Sponsored Program Compliance
9. The Cost Principles: Uniform Guidance (2 CFR 200)
Fiscal Fundamentals
Anyone authorizing the expenditure of federal funds needs to understand the cost principles contained in the Uniform Guidance located at 2 CFR 200, published by the Federal Office of Management and Budget (OMB). These principles govern costs that may be charged to the government by educational institutions either directly or indirectly.
Any cost being charged to a sponsor must satisfy the following criteria:
- The cost must be ALLOWABLE as defined by the Uniform Guidance (U.G.) and/or by the terms of your particular award (discussed further on the next page of this site).
- The cost must be ALLOCABLE, that is, the project which paid the expense must benefit from it.
- The expense must be REASONABLE, that is, the cost reflects what a "prudent person" might pay.
If costs are not allowable, allocable and reasonable, then they may NOT be charged to a sponsored project.
In addition, the U.G. requires that costs be handled consistently across the University. This means, for example, that particular types of expenses may not be charged directly in one School or Department, and charged as an indirect cost somewhere else. The University of Rochester's policies and practices regarding the consistent treatment of costs have been established to meet the compliance standards set forth in the U.G. and the Cost Accounting Standards (CAS) applicable to educational institutions. It is the responsibility of principal investigators, department heads and administrators to understand and comply with this guidance in order to prevent cost disallowances by the federal government. Consistent treatment of costs is necessary to meet the ultimate objective which is to prevent overcharging the federal government and double counting. If you are uncertain if a cost is allowable on a sponsored program, consult with your ORPA Research Administrator (R.A.) or departmental administrator.
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