Common use of Classification of Costs Clause in Contracts

Classification of Costs. As identified in the Auditor General’s review of contracted services administered by the Department of Elder Affairs, administrative costs reported in the audited financial statements of the contractors and subcontractors varied widely. In an attempt to more consistently report administrative costs, the following guidelines should help to more clearly identify the appropriate classification and allocation of administrative costs. These guidelines apply to the preparation of the Statement of Functional Expenses, (see template) as well as to the unit cost methodology used in determining future contracted unit rates and actual unit costs.