas policies and guidelines, and all relevant University of North Texas policies.

This guide should be followed by all Principal investigators, college research officers, and all administrators at the University who are responsible for the administration of sponsored projects and awards. Questions regarding this guidance can be sent directly to the office of Grants and Contracts.

2. RELATED POLICY GUIDES & OTHER RESOURCES

Financial Policies – Policies owned by the VP of Finance relating to all financial practices at the University.

Academic Policies- Policies owned by the VP for Academic Affairs relating to all academic areas of the University.

Research Policies- Polices owned by the VP for Research and Innovation relating to all areas of research at the University.

General UNT Policy Manual for all policies governing the operations at the University.

Allowable Cost Matrix – Cost matrix for allowable funding sources when not using grant funding.

Sponsored Project Handbook

Travel guide and Purchasing guidelines

3. FEDERAL AWARD COST PRINCIPLES

Adherence to federal regulations is required for all federal awards and cost shares. The guidance provided in this section is based on the interpretation of federal regulations that govern federal awards and sponsored projects.

An expense that is charged to any federal award should be auditable to these criteria:

Allowable: under federal and state guidance, and the specific terms of the award.
Allocable: the expense must be clearly associated with a high level of accuracy to the award (SOW and Budget Justification)
Reasonable: The cost to the award reflects what a reasonable person would consider an ordinary and necessary cost and sound business practice at the time it was incurred.
Consistently: Direct expenses charged to grants should follow the guidance that similar costs under similar circumstances should be treated the same way to ensure compliance with auditable guidelines.

Award/Grant Expense Categories:

Direct Expenses: These expenses often fall into specific budget categories set forth in the budget justification. They are with a high degree of accuracy, identifiably related to the particular sponsored project or activity, and do not violate any terms and conditions outlined by the specific sponsor.
Indirect Costs (IDC): Are those costs that recover the percentage of eligible direct costs expended to the award. This rate can vary depending on the type of award, and not all direct costs can be assessed as overhead. More information regarding F&A rates and indirect costs can be found on the Research and Innovation website.
Costs deemed Unallowable: These are charges that are outside the scope of work for the terms of the grant or are disallowed in the terms and conditions of the sponsor. For Federal sponsors, this would be referenced in 2 CRF 200.410; for private sponsors, it would be found in the agreement’s terms and conditions. Any expense deemed unallowable will need to be removed from the grant and funded from a different allowable institutional source. PIs and department administrators can work with the Office of Grants and Contracts when there are questions regarding unallowable items.

Federal Regulations that govern cost principles:

For Federal awards and grants, the Office of Management and Budget (OMB) publishes guidance in 2 CFR 200.
Contracts include guidance from the Federal Acquisition Regulations (FAR). FAR provides the terms and conditions that govern federal contracts. The following organizations jointly issue the FAR: DoD, NASA, and GSA, for use by executive agencies in the acquisition of goods and services. Our office of Grants and Contracts reviews and negotiates terms when entering into federal contracts.

Guidelines for cost accounting principles at the University of North Texas are set out in the cost principles policy.

4. NON-FEDERAL AWARDS COST PRINCIPLES:

For non-federal awards, the University will follow the outlined grant purpose and restrictions in the award documentation. All other items outside of these restrictions will be subject to the guidance of University Policy.

PIs and administrators of grants should practice proper stewardship of non-federal awards and, as such, should adhere to these key principles:

Allowable – aligns with the terms and conditions of the awarded grant and complies with all University policies.
Directly applicable and for the benefit of the award, expenses allocated to the award are directly related and can be associated with the support and application of the project or program.
Reasonable – The cost and expense are what a reasonable person would consider necessary and business-applicable at the time the cost was incurred.

Since non-federal awards each have their own individual terms and conditions, it is important for all terms and conditions to be reviewed prior to expenditures being made against the grant funding. Any questionable expenses that may fall outside of the direct terms and conditions should be reviewed by the college or department finance officer and can be referred to grants and contracts administration for additional support.

Indirect Costs for non-federal grants (F&A)

Sopor’s policies dictate direct and indirect care on non-federal wards. Due to this variability among non-federal sponsors, additional review and scrutiny may be needed to determine what costs can be charged as direct expenses to the sponsored project that may normally be considered indirect costs when associated with a federally sponsored project. This additional review is needed as many non-federal sponsors' indirect cost rate is nominal, and in order for the University to support the research items that would normally be considered indirect should be appropriately budgeted into the direct costs.

When principal investigators are preparing budgets for non-federal awards, this should be taken into consideration

5. GUIDANCE FOR EXPENSING COSTS TO SPONSORED PROJECTS

All grant expenditures at the University of North Texas must meet 3 layers of compliance:

State of Texas laws, policies, and expenditure requirements (as UNT is a state agency).
Federal regulations, including 2 CFR 200 for federal awards, and for non-federal awards, we must meet the specific terms and conditions, including private entity contracts.
University of North Texas policies and procedures governing procurement, expenditures, and financial management.

Expenditures must satisfy all applicable requirements – not just those of the funding source, deferring to the most restrictive when multiple guidance exists.

Relevant policies for review of these items can be found on the following UNT and State of Texas sites:

UNT Policy Manual

UNT Procurement Resources

State of Texas – state statutes for higher education

Cost Sharing Expensing

When meeting cost share requirements, expenses require the same level of review to ensure accounting, financial, and legal regulatory burdens are met. Expenditures that are proposed for cost share should be reviewed against the cost share policy.

Prior Sponsor Approval

There are times when, noted in the award terms of a sponsored project, there are additional specific items in addition to standard pre-approval items that must be written prior approval. Common examples of pre-approval items on federal awards are rebudgeting, changes in key personnel, changes in scope of work, or effort changes. The additional items listed in an award could be items such as domestic or foreign travel or expenses outside the original scope. To obtain written approval from the sponsor, please submit for an award modification in GRAMS describing the needed approval to allow the GCA analyst to reach out to the sponsored program officer and obtain permission for the change. For federal grants and agreements, prior written approval is governed by 2 CFR 200.407. Please see section 7 for additional details.

Allocation of Expenses to Multiple Funds

When direct allocation expenses benefit more than one project or are used in other areas of research and instruction, not limited to one project, a reasonable and documented allocation methodology should be used to allocate the percentage of cost to the award. A cost allocation methodology should be established and documented based on university sponsored cost allocation methodology guidance.

Documentation of allowability

It is required that documentation is available to support the allowability of any expenditure charged to a sponsored award. Supporting documentation will be considered adequate if it demonstrates and justifies that the expense:

Is a direct benefit to the award.
Complies with the terms, conditions, and any restrictions of the award.
Has obtained all needed approvals as outlined in the award guidance and in the award documentation.

Examples of supporting documentation:

Emails from the PI with an explanation and justification of the cost
Emails from the sponsor about expenses needed
Original budget justification for the award
Contract documents with approved expenses

Sometimes, in the course of completing a sponsored project, additional documentation may be required at the request of the sponsor or of the Grants and Contracts Office. When additional documentation is requested, it should include a full explanation of the direct benefit of the expense to the project, along with any sponsor discussion of the expense if applicable.

Collection of Improper Payments

2 CFR 200.428 – An improper payment is any payment that should not have been made, or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements.

2 CFR 200.305 – The cost incurred by a non-Federal entity to recover improper payments is allowable as either direct or indirect costs, as appropriate. Amounts collected may be used by the non-Federal entity in accordance with cash management standards.

Questions regarding sponsored project expenditures

There are times when department grant personnel or Principal Investigators working on their sponsored project may have questions or do not agree on the treatment of specific expenses. When this occurs, additional guidance should be sought from the College Research Officer (CRO) or College Research Office Staff. If further clarification is needed, please send an email to GCAPostAward@unt.edu with your question, and it will be reviewed by the Grants and Contracts Sr. Director of PostAward Administration.

6. FEDERAL AWARD SPECIFIC EXPENSE TYPES WITH SPECIAL TREATMENT

The information is intended to assist with guidance on some of the more specific expenditures that might be associated with federal awards. These guidelines can be found in reference to Subpart E in 2 CFR 200.400-200.476.

Administrative Staff Salaries – 2 CFR 200.413(c)

The salaries of administrative (non-technical) staff are typically treated as indirect costs. To be paid from a sponsored project, they must meet the following requirements

The administrative position is integral to a project or activity and,
The individual administrative personnel can be specifically identified with the project, and
The expenses should have been included in the application budget, and if not budgeted, prior written approval has been obtained by the required awarding agency; and
The costs are also not recovered as indirect costs

Advertising – 2 CFR 200.421

These costs include any type of advertising media, including but not limited to magazines, radio, television, internet, bulk or electronic mail, and the related administrative or design expenses.

Advertising may only be allowable on a federal award if it is used solely for one of the following purposes.

Recruitment of personnel required for the performance of a federal award – 2 CFR 200.463
To obtain goods and services for the performance of a federal award; or
Program outreach is necessary to meet the award requirements

Alcoholic Beverages -2 CFR 200.423

Alcoholic beverages are unallowable costs.

In the event that alcohol is specifically necessary for the aim and scope of the sponsored project, this should be provided in the award notice and justification.

If part of a business meal or travel-related meal (not related to per diem travel), a detailed receipt should be retained. This will allow for the exclusion of any alcohol on the meal receipt. If the receipt is lost, a missing receipt affidavit.

If the meal did not include alcohol, the submitter will state on the form and attest that no alcohol was purchased
If the meal did include alcohol, the submitter must remove the amount and any applicable tip and taxes on the amount of the alcohol purchase.
If the purchaser cannot attest that there was no alcohol on the receipt, then the full meal should be excluded from reimbursement on the grant.

Bad Debts 2 CFR 200.426

Bad debt from uncollectable accounts or billing, as well as legal claims, are unallowable and may not be charged to a federal award. Collections and legal expenses related to bad debt are also unallowable.

Bonuses – 2 CFR 200.430

Recruitment Bonuses may be allowable charges to the award if they are consistently applied at the University regardless of funding source, and if the individual leaves before a minimum of 12 months on the award, it must be prorated, and only months worked on the federal award may be incurred as a portion of the cost.

Incentive compensation paid to faculty or staff can be charged to awards if all of the following criteria are met:

Payment is part of a performance-based program available to all employees or groups of employees at the University, and
Overall compensation to the individual is reasonable within pay bands and guidelines and;
The bonus program is consistently applied and allocated based on proportional benefit.

Compensation – 2 CFR 200.430

Compensation of those working on the award can be charged at the rate that was specified in the proposal for effort percentages.

Compensation costs include paid time off that is available to all University of North Texas employees, such as sick leave, vacation leave when applicable, state-approved holidays, and other applicable leave time.

Special considerations for compensation

The level of compensation may not increase solely due to an increase in available sponsored funding.
All salary University of North Texas employees must be budgeted as salaries and cannot be included as consultants or vendors.
All student salaries or hourly wages charged to a grant must be proportionate to the amount of effort on the grant.

Medical and Family Leaves – Salary while on approved leave can continue to be charged to sponsored awards unless, in the judgment of the PI, the payment of those costs jeopardizes the completion of the aims, objectives, and scope of work of the award. In these instances, the amounts should be moved from the grant to a departmental or IDC funding source.

Severance – This is pay in addition to regular salary and wages paid by an institution whose services are being terminated. Severance pay is only allowable on sponsored projects to the extent that it is required by law or is a part of the University of North Texas employee contract agreement for specified categories of employees.

Communication (cell phones, Internet) 2 CFR 200 Appendix III

It is often difficult to identify the portions of a communication bill or the amount of use for specific sponsored projects, and due to this difficulty, the University of North Texas generally includes these costs in the indirect cost calculations.

In the federal cost accounting standards 48 CFR 9905.502, it outlines “unlike purposes and circumstances,” the University would use these criteria to determine if a communication expense can be directly charged to a sponsored award. Here are examples of items that might be charged directly to a grant.

Dedicated telephone lines set up to receive data feeds from a field office or to conduct dedicated surveys.
Internet fees from a hotel or airline during award-sponsored travel.
Communication devices for a multi-site research project not located on campus.

Conferences – 2 CFR 200.432

Conference fees may be charged as a direct expense if one of the following circumstances is met:

The PI or PI designee is presenting results of the research obtained from the course of their work; or
The PI can attest that the conference is directly related to the award being charged; or
The award scope of work included for the PI or designee to host a conference to disseminate information from the sponsored award.

Fees for conferences are treated as an indirect cost when attendance is for general understanding of the topics presented, rather than to present or receive specific information related to the sponsored award. Conference fees that are found to not be specifically related to the award should be charged to faculty IDC or departmental accounts.

Contributions or Donations – 2 CFR 200.434

It is unallowable to charge the value of (either monetary or in-kind) donated services and property to a sponsored project. In exceptional circumstances, it is sometimes allowable to use these values as a cost-share.

Equipment and equipment repairs – 2 CFR 200.439 & 2 CFR 200.452

Equipment with a useful life of more than 1 year is classified as capital equipment when its per-unit cost is equal to or greater than $10,000. Capital equipment can only be charged as a direct expense to the grant when it is deemed necessary for the progress of the sponsored award.

Equipment generally falls into two categories

General purpose – This equipment is, in most cases, not limited in its scope to just research or lab use and is often treated as an indirect cost since direct costs may be difficult to quantify. It should only be used as a direct cost when the PI can justify that the equipment is:
- At purchase, used almost exclusively for the benefit of the sponsored award.
- Not a piece of equipment that is already available at the university for readily available use.
- Necessary for the specific tasks of the sponsored project.
Specialized equipment – This equipment is generally only for research, laboratory, or technical use. This type of equipment is more often charged directly to a grant for specific grant use.

Equipment repairs – maintenance and routine repair of items not paid for from the sponsored award should not be directly charged to the award or deemed general purpose. These should be paid from PI IDC or departmental chartstrings. Repairs, service, or warranty costs for special equipment that was expensed to the sponsored award for dedicated use may be charged directly to the award.

Equipment purchases at the end of the award – It is the intended purpose of purchased equipment charged directly to an award to be necessary for completion of the project, as such equipment purchases near the end of an award require additional scrutiny and may be subject to additional justification and sponsor approval before they can be charged directly to an award.

Exchange Rates – 2 CFR 200.440

When expenses increase due to the fluctuation in exchange rates, this can be expensed as a direct cost if funding is available to cover the difference. Sponsor approval is only necessary if it requires additional funding to complete the project due to additional costs or if it would change the scope of work on the project due to the cost overrun.

Fines, Settlements, and/or Penalties – 2 CFR 200.441

It is unallowable to charge expenses resulting from violations or alleged violations for failure to comply with federal, state, local, or foreign laws, or contract violations. Examples include but are not limited to:

Regulatory violation fines
Late fee for rented space or equipment
Parking or traffic ticket

Materials and supplies – 2 CFR 200.453

General purpose – Often, general use supplies are considered in indirect costs and should not be charged directly to the sponsored award. Exceptions to this might be lab or office supplies that were approved in the budget justification or general supplies that are intended for grant-specific projects or dedicated use. If these supplies are used for multiple projects, they must be allocated across projects using the sponsored project cost allocation methodology.

Computing devices – These devices, such as tablets, laptops, desktop and other software accepting devices that are under $5,000, may be charged as a direct cost to the sponsored award if they are essential to the performance of the award. Examples of computing devices that may be directly charged to an award.

A laptop is necessary to record data at field sites.
A computer used primarily for the sponsored award for award-designated projects, data collection, or scope of work.
A computer that is attached to a piece of equipment in a lab or workspace that is being used for data collection or analysis on the sponsored award.

Computing devices that are allocated to multiple awards or only used partially for the essential functions of the award must be subject to the sponsored cost allocation methodology.

As with the equipment directly charged to a sponsored project, it is intended for the completion and execution of the scope of work of the project, and as such, computing devices purchased at the end of a project are subject to additional audit scrutiny and may require program officer approval before purchase.

Copy charges – If these are for general administrative support of a sponsored award, they should be considered part of the indirect cost rate. Copy charges should only be directly charged to a sponsored award if they meet both of the following criteria:

Copy expenses are specific to specific tasks associated with the sponsored award and can be tracked separately; and
The awarding sponsor has approved the direct charge in the awarded budget, or there is language in the approved budget justification for such charges.

Memberships, Subscriptions, and Professional Activity Expenses – 2 CFR 200.454

Memberships, subscriptions, and professional activity expenses (including books) are most often charged as indirect costs because they are more general by nature, and it is difficult to specify the degree of benefit to the individual research project. *Memberships may only be directly charged to a sponsored award if it is required for conference attendance where the PI or PI delegate is presenting their research, submitting an abstract, or circulating, obtaining, or distributing information to advance the performance of the project.

Examples of unallowable direct charges on sponsored awards

Journals or general reference texts that are generally available in the library.
Subscriptions to journals
Memberships to professional organizations (unless meeting the requirements described above)

Examples of exceptions that could be directly charged to a sponsored award – please get CRO and/or GCA approval.

A journal or book is not available in the university library and is needed for the specific use of the sponsored project
A journal or book is available in the library, but the need to utilize it on the grant is so frequent or it contains specific guidance that should be referenced frequently, that a designated copy for the grant is needed.

Postage and Express Delivery - 2 CFR 200.474

Postage and general shipping charges are usually treated as indirect costs. If the expense is required for a project and can be directly linked to the specific sponsored award, it may be charged as a direct expense. Examples of when postage or shipping may be charged as a direct expense include:

Postage cost for surveys
Shipping of research presentation materials for conference presentation.
Shipping of specimens to a lab for processing for the sponsored award
Shipping between field sites for specimens or equipment needed for the specific award.

Professional Services – 2 CFR 200.459

The cost of consultants and professional services is an allowable cost to sponsored awards when all of the following conditions are met:

The consultant or professional service provider is not a current University of North Texas employee and has not been an employee of the University in the last 12 months; and
The cost of the services provided is deemed reasonable by industry standards; and
The service being provided is allowable by the contract of the sponsored award.

Specialized Facilities Services – 2 CFR 200.468

The University of North Texas has specified service centers that charge for services that directly support the research and academic missions of the University, and they support their costs through charges to internal and external users. These charges are allowed to be directly charged to the sponsored award if they meet all of the following criteria:

Actual usage of is tracked, and the award is only charged for the actual usage of the service center resource; and
The service used is directly applicable to the sponsored award, and
The rate charged is based on an established rate schedule that does not discriminate between sponsored awards and other users of the same designation (i.e., internal, external, etc)

Taxes – 2 CFR 200.470

In general, as a state agency, it is the standard practice to exclude taxes from purchases and travel when able. In certain instances, when necessary, there are times that it is allowable to charge some taxes, such as sales tax or value-added taxes, to a federal award if allowable by that award.

Travel expenses – 2 CFR 200.475

All travel expenses that are directly charged to the award or used as cost share from cost-share-approved funding must follow all University of North Texas travel policy and guidelines. In addition, federal agency regulations and requirements for travel must be followed, and additional review may be required to comply with individual sponsor award compliance.

Tuition – 2 CFR 200.466

Tuition Remission

Tuition Remission is related to graduate student salary and, therefore, is subject to effort reporting. It is part of their compensation package for performing necessary work on the research project. The allocation of tuition payments must not exceed the salary distribution of related work effort on the sponsored award.

Tuition Support

Tuition support is not related to employment on the sponsored award. It is for individuals with stipend status during an academic appointment. The tuition support is not compensation for services rendered. It is generally related to sponsoring award fellowships or training grants.

7. PRIOR WRITTEN APPROVAL NEEDED

When managing sponsored awards, it may at times be difficult to determine allocability and reasonableness to the award. In these instances, to avoid the possibility of disallowance or later dispute with the sponsor, the University will seek prior written approval from the sponsor. The PI should coordinate with their college research officer or GCA post award, as it is required that the GCA office make these requests, and it will be required to have the approval from the sponsor in writing.

Per uniform guidance, prior written approval is explicitly required for the following instances:

Change of scope of work
Change of key personnel
Effort reduction of key personnel of 25% or greater, or PI
Goods or services for personal use
Investment management or fundraising expenses
Use of program income
Participant support costs
Selling and marketing costs
Renovation costs
Fines, penalties, damages or settlement costs
Cost sharing or Matching
Budget adjustments outside the allowable percentage of change.

The following require prior approval if not included in the original approved proposal budget.

Equipment purchases
Subawards
Supplemental compensation for incidental activities
Travel costs
Administrative costs
Entertainment costs
Pre-award expenses
No cost extensions
Carry forward

Please refer to the original sponsor project award documentation first when deciding whether a cost might be allowable. This guide is to serve as an assistance to complement University Policy and Procedure and Federal Uniform Guidance.