Direct Costs
All direct costs charged to sponsored projects awarded to The University of Texas must be allowable, allocable, necessary and reasonable for carrying out the objectives of the sponsored project as defined in Uniform Guidance (2 CFR 200 Subpart E—Cost Principles). To be consistent in managing direct costs, the University extends these requirements to both federal and nonfederal sponsors. Uniform Guidance defines direct costs as follows:
Direct Costs (e.g. salary, fringe benefits, and materials and supplies) can be identified specifically with a particular final cost objective or can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect (F&A) costs (200.413).
See the Selected Items of Cost (PDF) for a details on specific items related to direct costs.
Cost Allocation
Allocation is the process of assigning a cost, or a group of costs, to one or more projects. If a cost benefits two or more projects, the cost must be allocated to (i.e. shared between) the projects based on the proportional benefit to each project. If the exact proportions cannot be reasonably determined because of the interrelationship of the work involved, then the costs may be allocated using one of the cost allocation methodologies described in the Code of Federal Regulations (§200.405(d)).
The basis for the allocation methodology chosen should be documented at the time the cost is incurred. The allocation should also be approved in advance by the Principal Investigator (PI) of the projects to which the costs are allocated. When it is not possible to allocate costs to the benefiting sponsored projects at the time when the goods or services are purchased, costs must be recorded in a non-sponsored account instead of being charged to a sponsored project (§200.405(c)). The redistribution of these costs to a sponsored project is a cost transfer (VT6).
See the Cost Allocation Quick Guide (PDF) for details.
Budget Transfers, VTC and IDC Adjustments
Note: Facilities and Administration Costs (F&A) are also referred to as Indirect Costs, or Overhead
VTC documents transfer the budget from one sub account to another within the same budget group. Certain restrictions apply when processing a VTC budget transfer on a Sponsored Project account. For details, see the Budget Transfers on 26 Accounts Guidance (PDF).
Financial Closeout for Post-Award
Closeout is the process of ensuring that expenditures and income are finalized on accounts and that no further action is anticipated.
Closing Timeline
90 Days Before Funding Period End Date
PI and department contact receive an automatic email notifying that the account is ending. At this time, the PI should ensure that:
- Expenditures are as expected
- All project costs are incurred by the project end date
- Encumbrances will be finalized
- Salary allocations are moved to other funding sources at project end
- Any required cost share is documented
Review the accounts to determine:
- If an extension is needed
- If any budget transfers are needed
- If any salary transfers are needed from departmental accounts, including stop gap accounts
- That all cash advances are reconciled
- That all subaward and contractor invoices have been received and paid
Costs can continue to post to the project for one month after the end date, including payroll and payments for expenditures incurred before the end date. During this time, the PI and department can also make any cost transfers necessary to correct errors.
The Post-Award team will also be looking at accounts to help identify potential issues so they can be resolved in a timely manner.
At Period End Date
PI and department contact receive an email on the status of the account. This email will include current expenditure information and will encourage the PI and department to finalize expenditures.
Before Final Invoice/Final Reports Due Date
- The Post-Award team will prepare final invoice/final financial reports
- Verify that IDC has earned appropriately
- Send email to PI/department with final invoice/final financial report amounts before submitting final invoice/final financial report
- Submits final invoice/final financial reports
At Close Date
The Post-Award team will verify that all income has been received and coordinate any needed adjustments.
Travel on Sponsored Projects
University faculty, staff and students routinely travel in support of sponsored activities, and UT reimburses travelers for necessary and reasonable business expenses incurred while traveling. Travel costs include expenses for transportation, lodging, subsistence and related items incurred by individuals who are in travel status on official University business.
Reimbursable expenses must conform to University policy, federal and state law, if applicable, and the restrictions placed upon sponsored awards. Federal regulation requires that the University apply its policies and procedures consistently to both federally-funded and other activities of the University.
As a result, travel requests and reimbursements for sponsored projects are processed in accordance with University travel procedures as defined in the Handbook of Business Procedures (HBP) Part 11 and in Uniform Guidance at 2 CFR 200.475.
Travel Allowability
Travel expenses are an allowable direct cost to an award when the trip directly benefits the project and is included in the award proposal, participation by the individual traveler is necessary, and the costs are reasonable and align with University travel policies. However, the terms and conditions of each award should be reviewed for restrictions or requirements for specific sponsor prior approvals, even when travel was included in the proposed budget.
Federal and State of Texas funding sources generally follow General Services Administration (GSA) rates, as it relates to lodging and meals, while private funding sources may or may not stipulate particular travel reimbursement requirements. All air travel funded by a federal award must adhere to the requirements of the Fly America Act.
Guidelines for Reimbursement
In order to establish guidelines for reimbursing travel in accordance with applicable requirements, the University has developed specific travel rules which are applied to budget groups based on funding source. The travel guidelines, or travel rule, for each sponsored project is determined by multiple factors, including award provisions and sponsor guidelines.
If the sponsor guidelines and award terms do not specify a specific set of maximum travel rates, the University’s default established rates for local accounts will apply. An account listing by sponsor, with applicable travel rule, is available here.
In some cases, exceptions for charging an increased lodging rate may be considered. If there is a need for an increased lodging rate, travelers should complete the Maximum Lodging Rate Exception Form and receive approval from their unit prior to their travel dates.
Travel on Sponsored Projects Helpful Links
HOP 2.1.1 Travel Policy
Handbook of Business Procedures, Part 11. Travel
UT Austin, Purchasing Office: Payment Services for Travel
Travel Management Services: Request for Authorization
Travel Rule Matrix
Texas Comptroller: Grant Management
TexTravel
GSA Rates: Per Diem
Uniform Guidance: §200.475 Travel
Joint Travel Regulations (JTR)