|
13.
Documenting Allocability
|
|
Connecting
Expense to the Benefited Project
|
An
expense is allocable to a project if the item being
charged, e.g., salaries, supplies, travel, student tuition,
etc., benefits the project. Allocability is one
of the cost
principles defined in A-21, and expenses that
are not allocable may not be directly charged.
|
| Allocability
is a focus of audit activity. Project expenditures
must be supported by evidence of direct benefit
to the project. The availability of funds to pay
an expense, or its inclusion in a budget, is NOT
evidence of the allocability of that expense to
the project. In addition, if an appropriate basis,
such as usage, cannot be identified at the time
of purchase to allocate the charges with relative
ease, such costs may be considered indirect
costs (vs. direct costs). |
Allocability
Scenarios |
|
For
supplies and other non-salary expenses, allocability can
usually be documented through purchase/payment records
or other files, as well as through the certification of
expenditures. A knowledgeable person in the department
must review each month's project expenditures. Any errors
or requests for clarification should be brought to the
PI's attention and, if necessary, corrected PROMPTLY.
For salaries and wages, the PI's review and certification
of project expenditures is the primary documentation of
allocability.
|
If
an expenditure statement includes an error, the
department initiates a cost transfer to move
the charge to the right account. This needs to take
place as soon as possible after identifying the
need for a correction, and be sufficient to document
the benefit to the project being charged. Transfers
are fertile ground for audit activity, and they
will be reviewed carefully -- first by UR staff,
and then often by an external auditor. One very
good reason to "Do it right the first time!"
is to avoid the level of scrutiny that a transfer,
even one that is necessary and appropriate, will
invite.
|
Cost
Transfer Checklist |
|
| A-21
allows that PIs may allocate costs among different
projects, as long as the allocation method reasonably
approximates the degree to which each project benefits.
Allocation methods must be documented in department
files or in the online transaction documentation |
Examples
of Allocation Methods |
|
| |
| |
|
|
|
|
|
