Cost Principles for Sponsored Agreements

There are four basic concepts that guide the process of developing sponsored project budgets as defined in 2 CFR 200, Uniform Guidance. These four concepts are used to determine if costs may be requested within a sponsored project budget:

Allowability

Costs charged to a sponsored research award must comply with any limitations or exclusions indicated in the sponsored agreement or in the Federal Cost Principles within 2 CFR 200 (Uniform Guidance). This means that any limitations or exclusions specified in the funding opportunity and award must be strictly followed.

Allocability

Once a cost has been determined to be allowable, the next question is whether it’s allocable, meaning that it provides direct benefit to the sponsored project. Expenses in a sponsored project budget should not be general expenses that support various activities of the Principal Investigator (PI) and/or CU Boulder. They should be specific costs that can be reliably estimated that support or advance the work of the specific award and that award only. Items that benefit multiple projects are assigned to budgets in proportion to the benefit that they provide to each project.

Reasonableness

If a cost is deemed allowable and allocable, then the next question is whether or not it’s reasonable. The principle of reasonableness is basically how it sounds: the proposed costs must seem reasonable to the general public and able to withstand public scrutiny.

Consistent Treatment

The final consideration is whether the costs are consistently treated by the University. It is essential that all expenses be treated in the same manner under similar circumstances.

In December 2013, the Office of Management and Budget (OMB) issued uniform administrative requirements, cost principles, and audit requirements for Federal awards in the Federal Register. As of December 26, 2014, 2 CFR 200 (Uniform Guidance) replaces the administrative, accounting, audit rules and principles currently included in the OMB Circulars, including A-21, A-110 and A-133.

Your Proposal Analyst will analyze the costs within your budget and help ensure that they conform to sponsor and other regulatory requirements. Your Budget Justification is another important document that provides additional details to demonstrate adherence to the Cost Principles.

For more information, visit the Code of Federal Regulations and CU Boulder's Cost Principles Policy and Procedure Statements.