SPECIAL CIRCUMSTANCES | Description | Normal operating expense required for unit operations | Irregular expenses due to not following established policy; cost of doing business | Unforeseeable and/or random expenses that result from new or evolving policies |
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Responsibility for Expense | Operating Unit | Operating Unit | Operating Unit and Central Administration |
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Example | - Faculty/staff salary
- Office or Research Supplies
- FAIR Charges
| - Audit findings/unallowable costs
- Sponsor penalty
- Overdrafts
| - Exchange Rate settlements
- EEOC settlements
- Lawsuits
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There are three basic types of cost in the framework. The first type of cost are ordinary expenses, such as faculty or staff salary, non-compensation costs, or FAIR charges and they are the responsibility of the originating unit. These expenses are predictable and derived from regular and ongoing operations. The second type of cost are out-of-the-ordinary or event-driven expenses. Although these expenses are unplanned, the majority result from not following policy and therefore are the responsibility of the unit. Audit findings, penalties, and/or overdrafts are examples of event-driven costs. The third type of cost are irregular or costs that arise from a special circumstance. If a unit is following policy but policy changes, then the unit and Central Admin are both responsible for the cost. These types of costs are completely unknowable and are not the fault of either the unit or Central Admin. Units should not bear the cost of random expenses alone. Expenses related to the NIH-Salary-Cap are an example of an ordinary expense resulting from regular and ongoing operations. Therefore, units are responsible for funding and paying all NIH-Salary-Cap expenses in their respective units. |