Indirect Cost Rate Cap Rules
The indirect cost rate cap (on the Maintain>Allocation Codes form) is applied according to the following rules:
- Rule 1 - If the IC Limit is calculated to be zero or positive (Debit cap), then the Proposed Allocation is only adjusted if it would cause the recipient accounts to exceed the IC Limit in a positive (debit) direction. For example:
- Rule 2 - If the IC Limit is calculated to be less than zero (Credit cap), then the Proposed Allocation is only adjusted if it would cause the recipient accounts to exceed the IC Limit in a negative (credit) direction. For example:
- Rule 3 - If the Proposed Allocation plus the Posted Amounts do not exceed the IC Limit per Rules 1 and 2, then no adjustment is needed and the Proposed Allocation is applied in full. For example:
- Rule 4 - If the Posted Amounts reach or exceed the IC Limit before consideration of the Proposed Allocation, then the allocation amounts for the affected recipient lines are set to zero and an information code of “XCAP” is applied to those lines. The system continues to allocate for all lines where the IC Limit is not reached or exceeded by the Posted Amounts. For example:
|
Proposed Allocation |
Posted Amounts |
IC Limit |
|
500.00 |
1000.00 |
1300.00 |
|
200.00 remains in the pool. |
||
|
Proposed Allocation |
Posted Amounts |
IC Limit |
|
(500.00) |
(1000.00) |
(1300.00) |
|
(200.00) remains in the pool |
||
|
Proposed Allocation |
Posted Amounts |
IC Limit |
|
500.00 |
1000.00 |
1600.00 |
|
The entire Proposed Allocation is applied. |
||
|
Proposed Allocation |
Posted Amounts |
IC Limit |
|
500.00 |
1000.00 |
900.00 |
|
No allocations are made. The entire $500 remains. |
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