Federal Research:

Minor Changes Would Further Improve New NSF Indirect Cost Guidance

RCED-93-140: Published: Jun 3, 1993. Publicly Released: Jun 18, 1993.


Victor S. Rezendes
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Pursuant to a congressional request, GAO provided information on the National Science Foundation's (NSF) indirect costs, focusing on: (1) indirect cost guidance that NSF provides to grant recipients; (2) NSF procedures for establishing indirect cost rates; and (3) the extent to which NSF audit guidelines and audits cover indirect cost charges.

GAO found that: (1) NSF has issued new indirect cost guidance that provides overall grant guidance and requirements, but does not cite applicable Office of Management and Budget (OMB) circulars and federal regulations on charging indirect costs; (2) NSF procedures for reviewing indirect cost rate proposals appear to be adequate; (3) review procedures include examining management and accounting system information for adequate controls and reviewing proposals for compliance with federal regulations by identifying and excluding categories of unallowable costs; (4) NSF audit guidelines for both contractor- and NSF-conducted audits include steps for examining the recipient's actual charged indirect costs and appear adequate; and (5) it believes that, to prevent unallowable or inappropriate costs from being charged to the government, adequate controls and proper oversight should be in place to detect such costs.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendation for Executive Action

    Recommendation: To improve the indirect cost guidance provided to NSF recipients, the Director, NSF, should revise the proposal packet to cite the applicable OMB circulars and the federal regulation that provide comprehensive listings of allowable and unallowable indirect costs and indicate where to obtain these circulars and the regulation.

    Agency Affected: National Science Foundation

    Status: Closed - Implemented

    Comments: NSF revised its indirect cost proposal packet to cite the applicable OMB circulars and federal regulation that provide listings of allowable and unallowable indirect costs and also included information on where to obtain these documents.

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