Chapter 7-100

General Policy and Scope of Chapter

It is the policy of The Regents of the University of California under University Regulation No.4, Academic Personnel Manual APM 020, that “a charge shall be made sufficient to cover all expenses, both direct and indirect” incurred by the University for work conducted under extramural awards. In accordance with Business and Finance Bulletin A-47, University Direct Costing Procedures, section III. A., "Each accounting entity shall charge its budget with all the readily identifiable direct costs associated with the conduct of the operations of that entity.” This chapter addresses budgeting of and charging for direct costs associated with the conduct of extramurally-funded contracts, grants, and cooperative agreements. In this context, a direct cost is defined as any cost which can be readily and specifically identified as benefiting an extramurally-funded project.

With the exception of 7-500 through 7-530, this chapter is concerned with cost-reimbursement type awards. For information on costs borne by the University, see Chapter 5, "Cost Sharing." For information on indirect costs, see Chapter 8, "Indirect Costs." For general financial information, including information on the general authority to expend contract and grant funds, see Chapter 6, "Financial-General."

Direct costs should be allocable to (i.e., benefit) the project against which the costs are charged. In addition, direct cost charges to a project should be allowable, reasonable, and not prohibited by either the general or specific terms and conditions of the award. Further information on allocability, reasonableness, and allowability with respect to federal awards is found in Chapter 6-530 of this Manual.

The preparation of proposal budgets and authorization of expenditures of awarded funds must be in accordance with all applicable University policies and requirements. (Refer to Chapter 2 and Chapter 6 of this Manual.)