Accounting Office

Direct Costs: Fringe Benefits

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The Uniform Guidance defines Fringe Benefits in §200.431 as follows:

Fringe benefits are allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages. Fringe benefits include, but are not limited to, the costs of leave (vacation, family-related, sick or military), employee insurance, pensions, and unemployment benefit plans. Except as provided elsewhere in these principles, the costs of fringe benefits are allowable provided that the benefits are reasonable and are required by law, non-Federal entity-employee agreement, or an established policy of the non-Federal entity.

Consistent with the UCPath goals of standardizing processes and increasing efficiency, UCR has established fringe benefit rates that are assessed based on a percentage of an employee's gross salary. 

Additional Resources

• UCR Research and Economic Development - Proposal Preparation & Submission 
• BFS Payroll Coordination - Benefits and Assessments 

Benefits for Graduate Students

Fee/tuition remission is considered a fringe benefit, and is automatically charged to the same funding source that is charged for the student’s salary in the payroll system.

The Graduate Division's Graduate Student Employment webpage describes the regulations and processes related to the employment of graduate students.

Direct Costs: Equipment

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Generally speaking inventorial equipment is any movable tangible property with an acquisition cost exceeding the inventorial threshold of $5,000 with an expected life of one or more years. It must be freestanding, complete in itself, and not lose its identity when affixed or installed into another property. If equipment is a product of many component parts it must maintain its original form and not be re-purposed into different forms or split into separate entities. If any uncertainty exists with classifying inventorial equipment please contact Equipment Management for guidance.

Special purpose equipment, such as medical or research tools directly related to project objectives, is generally an allowable direct cost. However, if not included in the award budget, prior approval from the awarding agency may be required. General purpose equipment, like office furniture, printers, or IT systems, is typically not allowed as a direct cost, as these are covered by indirect costs (Facilities and Administration, or F&A).

Equipment costs are excluded from the Modified Total Direct Cost (MTDC) and are exempt from indirect costs.

If equipment is used across multiple projects, its cost should be allocated based on the benefit to each project (e.g., hours used). Departments must maintain documentation to support this cost allocation.

Fabrication of Equipment

A fabrication is a piece of equipment, as defined above, that is physically constructed through university activities and intended for university use upon completion. It is not a simple assembly of parts or a deliverable item. The costs of components and purchased services directly related to the fabrication are exempt from indirect costs. However, salaries, wages, benefits, maintenance agreements, and repair costs associated with the fabrication are not exempt and will incur F&A costs. As with other equipment, the title to fabricated equipment remains with UC Riverside unless otherwise specified in the award.

Management and Disposition of Equipment

University and contracting/granting agencies' regulations require campus departments to conduct periodic physical inventories of assigned equipment and to verify and update departmental equipment records.

The disposition of equipment after an award ends may be defined in the award itself. If no guidance is provided in the award, the title to the equipment vests in UCR, per the Uniform Guidance §200.313.

Capital Expenditures

Capital expenditures for improvement to land, buildings, or equipment may be allowable as direct costs if they are budgeted or otherwise approved in writing by the Federal agency. Allowable capital expenditures include costs for installing equipment, such as the temporary removal and replacement of wall sections to place equipment in its permanent location, or the costs of connecting utility lines, replacing finishes and furnishings, and installing any accessory devices required for the equipment's proper and safe utilization. Routine maintenance for buildings and equipment are usually captured under indirect costs.

Direct Costs: Travel & Fly America

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Travel costs, including costs of transportation, lodging, meals, and incidentals, are an allowable cost on Federal awards. Employees should be on travel status and on official business related to the Federal award (UG §200.475). The employee's travel should directly benefit the project goals. In most cases, this means an employee should be paid through the grant in order to charge travel to it. Documentation for travel costs charged to a Federal award must justify:

1. Participation of the individual is necessary to the Federal award
2. The costs are reasonable and consistent with UCR's travel policy

Airfare

When booking travel for Federal award or any other university business, only coach or economy-class tickets should be purchased. This policy applies to all travel regardless of the purpose or the fund source. Use of business or first-class may be authorized under the following circumstances:

• Business or first-class is the only service offered between two points;
• The use of coach class would be more expensive or time consuming, such as unduly long layover when making connections or an unnecessary hotel expense;
• An itinerary involves overnight travel without an opportunity for normal rest before the commencement of working hours; or
• The use of business or first-class travel is necessary to reasonably accommodate a disability or medical need of a traveler.

Exceptions should be justified, documented, and approved in advance by an administrator with an official Delegation of Authority granted by the Chancellor (usually a Dean, depending on the organizational structure of the unit).

Ancillary charges for airfare are sometimes allowable. Provided that the charges for these ancillary expenses are allowed by the funding source, the following airline charges may be reimbursable under UCR policy:

• Checked and carry-on bag fees
• Early check-in (i.e., Southwest Airlines Early Bird Check-in)
• Economy-class seat selection fees

Foreign Travel - Fly America Act

Federal Travel Regulations require that U.S. flag air carriers are used for travel that is to be reimbursed from federal grants and contracts. This policy is called the Fly America Act.

Before making travel arrangements for air travel for university business, find out about the funding type and, if applicable, ensure the booking is in accordance with the Act. The following information is provided to help determine if the airfare expenses comply with the federal regulations:

• Fly America Cheat Sheet provided by the U.S. General Services Administration.
• List of Certified U.S. Flag Air Carriers.
• Ticket cost and convenience are NOT exceptions to the Fly America Act.
• Compliance with the Fly America Act is the responsibility of each department.
• Authorized exceptions must include additional documentation, and may require pre-approval and a certification.

Exceptions to the Fly America Act

Responsibilities of Research Administrators

• Familiarize yourself with federal regulations and UCR’s travel policies, and stay updated on any changes.
• Know UCR’s travel reimbursement systems and forms, and complete any required training.
• Review the award terms and budget details for each project to determine who is allowed to travel, when they may travel, and if prior sponsor approval is required.
• Ensure the PI obtains timely prior approval from the sponsor if needed.
• Confirm that all travel is approved in writing by the PI before making any arrangements.
• Verify that the traveler is authorized to travel under the project or was specified in the budget (e.g., participant support travel).
• Ensure all reimbursable travel costs are allowable, reasonable, and consistent with UCR’s travel policy.
• Confirm that the most economical transportation method is used, and understand when exceptions to economy-class travel may be allowed under UCR policy.
• Determine allowable amounts for lodging, subsistence, and other expenses, and the type of reimbursement (actual costs, per diem, or a combination).
• Document the business purpose, trip dates, and specify personal days, ensuring they are excluded from reimbursement.
• Advise travelers to avoid paying for others' expenses during travel.
• If any trip costs were covered by another institution, ensure this is documented to prevent double reimbursement.

Direct Costs: Recruiting Costs

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Excerpts from UG -§200.463

(c) Where relocation costs incurred incident to recruitment of a new employee have been funded in whole or in part to a Federal award, and the newly hired employee resigns for reasons within the employee's control within 12 months after hire, the non-Federal entity will be required to refund or credit the Federal share of such relocation costs to the Federal Government.

(d) Short-term, travel visa costs (as opposed to longer-term, immigration visas) are generally allowable expenses that may be proposed as a direct cost. Since short-term visas are issued for a specific period and purpose, they can be clearly identified as directly connected to work performed on a Federal award. For these costs to be directly charged to a Federal award, they must:

1. Be critical and necessary for the conduct of the project;
2. Be allowable under the applicable cost principles;
3. Be consistent with the non-Federal entity's cost accounting practices and non-Federal entity policy; and
4. Meet the definition of “direct cost” as described in the applicable cost principles.

Generally Allowable Costs

Visa application fees for a researcher being recruited, whose skills are deemed critical and necessary for the conduct of the project. Five types of temporary non-immigrant visas are used to bring a researcher to the U.S. for a specific period and purpose:

• J-1 Exchange Visitor
• H-1B Temporary Worker – Specialty Occupation
• TN Temporary Worker – Trade NAFTA
• E-3 Certain Specialty Occupation Professionals from Australia
• O-1 Extraordinary Ability

Generally Unallowable Costs

The following fees are considered unallowable to a Federal award:

• Premium processing fees (e.g. Expedited or overnight fees, etc.)
• Renewal application fees
• Application fees for changes in visa type
• Dependent application/processing fees

If the employee resigns within 12 months of recruitment for reasons within the employee’s control, the associated relocation costs, including any visa costs, must be refunded or credited to the sponsor.

Direct Costs: Participant Support

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Uniform guidance uses the following definition and description for participant support:

Participant support costs are direct costs for items such as stipends or subsistence allowances, travel allowances and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences or training projects (UG §200.1).

A participant is a non-UCR employee eligible to receive services or training in connection with workshops, conferences, seminars, symposia, or other short-term instructional or informational activities. Participants can include students, scholars, scientists from other institutions, private sector individuals, teachers, and government personnel.

Participants do not perform work for the project and are not required to provide any services or deliverables in return for participant support allowances.

Participant Support does not include:

• Fees for speakers or trainers
• Expenses for the PI or UCR employees attending training or conferences
• Incentives for research subjects (e.g., gift cards or stipends)

Participant support costs are only allowable on a research project with prior approval from the awarding agency (UG §200.456) when the project includes an educational or outreach component.

For Kirschstein-NRSA programs and Education Grants (e.g., R25), the terms trainees, trainee-related expenses, and trainee travel are used instead of participant support.

Budgeting and Managing Participant Support Costs

Participant support must be budgeted in a separate category labeled as Participant Support. Funds in this category are restricted and accounted for separately. At UCR, a separate expense account is set up for participant support, and these costs are exempt from indirect costs. Under the Uniform Guidance, participant support costs are excluded from Modified Total Direct Costs (MTDC) and exempt from F&A costs.

If the sponsor allows, funds may be transferred into the Participant Support category but cannot be transferred out without prior sponsor approval (UG §200.308). If prior approval is not obtained, unspent funds must be returned to the sponsor at the end of the project.

PIs and departmental research administrators are responsible for reviewing award documents, monitoring expenditures, and securing written sponsor approval for any rebudgeting when required.

Direct Costs: Materials and Supplies

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Materials and supplies are expendable items necessary to carry out the work of the sponsored project. Examples of items typically listed in this budget category include laboratory supplies, clinical supplies, glassware, chemicals, regents, and computing devices.

Costs for materials, supplies, computing devices, and fabricated parts that are necessary to complete the objectives of a project are allowable on a Federal award (UG §200.453). Materials and supplies should be charged at their actual prices, less any discounts or rebates.

General purpose office supplies and materials used by departments for routine activities should not be directly charged to an award, unless specifically permitted by the sponsor. This includes items such as office supplies, cleaning materials, and copy paper.

Computing Devices

Computing devices are machines used for acquiring, storing, analyzing, processing, and publishing data and other information electronically. This includes accessories or peripherals for printing, transmitting, receiving, or storing electronic information.

The cost of computing devices can be charged as a direct cost to an award if the devices are essential and allocable to the project, even if not solely dedicated to it. Departments must document how each computing device is necessary and programmatically essential to the project and ensure that cost allocation methods used are reasonable. Computing devices cannot be purchased for convenience or preference.

If the cost of a computer exceeds $5,000, it should be classified as computing equipment.

Residual Inventory

If a department overestimates the supplies needed for a project, resulting in unused materials at the end of the project period, any residual inventory exceeding $5,000 that isn’t needed for another Federal award must be returned to the sponsor (UG §200.314).

Direct Costs: Contractors and Consultants

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When collaborating with an individual, company, or organization on a sponsored project, UCR must determine the appropriate type of relationship for the work. Different forms and requirements apply depending on the relationship.

• Contractor: A contractor provides goods or services through a legally binding agreement. The university controls the outcome of the service, but not the manner of performance. Contractors are not subject to federal compliance requirements (e.g., IRB, IACUC).

• Consultant: A consultant is a professional or technical expert who provides advice to the university. The university does not control the result or how the service is performed. Consultants do not use UCR facilities or resources and handle their own taxes on earnings.

Note: Even if an individual or organization refers to themselves as a consultant, they may not meet UC's definition of a consultant.

A Purchasing Agreement should be completed for both Contractors and Consultants.

Required Form*:

• Source Selection and Price Reasonableness Justification Form (SSPR) - Forms and Resources
  This form must be completed by the requesting Department for all federally funded purchases that are ≥$10,000.00 & non-federally funded purchases ≥$100,000.00, to substantiate the appropriateness of source selection and price reasonableness.

*Please check with Procurement Services for requirements and form inquiries.

Consultants on NIH Grants: Key Personnel?

Typically, consultants are not considered senior/key personnel. However, if they play a significant and measurable role in the scientific development or execution of a project, they should be designated as senior/key personnel and included in the Senior/Key Person Profile Component.

In the budget justification, grantees must outline the consultant's services, including the number of consultation days, compensation rate, travel, per diem, and other associated costs.

For all personnel designated as senior/key, including consultants, biosketches and effort levels (greater than zero person months) are required (NIH FAQs – Senior/Key Personnel, Consultants).

Direct Costs: Subawards

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Since the implementation of Uniform Guidance, pass-through entities are directly accountable to the sponsor for subrecipient performance and compliance, requiring closer monitoring. Pass-through entities must ensure that subrecipients use the subaward for authorized purposes, meet performance goals, and comply with Federal statutes, regulations, and subaward terms (UG §200.332).

Subaward Invoices

In addition to department fiscal approvers, Principal Investigators (PIs) are responsible for approving invoices related to sponsored projects, including subrecipient invoices for payment. 

Project and invoice monitoring includes the following:

• Reviewing invoices against the approved budget and verifying that costs are appropriate for the work performed.
• Ensuring costs align with applicable cost principles.
• Verifying that invoicing occurs according to the schedule outlined in the subaward's terms and conditions.
• Ensuring subrecipients submit a final, marked "final" invoice for project expenses at the project's conclusion.

Fixed Amount Subawards

Fixed amount awards means a type of grant or cooperative agreement under which the Federal awarding agency or pass-through entity provides a specific level of support without regard to actual costs incurred under the Federal award. This type of Federal award reduces some of the administrative burden and record-keeping requirements for both the non-Federal entity and Federal awarding agency or pass-through entity. Accountability is based primarily on performance and results. See §§ 200.102(c), 200.201(b), and 200.333.

With prior written approval from the Federal awarding agency, a pass-through entity may provide subawards based on fixed amounts up to the Simplified Acquisition Threshold ($250,000) provided that the subawards meet the requirements for fixed amount awards in § 200.201 .  In order for a pass-through entity to provide a fixed amount subaward, it must meet the following criteria:

• Prior written approval for a fixed amount subaward received from the sponsor;
• The project scope is specific;
• Adequate cost, historical, or unit pricing data is available to establish a fixed amount award based on a reasonable estimate of actual cost; and
• Payments are based on meeting specific requirements of the Federal award.

Under a fixed amount subaward, milestones/deliverables are established, and each assigned a lump sum amount. As the subrecipients meet those milestones or their deliverables are accepted, they may invoice for the corresponding amounts. 

Note: A fixed amount award cannot be used in programs which require mandatory cost sharing or match.

Indirect Costs

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Indirect costs, also referred to as Facilities and Administrative (F&A) costs, overhead, or research operating costs, are outlined in the UC Contract and Grant Manual, Chapter 8-100. This chapter provides the University's general policy on indirect costs, which are defined as follows. 

Facilities and administrative (F&A) costs are the indirect costs of conducting research, instruction, or other sponsored activities that cannot be easily attributed to a specific sponsored project. When seeking the reimbursement of indirect costs on a sponsored project, the University is recovering for costs already spent to support these activities.

Examples of indirect costs include grant administrative services, lab operations and maintenance, depreciation and debt services taken on for new construction to provide researchers with modern facilities. University negotiates F&A rates with the Department of Health and Human Services and these rates are reflected in the federally approved F&A Rate Agreement. The university seeks to apply negotiated F&A rates to all extramurally funded projects. Click here to learn about UCR-specific Indirect Cost (F&A) Rates 

UC policy requires recovery of all costs, direct and indirect, associated with extramurally funded research. Recouping the full, real costs of research is essential to maintaining the operations of a research university.