• The Office of Management and Budget's (OMB) Circular A-21 "Cost Principles for Educational Institutions" is the federal government's cost principles for colleges and universities. It defines what costs are allowable and allocable to federal grants and other "assistance" agreements.
• OMB Circular A-21 (Section J.10) Compensation for Services sets forth the following general principals:
(a) There will be a documentation process that will provide for after the fact verification of the distribution of actual payroll costs for sponsored projects. The verification will occur at least annually.
(b) Institutions may include in a residual category all activities that are not directly charged to sponsored agreements. The components of the residual category are not required to be separately documented.
• Recognizing there is no single best method, the apportionment of employees' salaries and wages chargeable to more than one sponsored agreement or other cost objective (instruction, research, patient care, administration), will be accomplished by methods that produce an equitable distribution of charges for employee's activities. A-21 outlines criteria for acceptable methods of charging salaries and wages to federally sponsored projects which include the following:
(a) At a minimum, the verification process will allow confirmation of activity allocable to each sponsored agreement.
(b) To confirm that the distribution of activity represents a reasonable estimate of the work performed by the employee during the period, the reports will be signed (electronic signature/ approval is acceptable) by the employee, principal investigator, or responsible official(s) using suitable means of verification that the work was performed.
• To comply with these requirements Dartmouth has established a Labor Verification Report by Employee (Dartmouth Employee’s).
• On an annual basis, usually the month following the Dartmouth fiscal year end, the Labor Verification Report by Employee will be distributed to each employee that has worked on a sponsored project during the past year. The individual must review the report for accuracy and if in agreement with the salary distribution for the worked performed, sign the verification statement. If the individual does not agree with the report, they should work with the PI or Department Grant Manager to correct the information. This completed report is returned to the Office of Sponsored Projects.
• A reminder when reviewing the salary allocation, time spent preparing a proposal or a bid is not normally directly chargeable to a sponsored project.
Last Updated: 12/16/10