Fiscal Polices, Responsibilities, & Compliances

Last Updated: December 22, 2025 2:54:17 PM PST

The individuals and organizations on this page have particular responsibilities for direct and indirect (F&A) costs incurred under sponsored projects. Find links to UCSD's sponsored project fiscal regulations, policies, and guidelines.

Links to Fiscal Regulations, Policies, and Guidelines

OMB Uniform Guidance
OMB Circular A-110 (PDF)
UCSD Policy and Procedure Manual:
- PPM 150-14 Facilities and Administrative Cost Rates Development Process & Timetable
- PPM 150-15 Facilities and Administrative Cost Rates Applicable to Research, Instruction, and Other Federal and Non-Federal Sponsored Projects
- PPM 150-40 Cost Accounting Standards Compliance
- PPM 150-42 Classification of Costs as Direct or Facilities and Administrative (Indirect)
- PPM 150-43 Accounting for Unallowable Costs
- PPM 300-51 Account Code Validation

Responsibilities in Sponsored Projects

Principal investigator/ department

Develops proposals for sponsored project funding; directs the research; assures that costs, both proposed and incurred, comply with sponsor requirements

Office of Contract and Grant Administration (OCGA)

Handles cost issues and inquiries relating to proposal development and pre-award activities; negotiates project terms and conditions

Costing Policy & Analysis

Monitors cost issues relating to campus recharge activities; develops and negotiates facilities and administrative (F&A) cost rates

Audit & Management Advisory Services (AMAS)

Advises on cost issues related to external audit, risk assessment, and other management advisory aspects; tests compliance with University, state, and federal regulations by conducting a recurring program of audit to evaluate business processes, cost activities, and the adequacy of internal controls

Controller

Establishes costing policy and serves as primary contact with the government on CAS issues; manages overall compliance issues and implementation practices for direct and F&A costs

OMB Uniform Guidance

OMB UG Cost Principles of Educational Institutions, provides principles for determining costs applicable to research and development, training, and other sponsored work performed by colleges and universities under grants, contracts, and other agreements with the federal government.

Cost Accounting Standards

The Cost Accounting Standards Board (CASB), an independent, legislatively established board within the executive branch of the federal government, provides guidelines on cost accounting practices, referred to as Cost Accounting Standards (CAS). In 1994, CASB imposed four standards on universities receiving significant awards from federal agencies. In 1996, 2 CFR 200 was revised to include the four CAS standards, and these standards became applicable to all types of federal awards. CASB imposed these standards for the following reasons:

To prevent the charging of unallowable costs to federal awards
To standardize university costing practices
To standardize requirements for recipients of federal funds

Find out more about Cost Accounting Standards.

Disclosure Statements (DS-2)

UG requires that each university disclose in writing its cost accounting practices. UCSD submitted the DS-2 to the federal government in 1996. To avoid financial penalties, it is important that the University follow its disclosed practices when developing proposals or spending federal funds.

Proposal and Award Spending Consistency

An important element of cost accounting standards is consistency in how the University estimates costs and ultimately spends federal award dollars. The means by which we estimate costs in pricing a proposal should be consistent with the cost accounting practices used in accumulating and reporting those costs. Also, it is important that similar expenditures made under similar circumstances have the same accounting treatment. For example, generally, a particular type of expense should not be charged directly in one school or department and be charged indirectly elsewhere. The key to consistency is adherence to UCSD policy and following UCSD accounting procedures.

Conflicts between University Policy and Sponsoring Agency

At times a sponsoring agency may authorize or direct a practice that conflicts with UCSD disclosed practices or a CAS requirement. These situations are rare, as most agencies are aware of, understand, and follow applicable cost accounting standards themselves. However, if you believe that what you are being directed to do may conflict with University policy, please contact SPF or the controller immediately. Either person will be glad to help you resolve the conflict with the agency.

Classification of Costs

Allowable costs are classified as either direct or indirect (F&A) costs. UG and the campus disclosure statement (DS-2) outline which costs are direct and which costs are indirect.
Costs must be classified in a consistent manner. Costs incurred for similar purposes and in like circumstances are to be consistently classified as either direct or indirect. Costs within a department and among departments, under similar circumstances, are to be treated the same.
Find out more about classification of costs in Direct and Indirect (F&A) Costs.

Allowable costs

An allowable cost is one that can be paid by your contract or grant. UCSD considers a cost to be allowable when it meets the following tests:

The cost is reasonable. That is, it reflects what a prudent person might pay.
The cost is allocable. That is, the contract or grant that paid the expense benefits from it.
The accounting treatment of the cost is consistent across the campus.
The cost is allowable as defined by UG and/ or by the terms of the particular award.

Unallowable costs

An unallowable cost is one that cannot be paid by your contract or grant. Such costs may be expressly prohibited by UG or may be considered unallowable as a result of campus policy or by mutual agreement with a governmental agency. The University has the responsibility to identify such costs and exclude them from any award billing, claim, or proposal.
Find out more about Allowable and Unallowable Costs.

Direct costs

Direct costs are those that can be charged directly to a contract or grant. Contract or grant funds are used to pay the expense, and the expense is reported to the agency on the financial status report. These costs must be allowable and must meet several other tests as well.

Indirect (F&A) costs

The term for indirect costs used by the Uniform Guidance is "facilities and administrative" (F&A) costs. F&A costs are incurred for common or joint objectives and, therefore, cannot be identified specifically or logically with a particular sponsored project or program. Allowable costs that are not determined to be direct costs will be considered F&A costs.
See Direct and Indirect (F&A) Costs and Step Through the Direct and Indirect Cost Decision for more information on direct and indirect costs.

Administrative or clerical costs

The Sept. 1, 1994, revision of OMB Uniform Guidance established the principle that administrative and clerical expenses are normally indirect costs. An exception permitted by the regulation is when the project can be designated as a major project.
Find out more about Charging Administrative and Clerical Costs as Direct.

Like and Unlike Circumstances

When costs are incurred under unlike circumstances, similar types of costs may be treated as direct under one circumstance and indirect under a differing circumstance. This does not violate the consistency requirement as long as all similar costs are treated in the same manner (in like circumstances).
For example, utility costs are usually considered an indirect expense. But at the San Diego Supercomputer Center, where utility costs represent an above-normal level of expense (an unlike circumstance), utility costs are treated as a direct expense. If you believe you have any unlike circumstance that warrants an exception, contact SPF. Criteria for identifying unlike circumstances include:

Type of cost
Beneficiaries of the cost
Percentage of the cost that benefits a particular activity
Specific needs or requirements of projects or activities
Previous classification of similar costs
Costs that are "above normal" for simliar costs on similar projects
Significant administrative or support costs that exclusively benefit a particular project

Cost Sharing

In cost sharing, the University contributes funds or resources to sponsored projects. To learn more about cost accounting requirements for cost sharing, please see 2 CFR 200.306, Cost Sharing on Sponsored Projects.

Payroll Distributions & Expense Re-budgeting

Distribution based on payroll

Certain costs, such as retirement benefits and network access for the next generation network, are identifiable to individual employees. Typically, these costs are classified as direct and charged to sponsored projects in the same percentages as individual salaries.

Expense transfers and re-budgeting

For detailed information on payroll and non-payroll expense transfers, please see Menu: Expense Transfers.