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Federal Grant Cost Principles
Federal Grant Cost Principles Policy
Responsible Office or Person:
Related Law & Policy:
CFR 200.402 to 200.415
Federal regulations are in place to assure the best value for each federal dollar and on promoting free and open competition. Consequently, all purchases using federal funds require a cost/price analysis and documentation showing that more than one vendor was considered, unless the purchase falls within the micro-purchase threshold (see Carroll University Federal Grants Procurement Policy).
The detail of the analysis and documentation required increases with the amount spent. As a general principal, Carroll is responsible for the efficient and effective administration of Federal grants through sound management practices. Carroll may not earn or keep any profit resulting from Federal funds, unless such is expressly permitted by the terms of the grant.
A. Costs (Section 200.404)
Costs must be reasonable, allowable and allocable.
A cost is “reasonable” if it is one a reasonable person would incur in the circumstances, after appropriate market research and price analysis.
B. Allowable Costs (Section 200.403)
“Allowable” costs must:
Be necessary and reasonable for the performance of the Federal award and be allocable to that award.
Duplicative or unnecessary purchases are not “allowable” and are not eligible for reimbursement from Federal grant funds.
Conform to any limitations set forth in this Policy or in the grant. Consult the grant staff and the notice of grant award regarding additional requirements attached to particular grants.
Be recorded and classified in a consistent treatment. For example, costs that are classified as indirect outside the context of a Federal grant may not be classified as direct costs when applied to a Federal grant.
Be determined in accordance with generally accepted accounting principles (“GAAP”).
Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period.
Be properly documented.
Whenever appropriate, the costs of leasing versus purchasing must be considered.
Principal Investigators, not grants staff, are responsible for ensuring grant expenditures are accounted for in a complete, timely, and accurate manner.
C. Account Codes
Account codes are used to classify and accurately track expenses and expenditures. Use of account codes is also required by Federal law and regulation. Account codes are furnished by the Business Office. Principal Investigators are responsible for the consistent and accurate use of account codes.
D. Allocable costs ( Section 200.405)
A cost is “allocable” to the extent that it provides a benefit to the project for which the grant was awarded. If there is no benefit, the expense is not “allocable.” If an expense is not “allocable,” it is automatically not “allowable” and cannot be paid for from grant funds.
Costs charged to Federal grants shall be the actual cost incurred by Carroll and shall therefore reflect any credits obtained by the university. No purchase discounts shall be taken by Carroll on Federal grant purchases.
If a cost benefits more than one project, but the proportion of benefit to each cannot be determined because of the interrelationship of those projects, then the cost may be allocated between those projects on any reasonable basis, with proper documentation as to how and why the allocation was made.
If a grant specifically authorizes the purchase of equipment or other capital assets, those costs shall be allocated to that grant, regardless of what use is made of such equipment or asset after its original purpose is completed. “Indirect” costs, such as maintenance and depreciation are discussed in the Section III. E, below.
In general, costs allocable to one grant may not be charged to any other Federal grant to overcome fund deficiencies or any other reason. In certain instances, however, shifting costs under two or more Federal grants is allowed. Cost shifting between federal grants is not permitted without the prior, written approval of the grants accountant.
Whenever Cost Accounting Standards apply, those standards shall take precedence over the allocation principles above. Consult the Business Office for guidance.
When in doubt regarding the reasonableness and allocability of any costs, consult the grants staff.
Certain grants may be subject to statutory limits on allowable costs. In those cases, costs that exceed that limit may not be charged to the grant.
Any payments made for costs determined to be unallowable must be returned (with interest) to the granting agency.
E. Indirect (Facilities and Administration) Costs (Section 200.414)
Indirect (F&A) costs must be classified as “Facilities” or “Administration.”
“Facilities” means depreciation on buildings, equipment and capital improvement, interest on debt associated with certain buildings, equipment and capital improvements, and operations and maintenance expenses. Library expenses are “Facilities” costs.
“Administration” means general administration and general expenses of the institution, departmental administration, grants administration, student administration and services, and all other types of indirect costs not listed under Facilities.
F. Certifications (Section 200.415)
Federal law requires periodic reports detailing the use of grant funds. These reports, as well as requests for payment, must be certified by the grant accountant. The required certification reads:
“By signing this report, I certify to the best of my knowledge and belief that the report is true, complete, and accurate, and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the Federal award. I am aware that any false, fictitious, or fraudulent information, or the omission of any material fact, may subject me to criminal, civil or administrative penalties for fraud, false statements, false claims or otherwise. (U.S. Code Title 18, Section 1001 and Title 31, Sections 3729-3730 and 3801-3812).”
Price analysis is a comparison of prices offered by qualified vendors competing in the open market. For further detail, see Carroll University Federal Grant Procurement Policy.