Department of Institutions Southwestern Montana Drug Program : Report On Audit : Grant Fiscal Year Ended October 31, 1974 1974

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(9) The U.S. Code of Federal Regulations (Title 45A, Part 74, Appendix C) applicable to the administration of DREW grants defines indirect costs as "...those (a) incurred for a common or joint purpose benefiting more than one objective, and (b) not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved."' The costs described above do not fit this definition. They (a) are incurred for a single purpose benefitting only one cost o
...bjective and (b) are readily assignable to the cost objective, and more effort is re- quired to account for them as indirect costs than if they were classified as the direct costs they are.
The classification of these costs as indirect probably stems from the time when the program was administered by Warm Springs State Hospital which also administered other programs. At that time, several of these type expenses were applicable to more than one purpose and therefore fell within the indirect cost definition.


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