Should fringe benefits be allocated between direct & indirect costs?
According to 2 CFR 230 (A-122), Appendix B, Section 8.g.(1), fringe benefits are allowable, “provided such costs are absorbed by all organization activities in proportion to the relative amount of time or effort actually devoted to each.” Also Section 8.g.(2) states that “whether treated as indirect or direct costs, [fringe benefits] shall be distributed to particular awards and other activities in a manner consistent with the pattern of benefits accruing to the individual or group of employees whose salaries and wages are chargeable to such awards and other activities.” ICS interprets the above to mean that if the position is classified as a direct position, then the salary along with applicable fringe benefits should also be treated as direct costs. If the position is classified as an indirect position, then the related fringe benefits are to be treated as indirect costs.
