DIRECT COSTS POLICY
The federal OMB Circular A-21 and the Cost Accounting Standards Board define the criteria for determining how costs are charged directly or indirectly to sponsored projects. This applies to all UAB sponsored agreements, federal or nonfederal.
UAB is responsible for ensuring consistent application of cost accounting principles within the institution. All costs incurred by UAB for the same purpose in like circumstances must be treated as either direct costs only or indirect costs only with respect to the final cost objectives.
Direct costs are those costs that can be identified specifically with a particular sponsored project, instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. It is important that where UAB treats a particular type of cost as a direct cost of sponsored agreements, all costs incurred for the same purpose in like circumstances must be treated as direct costs of all activities of the university.
Indirect costs are those that are incurred for common or joint activities of UAB and therefore cannot be identified readily and specifically with a particular sponsored project, instructional activity, or other UAB activity. These costs are assigned to activities that are classified by UAB as indirect activities.
UAB will develop guidelines defining those types of costs which the institution has identified as normally being direct costs. These guidelines will also specify those types of UAB costs (such as administrative costs) which are normally indirect. Even a cost which is identified as "normally indirect" may be charged directly to sponsored agreements when it is required by the project scope and it is formally established that it is incurred for a different purpose or in unlike circumstances than similar types of indirect costs. Therefore, these guidelines will also give examples of those factors which UAB considers to be relevant in justifying that a given project's activities constitute special purposes or circumstances for purposes of allowing direct charging of costs which are normally indirect.
The Vice President for Financial Affairs & Administration, through the Grants & Contracts Accounting Department, and the Provost, through the Office of Grants & Contracts Administration, are responsible for developing, implementing, and maintaining the procedures associated with this policy.