Accounting for Operations and Maintenance Costs

Purpose of Guidelines

The purpose of these guidelines is to provide information about the identifying and allocating operations and maintenance cost as defined in Uniform Guidance 2 CFR 200 and the Cost Accounting Standard (CAS) 48 CFR 9905.502 to which the University of Florida must adhere.


Uniform Guidance 2 CFR 200 establishes principles for determining costs applicable to grants, contracts, and other agreements with educational institutions. According to Uniform Guidance 2 CFR 200 sections 200.402, “The total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” The tests of allowability of costs under these principles in section 200.403 are:

  1. Be necessary and reasonable for the performance of the Federal award
  2. Be allocable thereto under these principles:
  3. Be Consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity
  4. Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.”

Cost Accounting Standard (CAS) 48 CFR 9905.502-40 requires consistency in allocating costs incurred for the same purpose. “All costs incurred for the same purpose, in like circumstances, are either direct costs only or indirect costs only with respect to final cost objectives. No final cost objective shall have allocated to it as an indirect cost any cost, if other costs incurred for the same purpose, in like circumstances, have been included as a direct cost of that or any other final cost objective. Further, no final cost objective shall have allocated to it as a direct cost any cost, if other costs incurred for the same purpose, in like circumstances, have been included in any indirect cost pool to be allocated to that or any other final cost objective. See University of Florida Policy on Charging Costs Directly to Sponsored Projects.

This means there must be consistency in accounting campus-wide; all costs for similar circumstances must be charged the same.


Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Code of Federal Regulations Title 2: Grants and Agreements Part 200 (2 CFR 200).
Allocation (9905.502-30.a.1)

  • To assign an item of cost, or a group of items of cost, to one or more cost objectives. This term includes both the direct assignment of cost and the reassignment of a share from an indirect cost pool.

Cost Objective (200.28)

  • Cost Objective means a program, function, activity, award, organizational subdivision, contract, or work unit for which cost data are desired and for which provision is made to accumulate and measure the cost of processes, products, jobs, capital projects, etc. A cost objective may be a major function of the non-Federal entity, a particular service or project, a Federal Award, or an indirect (Facilities & Administrative (F&A)) cost activity, as described in Subpart E-Cost Principles.

Operation and Maintenance (Appendix III, A.4.)

  • Those costs that have been incurred for the administration, supervision, operation, maintenance, preservation, and protection of the institution’s physical plant. They include expenses normally incurred for such items as janitorial and utility services; repairs and ordinary or normal alterations of buildings, furniture and equipment, care of grounds; maintenance and operation of buildings and other plant facilities; security; earthquake and disaster preparedness; environmental safety; hazardous waste disposal; property, liability and all other insurance relating to property; space and capital leasing; facility planning and management; and, central receiving.

Direct Costs (200.413)

  • Direct costs are those costs that can be identified specifically with a particular final cost objective, such as a Federal award, or other internally or externally funded activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect (F&A) costs.

Indirect (facilities & administrative (F&A)) costs (200.56)

  • Indirect (F&A) costs means those costs incurred for the common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved.

Guideline Issues

Operation and maintenance costs may be charged directly to sponsored agreements, subject to the requirements contained in the direct charging policy (i.e., they must be treated consistently for all major functions of the institution when incurred for the same purpose). These cost must be Reasonable, Identifiable specifically to the sponsored project, and stated in the budget or allowed by the agency.

Operations and maintenance costs may be charged directly to sponsored agreements (subject to the allowability criteria in University of Florida Policy on Unallowable Expenses) through service center recharge rates. The operations and maintenance costs included in recharge rates must be excluded from the University’s indirect cost pool.

All other operations and maintenance costs may be included in the indirect cost proposal. (These costs are therefore charged to grants and contracts through the indirect cost rate.)

Although much of these guidelines have already been implemented, an effective date of July 1, 1996 is set to allow for university-wide training at the department level so as to insure compliance and consistency.

Responsibility for compliance

PIs/Departments are responsible for correctly recording any O&M costs that are directly charged to a sponsored project. Due care must be taken to insure these costs are allowable. PIs/Departments are encouraged to call Contracts & Grants before charging O&M to a sponsored project.

Responsibility for following these guidelines lies primarily with Contracts and Grants. Contracts and Grants will also periodically review, by account code, costs normally charged indirectly that have been directly charged to sponsored agreements. Explanation of appropriateness or reversal of charges may be required. The University of Florida administration is responsible for guidance and training and for insuring compliance through periodic internal and external audits.