General Budget Preparation
IS IT ALLOWABLE & ALLOCABLE?
Funding from awards must be expended in accordance with governing regulations and agency policy. Pre-award reviews budgets to determine costs are allowable, allocable, and appropriate to grants in accordance with Uniform Guidance, the agency’s policies and guidelines, and institutional policy.
|A cost is allowable when:||A cost is allocable when:|
|It serves a University business purpose, including instruction, research, and public service.||It is incurred solely to advance the work under the sponsored agreement.|
|It is permissible according to UTHealth policy and federal regulations (regardless of whether it is a sponsored project).||It benefits both the sponsored agreement and other work of the institution, in proportions that can be approximated through use of reasonable methods.|
|It is permissible (for a sponsored project) according to the terms and conditions of the agreement.||It benefits both the sponsored agreement and other work of the institution, in proportions that can be approximated through use of reasonable methods.|
|It complies with the rules for allowability as covered in Uniform Guidance, which dictates that costs must be reasonable. A cost is reasonable when: a) prudent person would purchase the item at that price; b) the cost is necessary for the performance of the activity; and c) incurrence of the cost is consistent with established University policies and practices.||It is necessary to the overall operation of the institution and in accordance with Uniform Guidance, is deemed to be assignable in part to sponsored projects.|
Costs must be given consistent treatment through application of those generally accepted accounting principles (GAAP) appropriate to the circumstances.
All costs incurred on a grant must conform to any limitations or exclusions in Uniform Guidance or the sponsored agreement.
PIs should work with their departmental administrative officials to develop a budget which ensures all costs in the budget are fair and reasonable for a research project in accordance with UG, agency policies and guidelines, and institutional policy.
RESOURCES FOR DETERMINING ALLOWABLE COST
Calculating Salaries - Use this guide to help calculate appropriate salaries on grants and contracts.