The Uniform Guidance (UG)** governs costs charged either directly or indirectly to the agency. This is reinforced by the Administrative Rules and Procedures of NMSU and the Business Procedures Manual (BPM).Any cost charged to an agency must satisfy ALL the following criteria and must be:
- ALLOWABLE as defined by the UG and/or by the terms of the particular award.
- ALLOCABLE, that is, the project that paid the expense must benefit from it.
- REASONABLE, that is, the cost reflects what a “prudent person” might pay.
- CONSISTENT with costs charged in similar circumstances to other sponsored projects.
** 2 CFR Chapter I, Chapter II, Part 200, et. al. Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards
The UG requires that universities adhere to a set of standards established by the Cost Accounting Standards Board (CASB). The Board’s 19 standards and rules, known as the Cost Accounting Standards (CAS), were established to achieve uniformity and consistency in cost accounting practices.
The standards require consistency in:
- Estimating, accumulating and reporting costs
- Allocating costs incurred for the same purpose
- Identifying unallowable costs
- Using the same accounting period for estimating, accumulating and reporting costs
In addition to the preceding, federal contracts fall under greater scrutiny.
- Federal Acquisition Regulation (FAR) is the underlying regulation that applies to Federal Contracts
- Defense Acquisition Regulations System (DARS) develops and maintains acquisition rules and guidance for Federal Contracts
- Defense Federal Acquisition Regulation Supplement (DFARS) applies to purchases and contracts by Department of Defense (DoD)
Award terms and conditions take precedence over the cost principles. For example, although travel is defined as allowable under the UG, a particular award may designate travel, or more likely foreign travel, as unallowable and may not be charged to the award.
Charges that are defined as indirect by the UG might be allowed as direct charges if it can be shown the charge is integral to the award’s scope of work and CAS justification is provided.
- To request approval, complete a CAS justification form when submitting an award packet to OGC. Including these items in the proposal assists in the review/approval process so they are reflected in the approved budget as an allowable direct charge.
- Must be complete and cost-sharing arrangements documented and approved during the submission process.
- All award terms and conditions “flow down” to the recipients of subawards, e.g. a subcontract to fund a collaborator at UNM must also comply.
The UG states that the following expenditures require agency approval:
- Administrative Salaries (200.413)
- Capital Equipment (200.439)
- Computing Devices (200.453)
These items should be clearly stated in the proposed/approved budget so that additional justification is not required. Further justification may be warranted in order to comply with audits.
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