HBP Part 10.1. Introduction and Resources

Handbook of Business Procedures

Date published: February 25, 2013
Last revised: May 28, 2019
Issued by: Federal Costing


A. Introduction

The Office of Accounting & Financial Management’s Federal Costing section at The University of Texas at Austin works to ensure that the rules and regulations governing costing of direct and indirect expenses are followed by the university.

The university’s costing is governed primarily by two federal publications: the Part 200 – Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards and the Federal Acquisition Regulation (FAR), Part 30—Cost Accounting Standards Administration. The university also follows all applicable state and university rules and regulations.

B. Overview of Costing and Analysis Functions

The Federal Costing section performs the following primary tasks:

  • Prepares and implements costing policies and procedures
  • Calculates and negotiates the federal reimbursement rate for facilities and administrative expenses incurred in support of sponsored research, instruction, and other sponsored activities
  • Reviews and approves service center rates for departments providing goods and services
  • Assists departments with establishing new service centers
  • Establishes service center rate guidelines
  • Provides training on all costing-related topics, e.g., service centers, space management, and general costing concepts
  • Provides audit support on all costing-related topics
  • On an ad-hoc basis, prepares reports and studies related to costing

C. Rate Calculations

Federal Costing performs the following types of rate calculations so the university can charge reviewed and approved rates to customers in order to recover costs incurred for goods or services.

Type Definition

Facilities and Administrative (F&A) Rates

Federal Costing calculates F&A (indirect) rates, which are charged to sponsored awards by the university. F&A rates include:

  • Depreciation and interest costs associated with the university’s capitalized building, infrastructure, improvements, and equipment
  • Operating and maintenance costs, such as utility, security, and custodial
  • Common administrative functions, such as payroll and purchasing

Service Centers

Federal Costing establishes, reviews, and approves service center rates. Service center rates allow the department to recover costs incurred for goods or services required to support sponsored research programs or academic needs. A service center can provide services to internal and external users. New service centers require additional university executive leadership as outlined in HBP 10.3.7.

Institutional Administrative Fees

Federal Costing and the Budget Office calculate estimates of the institutional administrative fees, and the University Budget Council establishes the policy for these fees (e.g., which accounts they apply to). The Budget Office uses these policy guidelines to issue waivers, if applicable.

Institutional Surcharge

Federal Costing calculates the surcharge, and each service center with external customers charges the surcharge to recover institutional F&A expenses. Surcharge income is deposited into a central administrative account.

Special Use Facilities (SUF)

Federal Costing establishes, reviews, and approves SUF rates. This does not apply to service centers or specialized service facilities. SUF rates estimate marginal (incremental) costs.

D. Resources



Part 10. Costing - Table of Contents