Federal Cost Principles
All Costs Must –
¨ Be in accordance with generally accepted accounting principles
¨ Not included as a match
¨ Be of net applicable credits
¨ Be adequately documented
Necessary and Reasonable –
¨ Must be necessary for the performance or administration of the grant
¨ Must follow sound business practices
¨ Fair market prices
¨ Act with prudence under the circumstances
¨ No significant deviation from established prices
Practical Aspects of Necessary –
¨ Do I really need this?
¨ Is this the minimum amount I need to spend to meet my need?
Practical Aspects of Reasonable –
¨ Do I have the capacity to use what I am purchasing?
¨ Did I pay a fair rate?
¨ If I were asked to defend this purchase, would I be comfortable?