September 10, 1996
 
  To:         Principal Investigators and Departmental Grant Administrators

From:     Ronald S. Thompson
               Assistant Controller

Subject: Selective Changes to OMB Circular A-21

   On May 8, 1996, the Federal government issued a revised compilation of OMB A-21 which incorporated a number of changes. These changes will only impact 4-2XXXX accounts. Two of these changes are discussed below. The other major changes will be disseminated separately when appropriate.

1. Change in Terminology

Previously, we referred to our overhead charges on grants and contracts as indirect cost. Indirect cost is calculated by applying our indirect cost rate to the modified total direct cost (MTDC) of a particular grant or contract. Under the new terminology, Facilities and Administrative (F & A) cost will replace indirect cost. Similarly, the F & A cost rate will replace indirect cost rate. The change was implemented to be more descriptive as overhead costs are either related to facilities or to administration.

2. Equipment Under $1,000

In OMB A-21, the Federal government raised its equipment capitalization threshold from $500 to a maximum of $5,000. In our case that means the Federal threshold has moved from $500 to $1,000, which has been the University's non-Federal equipment capitalization threshold since July 1, 1994. In effect, equipment items between $500 and -$999.99 that would have previously been considered "equipment" and not subject to our F & A cost rate are now considered "supplies" and will be subject to the F & A cost-rate. To accommodate this change, University Accounting has established a new subcode in the "Supplies" subcode range (22XX). The new subcode is 2240 and entitled "Equipment Under $1,000 - DGCA Only". Please discontinue using subcode 7250 "Equipment under $1,000" as it will be considered an invalid subcode

Please note that for 4-2XXXX accounts, only three subcodes should be in use for equipment and additions and improvements. They are as follows:

            2240 Equipment Under $1,000 - DGCA Only
            7050 Additions & Improvements - Bldgs & Grounds
            7260 Equipment $1 ,000 and more - DGCA Only

Please use only these subcodes for grants and contracts.