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The following topics describe unallowable costs, definitions, examples/ explanations to help researchers manage federal grants and cooperative agreements, as well as contracts. The post-award staff provide projections of costs, prepare budgets and budget changes, prepare salary plans, oversee grant regulations, prepare financial reports, and act as your liaison to central administration.

Transferring/Charging Expenditures Appropriately

Journal Vouchers or Other Transfers

Transfers from one federal project to another federal project are not allowable unless the projects are related as to scope of research and must be justified when requested . It does not include non-competing continuations and renewals when the agency/sponsor grant number does not change.

Transfers from general funds or other miscellaneous funds must include detailed and reasonable explanation as to why charges were not initially placed against the inappropriate account. If charges were directly billed or placed through standing orders, explanations are required documenting the necessity of not charging the appropriate grant initially. To avoid unnecessary transfers (on proposals not yet awarded), an investigator should request an Advanced Fund Number.

Advanced Fund Number

If the award has not been received from the sponsor and a fund number has not yet been established, an Advanced Fund Number can be requested through the College's Grants and Contracts Office in 201 Henderson. The department/center must feel confident that the project will be funded and be effective for the date that the investigator has indicated. If the proposed project is not effective for the particular time that charges were incurred or it is not funded, the department/center would be responsible for all costs that were incurred. If you have had the practice in the past of charging general funds because a grant has not yet been funded and then later charging the grant by journal voucher, this would eliminate the duplication of paperwork.

Factors for Charging Grants Appropriately

  1. Placing expenditures must be given consistent treatment through application of generally accepted accounting principles and appropriate to the circumstances.
  2. Always provide a detailed description of the purchase/charge. This provides approvers and auditors reasonable information needed to determine if charge is allowable (grant related).
  3. Expenses should be considered a necessity to operate the research in aprudent and efficient manner and be reasonable and allocable under cost principles.

Budget Categories and Stipulations

For ALL Miscellaneous Funds refer to specific sponsor requirements and regulations

Postage

Is it daily or bulk mailing? Daily postage is not allowable. Shipping charges are only allowable if directly related with the research project. Surveys/bulk mailings are allowable. Postage should be described on the proposal budget to assure allowability.

Telephone

(long-distance) Dedicated phone lines should be established for use on the project. If not, researchers must log all appropriate calls in relation to the project to include purpose, contact name and date (this would include faxes). This is necessary documentation required if audited, and could be required for approval of a transfer request.

Telephone equipment rental/installation charges

In order for these types of charges to be allowable, FEDERAL guidelines indicate that they should be listed in the proposal budget as integral to the operation of research. Budgets for which charges are placed and do not have prior approval, will require justification on file and are susceptible to disallowance.

Standing Orders

If a standing order is used to purchase expenditures on miscellaneous funds, generally it should only be used for emergency purposes. Unless a project has unusual specific ordering requirements, individual orders should be placed to allow verification and allowability of the purchase.

Visa Card Purchases

These charges must be reconciled against the appropriate account at the time of resolution. If reconciled incorrectly, an appropriate explanation must be included with the request to transfer.

Salary & Wage Transfers

If requesting a transfer over 30 days on federally funded projects, a written justification is required explaining the unusual circumstances *which delayed the appropriate charge to be made within 30 days.
*Due to the University effort verification system, reasonable explanations for exceptions over 30 days must be valid, accurate and include documentation.

Example: Joan thinks it would be nice to have music playing while her researchers conduct experiments in the laboratory because it would enhance their performance. Joan wants to purchase a CD player and CD's. Allowable, NO!

Example: Joan would like to purchase t-shirts for all of her research staff with a logo in reference to their research. Allowable, NO! Example: Joan wants to take her research group to lunch and talk about the project and then request it be charged against the project. Allowable, NO!

Sabbatical Leave Costs

Costs/salary while on leave of absence are allowable provided the University has a consistent policy for persons engaged in research or instruction. Please Call your Human Resource Rep for salary information and Val Patrick of the Research Office in regard to effort charged to the Research budget.
According to University Policy on the regulations regarding use of support funds and receiving outside compensation during sabbatical leaves of absence, " A Faculty Member may Augment the Sabbatical Leave Stipend (67%) with funds from a Grant or Contract if APPROVED by Both the Dean (or the Senior Vice President for Research and Dean of the Grad School) and with Written Approval from the Granting Agency . In No Case Shall the Total Exceed the Amount of a Normal Full Salary of the Individual for the Period of Leave." For more information, please see: http://guru.psu.edu/policies/OHR/hrg15.html

Fines, Tickets, Penalties

Not Allowable on Federal Funds Unless Unusual circumstances are Involved.

Example: Researcher's were at an expected launching of a shuttle and due to inclement weather the launching was delayed; grant personnel associated with the launching had to change their air flight arrangements and were penalized by the airline. This Would Be Allowable. In other words, fines and penalties out of your control, could be allowable dependent upon the situation. Instances must be considered on a case to case basis.

Trainee Grants

Trainee expenses can not be re-budgeted for other costs, but "other costs" budget categories can be re-budgeted into trainee expenses. In other words, tuition/fees and stipends cannot be re-budgeted. Also, these charges are not charged indirect costs. Department/Centers are responsible for managing the allowable per trainee costs and must not exceed the designated amounts without approval. Justification would be required in case of an audit. For more information, see the following Web site: https://researchtraining.nih.gov/programs/training-grants/T32

Equipment

An article of non-expendable tangible personal property having a useful life of more than 2 years and an acquisition cost of $500 or more per unit. Capital Equipment: Unit cost of $5,000 or more.
Equipment SHOULD NOT be purchased in the FINAL (6) months of a federally funded project. A reasonable justification will be required.

Equipment including Fabrication

Expenditures for general purpose equipment which would be treated as direct costs for the project/program are unallowable, unless the equipment is primarily used in the actual conduct of the research. For any item with an acquisition cost of $5,000 or more, the Federal Government may request that the title be transferred.(Refer to FDP1996)

General Purpose Equipment

Equipment, the use of which is not limited to "special purpose". Examples of general purpose equipment are: office equipment/furnishing, printing/copying, motor vehicle, automatic data processing and air conditioning. NOT allowable on federal funds without prior approval.

Special Purpose Equipment

Equipment that is used only for research, medical, scientific, or other technical activities.

Maintenance expenses and replacement parts are not classified as equipment. System software when ordered in conjunction with a new piece of equipment can be considered part of the equipment (coded and capitalized accordingly). An independent software package such as word processing or spreadsheet software is subject to the University's indirect costs and coded as software. Equipment on Conference Grants must be rented and necessary. Equipment may not be purchased.

Fabrication of Equipment

(Check GURU for updates on policy.) The materials and other associated costs in the construction of a piece of CAPITAL equipment. Permission must be received from the Property Inventory Department to code orders fabrication (code 705) and the approved copy must be sent to the Financial Office. After construction, Property Inventory must be notified. The item then will be inspected and evaluated for compliance with the University's definition of capital equipment and tagged. If construction has taken place and orders were not coded fabrication, the department must provide a log of all costs and sources of funding in the construction. A summary of associated labor costs to be capitalized is also required. (Property Inventory will inspect the equipment and then prepare the journal entry to capitalize the items).

Conditions of Travel Arrangements Charged to a Federally Sponsored Project

It is NOT allowable when an employee makes travel arrangements and is aware that the travel will be reimbursed from another source or that he/she will be reimbursing the budget for a trip that is not grant related . Grant funds should not be used and would be subject to audit.

Foreign Travel

Federal grants or Cooperative Agreements no longer require prior approval, but still have specific regulations. The traveler must use a US Flag carrier unless proof that such a carrier is not available or agency approval is obtained in writing. Cost, convenience, and/or Personal Preference is not an acceptable justification for use of a foreign carrier (FDP1996)

Travel Reimbursement (Federal Grants)

The individual seeking reimbursement must be working on the project which is generally evidenced by his/her effort being charged/paid by the project. This may not apply to a Principal Investigator or non-university personnel performing duties directly associated with the grant but contributing their time to a project. Under no circumstances can an individual receive travel support from one project and be paid 100% effort from another project. Teaching assistants who are spending a portion of their effort toward a particular project may also charge travel support.

Group Meeting Expenses or Group Meals (Federal Funds)

Penn State employees, Individual and Groups are only allowable if on travel status. There is no such thing as a working lunch or business meeting . Example: Expenses of investigators/project directors or other employees who are not on travel status , serving as hosts, including interviewing prospective candidates, or otherwise participating at meals that are primarily social occasions involving speakers or consultants are not allowable . The cost of the consultant/speaker meal is allowable or any Non-PSU employee or federal employee.

Entertainment, amusement, diversion, and social activities and any costs directly associated with such costs (such as tickets to shows or sporting events, meals, lodging, rentals, transportation, and gratuities) are unallowable.