Office of Research

Direct Cost Disallowances

The principal investigator is responsible for ensuring that expenditures are valid and allowable according to the terms of the grant or contract. However, there are several reasons for cost disallowances listed below:

  • Costs were incurred prior to the start date of the grant or contract without the sponsor’s permission.
  • Office furniture or general-purpose supplies and equipment, such as calculators, computers, refrigerators or air conditioners, were  purchased without prior approval of the sponsoring agency.
  • Expenditures were transferred from one grant to another to correct for cost overruns or avoid unexpended balances.
  • Services were subcontracted without sponsor approval.
  • Project funds were used to generate income without prior sponsor approval and an agreement regarding the disposition of those funds.
  • The scope of the project was changed without notifying the sponsor.
  • Funds were excessively re-budgeted without sponsor approval. (Tolerance for re-budgeting varies; some sponsors allow no re-budgeting.)
  • Delinquent certification of effort (CLEAR - Clemson Link to Employee Activity Reporting).
  • More effort was charged to the grant than was actually committed to the grant.
  • The project director was absent for more than three months without notifying the sponsoring agency 30 days prior to the absence.
  • The project director was changed without requesting permission from the sponsor.
  • A pay rate higher than base salary and/or consulting fees to recipient staff was authorized.
  • Effort was not appropriately reflected on the effort report (CLEAR) based on actual performance of the individual.
  • Money was spent for major equipment purchases during the last 90 days of the grant.
  • More than $5,000 was spent for equipment or remodeling without sponsor approval, unless authorized to do so in the award. 
  • Unexpended balances were used within the last 60 days of the grant account to stockpile supplies for unnecessary miscellaneous costs or for other excessive spending.
  • Foreign travel was charged to the grant without prior approval from the sponsor.
  • Unrelated costs were charged to the grant. For example, travel costs of faculty not named on the grant, salary costs for effort performed on other projects or reimbursing a department for deficits incurred on an earlier grant.
  • Costs were incurred after termination of the sponsored project.
  • Facilities and administrative costs were transferred to direct costs without sponsor approval.

Costing Reference Chart
The Costing Reference Chart is a guide for charging expenditures to sponsored agreements and for costs charged to institutional accounts included in the University’s Facilities and Administrative Cost Allocation Plan (Indirect Cost Study).

Normally Allowable Direct Costs are those costs that are easily and specifically identifiable by function with a particular sponsored project with a high degree of accuracy. Field 2 of the current account structure is used to identify the program. These generally include instruction, research and public service.

Conditional Allowable Direct Costs are costs that are not normally charged to sponsored agreements. They may be charged under unique circumstances and must be clearly identified in the proposal budget and may require specific approval by the sponsor.

Facilities and Administrative Costs (Indirect Costs) are costs that are included in the University’s Facilities and Administrative Cost Allocation Plan and are not appropriate for direct costing to a sponsored project. These accounts normally pay for costs that are associated with the overhead of sponsored agreements. Included in these accounts are state appropriations and other institutional accounts.

Generally Unallowable Costs are costs that cannot be charged directly to a sponsored project. If these costs are charged to an institutional account, they must be removed from the University’s Facilities and Administrative Cost Allocation Plan.

Download a printable version of the Costing Reference Chart


Amendment of Facilities and Administrative Cost Rate
If the amount of facilities and administrative costs to be charged to a sponsored project changes from the amount specified in the proposal and/or grant or contract award, the following guidelines apply to all agreements, cost-reimbursement and fixed price.

Fixed Facilities and Administrative Cost Rate on Federal Programs
Federal agencies shall use the negotiated rates for facilities and administrative costs in effect at the time of the initial award throughout the life of the sponsored agreement. "Life" for the purpose of this subsection means each competitive segment of a project. A competitive segment is a period of years approved by the federal funding agency at the time of the award. If the negotiated rate agreement does not extend through the life of the sponsored agreement at the time of the initial award, then the negotiated rate for the last year of the sponsored agreement shall be extended through the end of the life of the sponsored agreement. Award levels for sponsored agreements may not be adjusted in future years as a result of changes in negotiated rates.

Predetermined Rates for Facilities and Administrative Cost
Public Law 87-639 (76 Stat. 437) authorizes the use of predetermined rates in determining the "indirect costs" (facilities and administrative costs) applicable under research agreements with educational institutions. The stated objectives of the law are to simplify the administration of cost-type research and development contracts (including grants) with educational institutions, to facilitate the preparation of their budgets and to permit more expeditious close-out of such contracts when the work is completed. In view of the potential advantages offered by this procedure, negotiation of predetermined rates for facilities and administrative costs for a period of two to four years should be the norm in those situations where the cost experience and other pertinent facts available are deemed sufficient to enable the parties involved to reach an informed judgment as to the probable level of facilities and administrative costs during the ensuing accounting periods.

Amendment of Facilities and Administrative Cost Base
If a sponsored program contract is modified to increase direct costs, the same administrative offices that approved the original budget in accordance with the terms of the grant or contract must authorize it. If the approved revision increases the direct costs on which the allowable facilities and administrative cost recovery is based, the budget for facilities and administrative costs will be increased accordingly. A decrease in direct costs does not require an amendment to budgeted facilities and administrative costs unless the sponsoring agency, upon request by the University, authorizes the re-budgeting of funds from facilities and administrative costs to direct cost categories.