Final answer:
Entities receiving over $25 million in federal agreements must submit an indirect cost rate proposal to detail their cost allocation and establish a negotiated indirect cost rate, ensuring transparency and adherence to federal guidelines.
Step-by-step explanation:
The question pertains to the requirements for entities that receive significant federal funding. When an entity receives over $25 million in federally sponsored agreements annually, they are typically required to submit an indirect cost rate proposal. This proposal details how indirect costs are allocated and what the federally negotiated indirect cost rate would be. Indirect costs are those that are not directly tied to a specific project or activity but are necessary for the general operation of the organization and the performance of its activities.
Entities such as large universities or research institutions often deal with these requirements. The indirect cost rate proposal is usually required to ensure transparency and proper use of federal funds, and it must adhere to the guidelines established by the Cost Principles outlined in 2 CFR 200, also known as the Uniform Guidance.