Archived Information

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| #                                                                     |
|                                                                       |
| # Prior Approval Requirements in the Cost Principles                  |
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| **OMB Circular A-21,"Cost Principles for Educational Institutions"**  |
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| [Salary rates for faculty members:]{.underline}                       |
|                                                                       |
| ...in unusual cases where consultation is across departmental lines   |
| or involves a separate or remote operation, and the work performed by |
| the consultant is in addition to his regular departmental load, any   |
| charges for such work representing extra compensation above the base  |
| salary are allowable provided that such consulting arrangements are   |
| specifically provided for in the agreement or approved in writing by  |
| the sponsoring agency. \[A-21, Att. J.8.d.(1)\]                       |
|                                                                       |
| [Equipment and other capital expenditures:]{.underline}               |
|                                                                       |
| \(1\) Capital expenditures for general purpose equipment, buildings,  |
| and land are unallowable as direct charges, except where approved in  |
| advance by the sponsoring agency. \[A-21, Att. J.16.b.(1)\]           |
|                                                                       |
| \(2\) Expenditures for special purpose equipment are allowable as     |
| direct charges with the approval of the sponsoring agency. \[A-21,    |
| Att. J.16.b.(2)\]                                                     |
|                                                                       |
| \(3\) Capital expenditures for improvements to land, buildings, or    |
| equipment which materially increase their value or useful life are    |
| unallowable as direct charges, except where approved in advance by    |
| the sponsoring agency. \[A-21, Att. J.16.b.(3)\]                      |
|                                                                       |
| > [Insurance and indemnification:]{.underline}                        |
| >                                                                     |
| > ...costs of insurance or of any contributions to any reserve        |
| > covering the risk of loss of or damage to federally-owned property  |
| > are unallowable, except to the extent that the Federal Government   |
| > has specifically required or approved such costs; \[A-21, Att.      |
| > J.21.b.(2)\]                                                        |
|                                                                       |
| ### A-21, continued                                                   |
|                                                                       |
| > [Rearrangement and alteration costs:]{.underline}                   |
| >                                                                     |
| > Costs incurred for ordinary or normal rearrangement and alteration  |
| > of facilities are allowable. Special arrangement and alteration     |
| > costs incurred specifically for the project are allowable when such |
| > work has been approved in advance by the sponsoring agency. \[A-21, |
| > Att. J.35.\]                                                        |
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| **OMB Circular A-87, "Cost Principles for State, Local**              |
|                                                                       |
| **and Indian Tribal Governments"**                                    |
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| > [Equipment and other capital expenditures:]{.underline}             |
|                                                                       |
| Capital expenditures for equipment, including replacement equipment,  |
| other capital assets, and improvements which materially increase the  |
| value or useful life of equipment or other capital assets are         |
| allowable as a direct cost when approved by the awarding agency.      |
| \[A-87, Att. B, 19.c.\]                                               |
|                                                                       |
| [Gains and losses on disposition of depreciable property and other    |
| capital assets and substantial relocation of Federal                  |
| programs:]{.underline}                                                |
|                                                                       |
| Substantial relocation of Federal awards from a facility where the    |
| Federal Government participated in the financing to another facility  |
| prior to the expiration of the useful life of the financed facility   |
| requires Federal agency approval. \[A-87, Att. B, 22.a.\]             |
|                                                                       |
| > [Memberships, subscriptions, and professional                       |
| > activities:]{.underline}                                            |
|                                                                       |
| Costs of membership in civic and community, social organizations are  |
| allowable as a direct cost with the approval of the Federal awarding  |
| agency. \[A-87, Att. B, 30.d.\]                                       |
|                                                                       |
| [Proposal costs:]{.underline}                                         |
|                                                                       |
| ...proposal costs may be charged directly to Federal awards with the  |
| prior approval of the Federal awarding agency. \[A-87, Att. B, 34.\]  |
|                                                                       |
| **A-87, continued**                                                   |
|                                                                       |
| [Rearrangements and alterations:]{.underline}                         |
|                                                                       |
| Special arrangements and alterations costs incurred specifically for  |
| a Federal award are allowable with the prior approval of the Federal  |
| awarding agency. \[A-87, Att. B, 36.\]                                |
|                                                                       |
| [Travel costs:]{.underline}                                           |
|                                                                       |
| > Notwithstanding the provisions of section 23, travel costs of       |
| > officials covered by that section, when specifically related to     |
| > Federal awards, are allowable with the prior approval of a grantor  |
| > agency. \[A-87, Att. B, 4l.a.\]                                     |
| >                                                                     |
| > [Note:]{.underline} Section 23 lists the following officials \--    |
| > Governor of a State, the chief executive of a political             |
| > subdivision, the chief executives of federally-recognized Indian    |
| > tribal governments, State legislatures, tribal councils, county     |
| > supervisors, city councils, school boards, the judiciary branch of  |
| > a government.                                                       |
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| **OMB Circular A-122, "Cost Principles for Non-Profit                 |
| Organizations"**                                                      |
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| > [Compensation for personal services:]{.underline}                   |
| >                                                                     |
| > Where an organization follows a consistent policy of expensing      |
| > actual payments to, or on behalf of, employees or former employees  |
| > for unemployment compensation or workers\' compensation, such       |
| > payments are allowable in the year of payment with the prior        |
| > approval of the awarding agency, provided they are allocated to all |
| > activities of the organization.                                     |
| >                                                                     |
| > \[A-122, Att. B, 7.(3)(b)\]                                         |
| >                                                                     |
| > [Organization-furnished automobiles:]{.underline}                   |
| >                                                                     |
| > That portion of the cost of organization-furnished automobiles that |
| > relates to personal use by employees (including transportation to   |
| > and from work) is unallowable as fringe benefit or indirect costs   |
| > regardless of whether the cost is reported as taxable income to the |
| > employees. These costs are allowable as direct costs to sponsored   |
| > award when necessary for the performance of the sponsored award and |
| > approved by awarding agencies.                                      |
| >                                                                     |
| > \[A-122, Att. B, 7.g.\]                                             |
|                                                                       |
| ### A-122, continued                                                  |
|                                                                       |
| > [Equipment and other capital expenditures:]{.underline}             |
| >                                                                     |
| > b\. (1) Capital expenditures for general purpose equipment are      |
| > unallowable as a direct cost except with the prior approval of the  |
| > awarding agency.                                                    |
| >                                                                     |
| > \(2\) Capital expenditures for special purpose equipment are        |
| > allowable as direct costs, provided that items with a unit cost of  |
| > \$5000 or more have the prior approval of awarding agency.\         |
| > c. Capital expenditures for land or buildings are unallowable as a  |
| > direct cost except with the prior approval of the awarding agency.  |
| >                                                                     |
| > d\. Capital expenditures for improvements to land, buildings, or    |
| > equipment which materially increase their value or useful life are  |
| > unallowable as a direct cost except with the prior approval of the  |
| > awarding agency.                                                    |
| >                                                                     |
| > \[A-122, Att. B, 15.b-d.\]                                          |
| >                                                                     |
| > [Housing and personal living expenses:]{.underline}\                |
| > \                                                                   |
| > Costs of housing (e.g., depreciation, maintenance, utilities,       |
| > furnishings, rent, etc.), housing allowances and personal living    |
| > expenses for/of the organization\'s officers are unallowable as     |
| > fringe benefit or indirect costs regardless of whether the cost is  |
| > reported as taxable income to the employees. These costs are        |
| > allowable as direct costs to sponsored award when necessary for the |
| > performance of the sponsored award and approved by awarding         |
| > agencies. \[A-122, Att. B, 19.a.\]                                  |
| >                                                                     |
| > [Memberships, subscriptions, and professional activity              |
| > costs:]{.underline}                                                 |
| >                                                                     |
| > Costs of membership in any civic or community organization are      |
| > allowable with prior approval by Federal cognizant agency. \[A-     |
| > 122, Att. B, 30.d.\]                                                |
| >                                                                     |
| > [Organization costs:]{.underline}                                   |
| >                                                                     |
| > Expenditures, such as incorporation fees, brokers\' fees, fees to   |
| > promoters, organizers or management consultants, attorneys,         |
| > accountants, or investment counselors, whether or not employees of  |
| > the organization, in connection with establishment or               |
| > reorganization of an organization, are unallowable except with      |
| > prior approval of the awarding agency.                              |
| >                                                                     |
| > \[A-122, Att. B, 31.\]                                              |
| >                                                                     |
| > [Overtime, extra-pay shift, and multi-shift premiums:]{.underline}  |
| >                                                                     |
| > Premiums for overtime, extra-pay shifts, and multi-shift work are   |
| > allowable only with the prior approval of the awarding agency       |
| > except:                                                             |
|                                                                       |
| ### A-122, continued                                                  |
|                                                                       |
| > a\. When necessary to cope with emergencies, such as those          |
| > resulting from accidents, natural disasters, breakdowns of          |
| > equipment, or occasional operational bottlenecks of a sporadic      |
| > nature.                                                             |
| >                                                                     |
| > b\. When employees are performing indirect functions, such as       |
| > administration, maintenance, or accounting.\                        |
| > c. In the performance of tests, laboratory procedures, or other     |
| > similar operations which are continuous in nature and cannot        |
| > reasonably be interrupted or otherwise completed.                   |
| >                                                                     |
| > d\. When lower overall cost to the Federal Government will result.  |
| >                                                                     |
| > \[A- 122, Att. B, 32.\]                                             |
| >                                                                     |
| > [Participant support costs:]{.underline}                            |
| >                                                                     |
| > Participant support costs are direct costs for items such as        |
| > stipends or subsistence allowances, travel allowances, and          |
| > registration fees paid to or on behalf of participants or trainees  |
| > (but not employees) in connection with meetings, conferences,       |
| > symposia, or training projects. These costs are allowable with the  |
| > prior approval of the awarding agency. \[A-122, Att. B, 34.\]       |
| >                                                                     |
| > [Publication and printing costs:]{.underline}                       |
| >                                                                     |
| > Publication and printing costs are unallowable as direct costs      |
| > except with the prior approval of the awarding agency. \[A-122,     |
| > Att. B, 41.c.\]                                                     |
| >                                                                     |
| > [Rearrangement and alteration costs:]{.underline}                   |
| >                                                                     |
| > Costs incurred for ordinary or normal rearrangement and alteration  |
| > of facilities are allowable. Special arrangement and alteration     |
| > costs incurred specifically for the project are allowable with the  |
| > prior approval of the awarding agency. \[A-122, Att. B, 42.\]       |
| >                                                                     |
| > [Selling and marketing:]{.underline}                                |
| >                                                                     |
| > Costs of selling and marketing any products or services of the      |
| > organization (unless allowed under paragraph 1 as allowable public  |
| > relations costs) are unallowable. These costs, however, are         |
| > allowable as direct costs, with prior approval by awarding          |
| > agencies, when they are necessary for the performance of Federal    |
| > programs. \[A-122, Att. B, 48.\]                                    |
| >                                                                     |
| > [Severance pay:]{.underline}                                        |
| >                                                                     |
| > Severance payments to foreign nationals employed by the             |
| > organization outside the United States, to the extent that the      |
| > amount exceeds the                                                  |
|                                                                       |
| ### A-122, continued                                                  |
|                                                                       |
| > customary or prevailing practices for the organization in the       |
| > United States are unallowable, unless they are necessary for the    |
| > performance of Federal programs and approved by awarding agencies.  |
| > \[A-122, Att. B, 49.d.\]                                            |
|                                                                       |
| Severance payments to foreign nationals employed by the organization  |
| outside the United States due to the termination of the foreign       |
| national as a result of the closing of, or curtailment of activities  |
| by, the organization in that country, are unallowable, unless they    |
| are necessary for the performance of Federal programs and approved by |
| awarding agencies.                                                    |
|                                                                       |
| \[A-122, Att. B, 49.e.\]                                              |
|                                                                       |
| > [Training and education costs:]{.underline}                         |
| >                                                                     |
| > Costs of tuition, fees, training materials, and textbooks (but not  |
| > subsistence, salary, or any other emoluments) in connection with    |
| > full-time education, including that provided at the organization\'s |
| > own facilities, at a post-graduate (but not undergraduate) college  |
| > level, are allowable only when the course or degree pursued is      |
| > related to the field in which the employee is now working or may    |
| > reasonably be expected to work, and only where the costs receive    |
| > the prior approval of the awarding agency. Such costs are limited   |
| > to the costs attributable to a total period not to exceed one       |
| > school year for each employee so trained. In unusual cases the      |
| > period may be extended. \[A-122, Att. B, 53.c.\]                    |
| >                                                                     |
| > Training and education costs in excess of those otherwise allowable |
| > under subparagraphs b and c may be allowed with prior approval of   |
| > the awarding agency. To be considered for approval, the             |
| > organization must demonstrate that such costs are consistently      |
| > incurred pursuant to an established training and education program, |
| > and that the course or degree pursued is relative to the field in   |
| > which the employee is now working or may reasonably be expected to  |
| > work. \[A-122, Att. B, 53.g.\]                                      |
| >                                                                     |
| > [Travel costs:]{.underline}                                         |
|                                                                       |
| Direct charges for foreign travel costs are allowable only when the   |
| travel has received prior approval of the awarding agency. Each       |
| separate foreign trip must be approved. For purposes of this          |
| provision, foreign travel is defined as any travel outside of Canada  |
| and the United States and its territories and possessions. However,   |
| for an organization located in foreign countries, the term \"foreign  |
| travel\" means travel outside that country. \[A-122, Att. B, 55.e.\]  |
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