12. Documenting
       Allocability

Connecting expense   
to the benefiting project  

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Stanford Policy

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Fiscal Responsibilities
of PIs

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Cost Transfers

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Allocations and Offsets

 

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RESEARCH POLICY
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Effort Allocation
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Monthly Expenditure
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An expense is allocable to a project if the item being charged, e.g., salaries, supplies, travel, student tuition, etc., benefited the project. Allocability is one of the cost principles defined in A-21, and expenses that are not allocable may not be directly charged.

Allocability is a focus of audit activity. Project expenditures must be supported by evidence of direct benefit to the project. The availability of funds to pay an expense, or its inclusion in a budget, is NOT evidence of the allocability of that expense to the project.

Allocability
Scenarios

For supplies and other non-salary expenses, allocability can usually be documented through purchase/payment records or other files, as well as through the certification of expenditures. A knowledgeable person in the department must review each month's project expenditures. Any errors or requests for clarification should be brought to the PI's attention and, if necessary, corrected PROMPTLY.

For salaries and wages, the PI's certification of expenditures is the primary documentation of allocability. Project expenditures must be certified by the PI each academic quarter, assuring that salaries paid "are appropriate in relation to work performed."

Certification
Language

To be timely, the certification must be completed within two months of the end of the quarter being certified.

Failure to review and certify sponsored project expenditures in a timely manner can call into question the allowability of those costs. A reminder about the importance of this internal control, and possible consequences for lack of certification, was distributed to all faculty in July 2005.

If an expenditure statement includes an error, the department initiates a transfer to move the charge to the right account. Department staff will do this based on information provided by the PI. This needs to take place as soon as possible after identifying the need for a correction, and be sufficient to document the benefit to the project being charged. Transfers are fertile ground for audit activity, and they will be reviewed carefully -- first by Stanford staff, and then often by an external auditor. One very good reason to "Do it right the first time!" is to avoid the level of scrutiny that a transfer, even one that is necessary and appropriate, will invite.

A-21 allows that PIs may allocate costs among different projects, as long as the allocation method reasonably approximates the degree to which each project benefits.

Examples of
Allocation
Methods

Allocation methods must be documented in department files or in the online transaction documentation.

 

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