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4330 The Indirect Cost Rate Used by Universities to Allocate Indirect Costs to a Title IV-E Contract

Title IV-E Training Contracts Financial Handbook August 2009

Indirect Costs

An indirect cost:

  •  benefits more than one cost area or department; and

  •  cannot be readily identified with a particular final cost area without effort disproportionate to the results achieved.

A cost may not be allocated to a federal program as an indirect cost if any other cost incurred for the same purpose, in like circumstances, has been charged to the federal program as a direct cost.

Indirect Cost Rates

Indirect costs are normally charged to federal programs by the use of an indirect cost rate. If a university desires to allocate indirect costs to the Title IV-E contract, university staff must prepare an indirect cost rate proposal and related documentation, in accordance with OMB Circular A-21, Cost Principles for Educational Institutions.

Indirect cost rates are addressed in Uniform Grant Management Standards (UGMS) (as adopted June 2004):

  •  Appendix C: State/Local-Wide Center Service Cost Allocation Plan; and

  •  Appendix E: State and Local Indirect Cost Rate Proposals.

The federally approved Indirect Cost Rate Agreement and related documentation must be retained for audit, in accordance with federal requirements for records retention.

Copies of the federally approved Indirect Cost Rate Agreement and documentation must be provided to the DFPS contract manager.

A copy of the federally approved Indirect Cost Rate Agreementmust accompany the annual contract renewal submission.

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