Allowable costs are defined in the FAR as costs that are reasonable and allocable to the contract, per the terms of the contract at issue, Cost Accounting Standards and the FAR. (See FAR 31
What is an allowable cost?
An allowable cost is a cost that can be paid by your contract or grant. A cost is allowable only if: The cost is reasonable; it reflects what a prudent person might pay. For a cost to be allocable, it must meet one of the following criteria: It is incurred solely to advance the work under the sponsored agreement.
Are bonuses allowable costs?
Bonuses and incentive programs are allowable costs if certain criteria are met. The bonuses must be based on a written agreement, plan or policy implying an agreement.
Are contract closeout costs allowable?
As permitted by FAR 4.804-5(a), Automated Contract Closeout (ACCO) allows a system to initiate and execute the closeout action without action on the part of the Contracting Officer administering the contract. (B) FAR 52.216-7 Allowable Cost and Payment. (C) FAR 52.227-9 Refund of Royalties.
What should be included in allowable, allocable and reasonable costs?
Once a determination of allowability, allocability, and reasonableness has been made, it is important that all expenses (those charged to sponsored research accounts and department GL accounts) be charged to the appropriate expenditure type/natural class.
What are the allowable expenses for a small business?
Everyday costs. Allowable expenses include your basic office costs such as stationery and the bills you pay on your business phone. Travel costs and staff salaries are also included, as is the cost of a uniform or other appropriate clothing (for example, if you work in a skilled or manual trade).
Why do you need to Know Your allowable expenses?
Understanding what your allowable expenses are, as HMRC calls them, can really help your business. This is because expenses reduce your Self Assessment tax bill. It’s not quite like getting stuff for free, but it’s the next best thing.
What makes a cost acceptable to the public?
The cost must be able to withstand public scrutiny, i.e., objective individuals not affiliated with the institution would agree that a cost is appropriate on a sponsored research award or as a component in its Facilities and Administration Cost proposal.
