| Answers |
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| 1. What are allowable costs? |
| Allowable costs are those costs that are reasonable, allocable, consistently applied and not specifically prohibited by
federal regulation e.g., Far 31.205 (
http://www.arnet.gov/far/) or the cost principles e.g., OMB Cost Circulars
(
http://www.whitehouse.gov/omb/circulars/). |
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| 2. What accounting system should an organization use? |
| The accounting system should be a project/job cost
accounting system that not only segregates costs by project but also between
direct and indirect costs. There are a number of commercial software systems that can be purchased
off-the-shelf, but the particular needs of an organization should be discussed
with an independent CPA or with a local computer store prior to making
any purchase. Click here
for a Sample Chart of Accounts
[pdf]. (PDF require Acrobat Reader.
Click here to download). |
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| 3. Does time and effort reporting apply to subrecipient's? If so, are the
applicable requirements based on the prime or subrecipient's type of organization? |
| Yes, time and effort reporting is applicable to subrecipient's. The requirements are based on the
subrecipient’s type of organization. |
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| 4. Which cost principles apply to universities? Non profit organizations?
Hospitals? Commercial (for-profit) organizations? State and Local Governments? |
| Universities - OMB Circular A-21;
Non-Profit Organizations - OMB Circular A-122; Hospitals - 45 CFR Part 74, Appendix E; |
| State and Local Governments - OMB Circular A-87; Commercial (for-profit)
Organizations - FAR Part 31; |
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| 5. What is the difference between a grant and a contract? |
| A grant is an assistance mechanism, and a contract is a mechanism for acquiring services, supplies or research
for the direct benefit and use of the government. |
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