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Guidelines for Compliance with Federal Cost Principles

Purpose

In compliance with the Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR 200, (Uniform Guidance) and the Cost Accounting Standards, the University of North Texas has established the following guidance to Principal Investigators and others responsible for the administration of Sponsored Projects on the University's requirements for complying with Federal Cost Accounting Standards.

Applicability

Principal Investigators (PIs), Financial Officers and Research/ Departmental Administrators, Grants and Contracts Accounting Analysts and/or any other administrators managing sponsored projects.

Background

The federal government expects universities to charge their federal grants and contracts using accepted cost principles. This policy guidance addresses Cost Principles, as set forth in 2 CFR Chapter I and Chapter II Part 200 Uniform Administrative Requirements, Cost Principles.

Guidance

Uniform Guidance regulations require that Universities comply with certain regulations, including four Cost Accounting Standards. For an expense to be charged as an appropriate cost on our sponsored projects, the charge must be:

  • Allowable – The cost must be allowable per the terms and conditions of the sponsored award, under applicable sponsor regulations and University policies

(a) Be necessary and reasonable for the performance of the Federal award and be allocable under these principles.

(b) Conform to any limitations or exclusions as to types or amount of cost items set forth in these cost principles or in the Federal award.

(c) Be consistent with policies and procedures that apply uniformly to both federally funded and other activities of our university.

(d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.

(e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided.

(f) 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.

(g) Be adequately documented.

(h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods.

  • Reasonable – The cost may be considered reasonable if the nature of the goods or services acquired, and the amount involved reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made. Key factors in determining reasonableness are defined in Uniform Guidance, 200.404

    A cost should be:

(a) Generally recognized as ordinary and necessary for the operation of the University or the proper and efficient performance of the Federal award.
(b) Factors such as sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and the terms and conditions of the Federal award should be considered.
(c) Market prices for comparable goods or services for the geographic area.
(d) The individuals concerned should act with prudence in the circumstances considering their responsibilities to the University, its employees, where applicable its students or membership, the public at large, and the Federal Government.
(e) Finally, the University should not significantly deviate from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.

  • Allocable – The cost must benefit the project and be directly attributable to the project or activity being performed. The cost can only be assigned and allocated to the project(s) based on that portion of the expense that represents the direct benefit to the project. Please see the additional guidance Allocation of Cost Guidelines on our Post Award website.
  • Consistently treated – Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or F&A costs in order to avoid possible double charging of Federal awards


Policy Guideline Created: August 8, 2024
Questions? Contact Grants and Contracts Administration or 940.565.3940
Read the full policy: UNT Policy Guidelines for Cost Principles