It is the principal investigator's/project manager's responsibility to ensure that the funding he or she has received is expended for charges that are "allowable" for the project in question. Under Federal guidance, for an expense to be considered allowable to be direct-charged to an award, it must first satisfy four conditions:
- Reasonable - If the nature and amount of the expenditure reflect the action that a prudent person would have taken under the same circumstances.
- Allocable - Chargeable or assignable in that is it either incurred solely to advance the project work or has a reasonable basis for proportional assignment. Note that items generally covered by indirect costs (e.g. office supplies, administrative personnel, facilities costs) should not be assigned as direct costs to sponsored projects. For more information please refer to APM 45.06.
- Consistently treated - Through application of generally accepted accounting principles like expenses must be treated in the same way.
- Conforming to any limitations or exclusions either specific to the sponsor or to Federal regulations.
Questions regarding the allowability of costs should be directed to the Cost Accounting Unit of the Office of Sponsored Programs. You may also choose to view the Power Point file in the Training section of OSP website.