Here's what the accountants may be thinking. When you create the F&A rate (this is VERY simplistic, but the point is real), you divide (research) expenses on one dimension between direct and indirect, and on a second dimension between externally paid and internally paid. So, if you absorb F&A costs to meet cost sharing requirements rather than collecting them, the result is, theoretically, a reduction in the rate you can claim. However, in reality, the effect is vanishingly small -- but because it is there, it is one more argument for not reducing or waiving F&A reimbursements unless there is a very good reason to do so. Cost sharing, in my opinion, is a good reason, because you are going to cover those costs anyway, and not recovering them is easier (and harder to pinpoint in the system!) than ponying up direct costs of some sort. Are your outside auditors well versed in F&A rate proposal creation? Recently this listserve heard from someone whose auditors did not comprehend that federal grants are "assistance", and thought uncollected F&A was a "loss", in the sense of not being paid the full costs of something being done for someone, rather than simply a reduction in the amount assistance to get done something they would have done anyway if they had the funds. Chuuck At 01:47 PM 4/23/2004, you wrote: >Dear Chuck, thanks, this is how I see the issue; however, my Accounting >staff has gotten a preliminary read the other way from our outside >auditors. If the final answer my Accounting office accepts goes the >"wrong way" (saying the foregone indirect as a cost share reduces the >subsequent indirect cost proposal, lowering the rate), I will be in need >of references to OMB circulars or some such to win the day. Please stay tuned. >Thanks, Dan Snyder > >Mr. Dan Snyder >Administrative Director >Patrick Center for Environmental Research >Academy of Natural Sciences >1900 Ben Franklin Parkway >Philadelphia, PA 19103-1195 > >Phone: (215) 299-1065 >FAX: (215) 299-1079 >xxxxxx@acnatsci.org >http://www.acnatsci.org/research/pcer/ > > >>> xxxxxx@VCU.EDU 04/23/04 01:38PM >>> >Someone got it right: "since no actual indirect costs are involved in the >cost share, only foregone revenue, the cost share has no effect on the >subsequent indirect cost proposal." > >Indirect costs are real costs. You pay them. And they apply to all like >(research, education, other) projects, no matter what external agency funds >the projects. Whether or not you get reimbursed for them makes no >difference in how you count them in your proposal for setting a >reimbursement rate. > >NEVER let anyone confuse the indirect costs you spend, and the >reimbursement you may (or may not) get to cover these already paid costs. > >Chuck > > >At 09:00 AM 4/23/2004, you wrote: > >Does foregoing indirect costs to provide cost sharing have any effect on > >our subsequent indirect cost proposal? For example: We are preparing a > >proposal to a state agency that requires cost sharing. They are willing to > >accept foregone indirect costs as a form of cost sharing. So, we will > >only charge an indirect cost rate of 10% MTDC, which is well below the > >rate negotiated with our cognizant federal agency. > > > >So far, so good. However, the question has arisen here internally as to > >whether this form of cost sharing has any effect on the next indirect cost > >proposal we prepare for our cognizant federal agency. One view is that > >since we promised these foregone indirect costs as cost sharing to the > >state agency, we must deduct the amount of indirect cost recovery foregone > >from our stated indirect costs in the next proposal to the cognizant > >federal agency. The other view is that since no actual indirect costs are > >involved in the cost share, only foregone revenue, the cost share has no > >effect on the subsequent indirect cost proposal. > > > >We are in the process of tracking down information to enlighten our > >internal debate, and would appreciate input from you experts who inhabit > >this list! Thanks for any help. > > > >Mr. Dan Snyder > >Administrative Director > >Patrick Center for Environmental Research > >Academy of Natural Sciences > >1900 Ben Franklin Parkway > >Philadelphia, PA 19103-1195 > > > >Phone: (215) 299-1065 > >FAX: (215) 299-1079 > > > > > >====================================================================== > > Instructions on how to use the RESADM-L Mailing List, including > > subscription information and a web-searchable archive, are available > > via our web site at http://www.hrinet.org (click on "Listserv Lists") > >====================================================================== > >Herbert B. Chermside, CRA >Special Asst. to VP-Research >Virginia Commonwealth University >PO BOX 980568 >Richmond, VA 23298-0568 >Voice: 804-827-6036 >Fax 804-828-2051 >e-mail xxxxxx@vcu.edu > > >====================================================================== > Instructions on how to use the RESADM-L Mailing List, including > subscription information and a web-searchable archive, are available > via our web site at http://www.hrinet.org (click on "Listserv Lists") >====================================================================== > > >====================================================================== > Instructions on how to use the RESADM-L Mailing List, including > subscription information and a web-searchable archive, are available > via our web site at http://www.hrinet.org (click on "Listserv Lists") >====================================================================== Herbert B. Chermside, CRA Special Asst. to VP-Research Virginia Commonwealth University PO BOX 980568 Richmond, VA 23298-0568 Voice: 804-827-6036 Fax 804-828-2051 e-mail xxxxxx@vcu.edu ====================================================================== Instructions on how to use the RESADM-L Mailing List, including subscription information and a web-searchable archive, are available via our web site at http://www.hrinet.org (click on "Listserv Lists") ======================================================================
