Policy Number: 12000.001
Unit: Grants and Contracts
1.0 Policy Statement
All direct costs associated with a federally sponsored program must be determined as allowable, allocable and reasonable. This determination is required to support and validate all claims of both direct cost and Facilities and Administrative (F&A/Indirect Cost) reimbursements of funds from the federal sponsoring agency.
2.0 Purpose
This policy is designed to outline the University’s adherence to federal regulations for determining allowability and allocability of cost.
3.0 Definitions
3.1 Allocable Cost – Cost that can be assigned or charged to a particular Federal award when the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received.
3.2 Allowable Cost – Any cost that conforms to the limitations outlined in federal regulations, award guidelines, generally accepted accounting principles and University policies.
3.3 Direct Cost – Any cost that can be specifically identified and/or associated with a particular sponsored project/activity relatively easily with a high degree of accuracy. (§200.413)
3.4 Facilities and Administrative (F&A/Indirect Cost) – Costs incurred and shared in support of sponsored programs, in general, but not identifiable with any single project. (§200.414)
3.5 Reasonable Cost – Any cost recognized as necessary for the performance of the sponsored project and reflects the action that a prudent person would have taken under the prevailing circumstances at the time of the decision to incur the cost.
3.6 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) – Federal policy and guidance issued by the Office of Management and Budget for the administration of federal grants and awards.
4.0 Additional Information
4.1 Determination of cost allowability, allocability and reasonableness is based upon guidance outlined the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).