This information is intended to facilitate the completion and submission of your indirect cost rate proposal. We have designed a series of checklists, forms, samples, and templates to assist you in meeting the ICP documentation requirements.
Additional support is provided with links to cost principle guidance and frequently asked questions.
Please be sure to include the completeness checklist and required certifications with your ICP or CAP.
August 2008 – Partial Settlement Agreement (PSA) III issued in the Ramah Navajo Chapter, Oglala Sioux Tribe, and Pueblo of Zuni, for themselves on behalf of a class of persons similarly situated vs. Dirk Kempthorne, Secretary of the Interior, in his official capacity, et. al.
For a copy of the Final Judgment Approving this PSA III and a complete copy of the PSA III with all appendices please click here. Please be sure to review the second and third table of documents.
March 10, 2010 - See changes to the Unallowable Cost Reference Sheet regarding General Government Expenses.
List of Unallowable Costs:
The following templates should be used when submitting an indirect cost rate proposal for a fixed with carryforward rate. Each template contains instructions and schedules for the following:
Please be sure to use the correct template depending on the fiscal year of the indirect cost rate proposal being submitted. For example, if you are submitting an indirect cost rate proposal for FY 2008 and/or 2009, use the FY 2009 & Prior Years template for both years. If you are submitting an indirect cost rate proposal for FY 2010, use the FY 2010 & Later Years template.
The Fixed with Carryforward Templates were revised on 12/12/2011. Please note that the order of the exhibits (worksheet tabs) within the templates has changed and new worksheets have been added. However, the worksheet tab and exhibit name on each worksheet did not change. Please read the instruction tab for helpful hints to get the most out of the templates.
Proposals and audited financial statements can be submitted electronically to Ics@nbc.gov preferably in 3 files: 1) Part 1 Narrative, 2) Part 2 Exhibits, and 3) Audited Financial Statements. Do not mail hard copy if submitting electronically, doing so will delay the processing of your proposal. The only document that we need in the mail is the signed Certificate of Indirect Costs in original signature. Everything else can be electronic.
1. Which Federal agency is the cognizant agency for my organization?
The cognizant agency for negotiating indirect cost rates shall be the federal agency that provides the majority of the Federal funding (per OMB guidance). However, the Indirect Cost Services is the Federal cognizant agency designated by OMB to negotiate indirect cost rates for all Indian tribal governments and their component units regardless of funding. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable.
2. Is there a standard format that we should follow to compile the indirect cost proposal (ICP)?
Indirect Cost Services has created sample proposal formats, checklists, and templates to assist you in completing the ICP and CAP proposals. Please select the appropriate sample proposal for your type of organization (i.e., tribal governments). Although it is not required that you follow our ICP or CAP format, doing so will expedite the review process because our format will contain the information needed to process either the ICP or CAP proposals.
3. Due to presentation changes required in GASB 34, the audited financial statements no longer have the detailed program information needed to compile the indirect cost rate proposal. What should we do?
In order to avoid situations like this, tribal entities may want to request that their CPA include the detailed program information in the supplemental section of the audit. Without the detailed information in the audit, the tribal entity may be required to provide a copy of the general ledger or CPA work sheets to support the costs included in the proposal.
4. Our tribal organization did not receive total reimbursement (100%) of indirect costs from the program funding agencies; therefore, we had to supplement the programs' indirect cost collections with tribal dollars. Do we need to count the tribal supplements as part of the indirect cost collections?
No – Indirect Cost Services will only consider the indirect cost collections/recoveries received from funding agencies as indirect cost collections. Tribal supplements to program indirect cost collections are NOT counted, although tribal supplements (used for indirect cost expenditures) need to be excluded from the direct cost base. Tribal supplements used for indirect cost collections are not counted. Doing so would overstate the indirect cost collection amounts and thus have a detrimental impact to the tribal entity's carryforward amount.
5. Some programs do not pay indirect costs or have a limitation on the amount of indirect costs collected; can these programs be excluded from the direct cost base?
According to 2 CFR 225 (A-87), Appendix A, Section C.3.b, "All activities which benefit from the governmental unit's indirect costs, including unallowable activities and services donated to the governmental unit by third parties, will receive an appropriate allocation of indirect costs."
Also, Section C.3.c states that "Any cost allocable to a particular federal award or cost objective under the principles provided for 2 CFR Part 225 may not be charged to other federal awards to overcome fund deficiencies, to avoid restrictions imposed by law or terms of the federal awards, or for other reasons."
We interpret these guidelines to mean that all programs regardless of funding (or lack of funding) for indirect cost recoveries must be considered in the base for purposes of determining indirect cost rates. All programs that benefit from the organization's indirect cost (which includes space occupancy and human resources costs) must be allocated their share of the organization's indirect cost pool.
6. Do indirect cost collections/recoveries need to be supported with adequate documentation?
Yes - indirect cost collections/recoveries identified by program funding sources must be supported by one of the following documents types:
7. What types of legal costs are allowable in the indirect cost pool?
Only legal salaries (in-house attorneys) or legal costs (for contracted legal services) related to an allowable indirect cost activity and supported with adequate documentation will be eligible for inclusion in the indirect cost pool. Legal costs related solely to general government operations (an unallowable cost) or to direct cost activities (i.e., federal awards) are not allowable in the indirect cost pool. Governments may, however, apply to program managers to recover direct legal costs from funding agencies through program agreements.
Legal salaries must related to allowable indirect cost activities and be adequately documented and supported in accordance with 2 CFR 225 (A 87), Appendix B, Section 8.h.(4) in order to be included in the indirect cost pool. Please see Question 9 for further explanation of adequate salary documentation requirements for employees (attorneys or legal staff) that work on multiple activities. Contracted indirect legal services costs should be supported with billings or contract invoice documentation.
8. What is considered adequate documentation to support the salaries and wages of personnel included in the indirect cost pool?
Federal regulations (2 CFR 225 & 230, A-87 & A-122) require that employee salaries and wages be properly documented and approved. The required documentation includes:
Salary and Wage Certifications: Used when employees are expected to work on a single federal award or cost objective during the period being certified. The certifications should be:
Personnel Activity Reports or equivalent documentation is required for employees who work on multiple activities, that is:
Personnel Activity Reports or equivalent documentation must meet the following criteria:
As the cognizant agency, we have the right to approve substitute systems for allocating salaries and wages in place of activity reports. Substitute systems may include random sampling that meets acceptable statistical sampling standards, case counts, or other quantifiable measures of employee effort. We may accept sampling that does not fully comply with sampling standards provided that the amounts involved are minimal or would result in a lower cost.
9. What if my organization needs a restricted rate?
Restricted rates are reviewed and approved by the Department of Education and are applicable only to certain DOE programs. Please contact DOE for information about format and submission requirements:
Ms. Frances L. Outland, CPA
Director, Indirect Cost Group
Financial Improvement and Post-Audit Operations
US Department of Education
Office of the Chief Financial Officer
550 12th Street, SW, Room 6017
Washington, DC 20202-4450
Phone: (202) 245-8082
The Department of Education has an interagency agreement with Indirect Cost Services in which Indirect Cost Services will include the approved restricted rate on DOE's behalf on the Indirect Cost Services issued negotiation agreement.
10. Why must the total federal expenditures reported in the base schedule tie to the amounts reported in SEFA (Schedule of Expenditure of Federal Awards) in the audit?
These two amounts need to match to ensure the indirect costs allocated to the federal programs through the carryforward calculation are fair and equitable so federal programs will bear only their share of the indirect costs. Any difference between the federal expenditures reported in the base and the SEFA amounts in the audit must be explained.
This requirement is only applicable for tribal entities that negotiate the fixed carryforward rate. For tribal entities that negotiate the Provisional/final rate, this requirement does not apply.
11. What is the rule on tribal council costs?
Up to 50% of council costs can be included as indirect costs without support. If request more than 50% of council costs, we would require support documentation. Examples are personnel activity reports (see general FAQ #15), position descriptions, activity logs, minutes of meetings, time study, etc. Do not submit the documents with the proposal. The negotiator will determine the type of support and the amount of documentation required at the time of the desk review.
12. What is the difference between "indirect cost pool", "indirect cost collections", "indirect costs charged to programs", and "directly funded indirect"?
"Indirect cost pool" is the accumulated administrative costs that jointly benefit the overall organization programs and objectives. Indirect cost pool typically includes accounting/finance, payroll, HR, IT, operating and maintenance costs, etc.
"Indirect cost collections" is the amount of indirect costs that recovered or collected from programs in the base. This is typically reported as revenue.
"Indirect costs charged to programs" is the amount of indirect expenses charged or allocated to programs in the base. The amount may include both tribal and non-tribal indirect expenses. This is typically reported as expenditure.
"Directly funded indirect" is specific line item costs that are indirect in nature but are directly paid for by programs in the base. "Directly funded indirect" must be excluded from both direct and indirect. For example, the Payroll Clerk position is normally an indirect position but BIA has agreed to pay the position using program dollars. Since the position is an indirect position, it is excluded from the base because it is not a direct cost. The position is also excluded from the pool because it is being funded by program dollars. Leaving the position in the pool will result in double funding.