Charging travel costs to your Federal Grant can be a bit confusing.
Let’s open the grant management mailbag again today for some common problems encountered in the “real-world” by “real-life” grant managers.
Here are three factors affecting the use of actual travel costs vs. per diem travel costs on your Federal grants.
A Grant Manager Writes:
“We are the Prime Recipient on some federal grants and a subgrantee on others.
On our grants we follow the actual travel cost method as a Prime recipient, whereas our subgrants require us to follow the per diem method.
Is this acceptable or not?”
Factor #1: How to Pick Between Actual Costs vs. Per Diem Costs?
The Cost Principles do allow the use of either actual or per diem rates for travel costs as long as the methods are used for the entire trip.
The net result in charges should be consistent with those normally allowed in like circumstances in the organization’s non-federally-sponsored activities.
The Grant Professional Continues:
If we are on grant funded travel– can we pay more for meals on say Day 1 and less on day 2 and 3 as long as the total is within the total per diem?
Factor #2: Can Per Diem Travel Expenses Be “Averaged?”
The Cost Principles say that “the selected method-whether actual cost vs. per diem method-must be used consistently for the entire trip and not applied selectively to certain days.”
If you are using a “per diem” method for travel costs this means the same cost should be charged “per day” not “the average of several days.”
Whichever method you use, the costs must still be “reasonable.”
Then Our Colleague Asks:
“On the day of travel our policy states we get 75% of meals and incidentals.
What if the day of travel is also a full work day and then we travel home the next day?
Can we get the 100% of meals and incidentals?”
Factor #3: Can We Get 100% of Per Diem on Travel Days?
This requires going back to your written travel policy, and then applying the requirements consistently.
Many organizations standardize this with the 75% of a departure and arrival day because presumably you eat breakfast before you go, and eat dinner when you get home.
That is a reasonable approach when consistently applied.
If you don’t take a standard approach, it puts you (or your analysts and clerks) in the undesirable position have having to decide this on a case-by-case basis.
Where can I find out more?
More information on travel costs for Federal Grants can be found in the Selected Items of Cost found in the Cost Principles Regulation.
For Non-profit Organizations:
The relevant sections are contained in 2 CFR Part 230 (Formerly OMB Circular A-122)
Appendix B: Selected Items of Cost for Non-Profit Organizations
For Institutions of Higher Learning:
The relevant sections are contained in 2 CFR Part 220 (formerly OMB Circular A-21)
Appendix A, Section J: Selected Items of Cost
For State, Local and Tribal Governments:
The relevant section is contained in 2 CFR Part 225 (formerly OMB Circular A-87)
Appendix B: Selected Items of Cost
When In Doubt-Apply the Allowable Cost Framework
When in doubt-remember the framework of what makes costs allowable to charge the Federal award.
Are the costs:
• Reasonable and necessary?
• Allocable to the Federal Grant?
• Not limited or prohibited by laws and regulations?
• Uniformly applied to both Federal and non-Federal activities?
• Adequately documented?
Lucy Morgan CPA, MBA
CEO, Compliance Warrior
P.S. If you’d like some more help about what we talked about today, check out Grant Management Boot Camp training that helps that helps people work through these issues.
Click the link below for your type of organization to get more information about our courses and to get signed up.