Yes, you must be able to demonstrate that direct costs of a specific award
benefit that specific project.  It is usually done by setting up a separate
account for each sponsored project.  That also satisfies the "no
commingling" requirement.  However, the phrase "conforming to generally
accepted cost  accounting practices consistently followed by the
institution" means, "don't keep your books much differently than other
similar organizations do, and whatever you do, do it the same every
time."  Clearly this translation is from a non-accountant, but if you live
by it, you will keep the auditors away!

Chuck

At 08:36 AM 8/22/01 -0500, you wrote:
>Hi, all --
>
>The finance VP at my organization has asked me a very basic grant accounting
>question, and my forte is not in post-award issues, so I'm asking you all
>for help. We are a not-for-profit health care center (not university
>affiliated, not presently conducting any grant-funded research projects,
>though we do have federal grant expenditures which approach/exceed $300K
>annually -- we are apparently right on the bubble until we can make a
>determination about some of the state flow-through awards). We have not
>(yet) negotiated a federal indirect cost rate, but we are researching that
>issue.
>
>Here is the VP's question:
>
>Are awardees of federal grants required to operate cost accounting systems
>to demonstrate that even direct costs are providing identifiable benefit to
>work for which a particular grant is awarded?  I ask because both A-21 and
>45 CFR 74 App. E, in "Basic Considerations," specify that even direct costs
>must be identified by "conforming to generally accepted cost accounting
>practices consistently followed by the institution."
>
>-----------------
>Molly Daniel
>Grants Specialist
>Planning Dept.
>Sarah Bush Lincoln Health Center
>1000 Health Center Drive
>Mattoon, IL 61938-0372
>tel. 217-258-2195
>fax 217-258-4135
>email: xxxxxx@sblhs.org <mailto:xxxxxx@sblhs.org>
>web: www.sarahbush.org <http://www.sarahbush.org>
>
>
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Herbert B. Chermside, CRA
Director, Sponsored Programs Administration
Virginia Commonwealth University
PO BOX 980568
Richmond, VA  23298-0568
Express Delivery Only:
 Sanger Hall, Rm. 1-032A
 11th & Marshall Streets
 Richmond, VA  23219
Voice:  804-828-6772
Fax     804-828-2521
OFFICE e-mail   xxxxxx@VCU.EDU
Personal e-mail xxxxxx@vcu.edu
http://views.vcu.edu/ospa/

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