This chapter addresses the general principles underlying the allowability of costs, differentiates direct costs from F&A costs, and highlights a number of specific costs and categories of cost for NIH applicants and grantees.
During post-award administration, the GMO, or a GMO designee, monitors expenditures for conformance with cost policies.
In the latter case, the GMO must be satisfied that the organization's accounting system can adequately identify and support all costs as direct costs to the project.
This includes being able to identify and segregate costs on the basis of a process that assigns costs commensurate with the benefits provided to individual projects (see Administrative Requirements—Management Systems and Procedures—Financial Management System Standards).
Grantees may use their own accounting systems, policies, and procedures to implement the cost principle requirements as long as they meet the standards prescribed in 45 CFR part 74.21 or 92.20 for financial management systems.
The cost principles address four tests to determine the allowability of costs.