As defined in OMB Circular A-21, these are costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, and that 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 F&A costs. Where an institution treats a particular type of cost as a direct cost of sponsored agreements, all costs incurred for the same purpose in like circumstances shall be treated as direct costs of all activities of the institution. Direct costs have the following characteristics:

• Reasonable – costs a “prudent” person would have incurred in the course of conducting the project
• Allocable – costs directly benefit the project to which they are charged and are in proportion to the benefit received by the project
• Allowable – costs are allocable, reasonable and not specifically excluded by A-21 (See A-21 section J for allowable and unallowable costs.)

2. Facilities and Administrative (F&A) Costs

These are costs incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, instructional activity, or any other institutional activity. In other words, F&A costs are not easily assignable to individual projects due to the nature of these costs: library use, student services, building operations and maintenance, building and equipment depreciation, departmental secretarial assistance, general office supplies, and administration. “Administration” includes processing orders and payments for equipment, supplies, and travel; hiring, appointing and paying employees, processing proposals, administering award funds, billing and collecting from sponsors; monitoring compliance and auditing. Since it is cumbersome to allocate F&A costs to individual projects, these costs are pooled and charged to projects on a percentage basis.

3. Budget Periods

Fiscal Year (FY)

For purposes of this module, fiscal year refers to the UNH fiscal period that begins on July 1 and ends the following June 30. (The federal fiscal year begins on October 1 and ends the following September 30.)

Academic Year (AY)

Academic Year refers to the 39 weeks for which AY faculty members are appointed, as defined by the UNH calendar.

Summer.

Summer refers to the 13 weeks outside of the AY. (Every 6-7 years, there is an extra summer work week.)