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.
NIH Allowable and Unallowable Costs and Activities
PAF American Heart Association Allowability Grid
PAF Expense Allowability Grids for Private Agencies (March of Dimes, Shriner’s Children’s Hospital, The Welch Foundation)