Indirect Cost Rate Agreement Example

The goal of the SPC is to create a clear agreement between the organization and the federal government on directly charged and indirect costs. In addition, a record of the winner`s practices in the event of a staff change is made available to recipients (only changes in accounting practices or allocation methods must be submitted after the first year). Reimbursement of indirect costs is subject to the submission of a proposal for indirect cost rates, the availability of resources, legal and administrative restrictions, and the authorization of the USAID Grant Officer or the authorized representative. As a reminder, the proposal for the indirect cost rate should not explicitly include the unauthorized costs in 2 CFR 200, subsection E, sections 200,420 to 200.475. Prior to the development of a proposal for indirect cost rate and supporting documentation, a thorough review of the cost principles set out in subsection E of CFR 200 is required. If indirect costs are allowed under the terms of the premium, the company is willing to prepare a proposal for an indirect cost rate beginning with the following steps: the direct amount of work must be supported by the organization`s work allocation report and the internal accounting system. These amounts should also be linked to the main and annual accounts. If necessary, a voting table should be provided to support the labour costs claimed by the organization. In order to avoid overpayment or significant underpayment of indirect costs during the year, the organization may require a revised interim rate. The following allocation bases are acceptable examples of use when indirect costs are allocated to cost targets through an indirect cost rate.

Common costs, such as depreciation, rental, operation and maintenance of facilities, telephone and other costs, are individually used on a pro-rata basis as direct costs for each category and any federal premium or other activity, using a pro-rata cost base. A pre-determined rate can be negotiated for the use of federal premiums if, based on previous experience and a reliable projection of the organization`s costs, there is reasonable assurance that the rate is likely not to exceed a rate based on the actual costs of the organization.