Transcript OMB Circular A-21 - Weber State University

OMB Circular A-21
Cost Principles for Educational
Institutions
Purpose:
Gives instruction to federal agencies affected by the
circulars; federal agencies are required to implement
by passing requirements on to institutions.
Effect:
Sets minimum standards applicable to institutions
Responsibility for compliance to standards set by
OMB A-21belongs to:
 Principal Investigator
 Office of Sponsored Projects, and
 Other Administrative Offices
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Payroll
Purchasing
Property Control
Risk Management and Insurance
Counsel’s Office
Any office dealing with a Sponsored Project
What the Cost Principles Do
 Requires a cost to:
Be allowable
Be allocable
Be reasonable (prudent person test)
Be treated consistently
Be necessary to perform the program
Be permissible under the law
Section J of OMB A-21: provides specific rules on
cost allowability.
 Sub-sections 1 through 54: provides principles to be
applied in establishing the allowability of costs.
 Specifies approval requirements, documentation and
other provisions, for some costs.
 Determination of allowability in each case should be
based on the treatment provided for similar or related
items of cost.
 When there is a discrepancy between the provisions of a
sponsored agreement and the provisions, the agreement
should govern.
How is allowability determined?
Allowable: Under the agreement, regulations, and
public laws
Reasonable: A prudent person would have purchased
this item and paid this price
Allocable: They can be assigned to the activity on
some reasonable basis
Consistently Treated: Like costs must be treated same
in like circumstances
If a cost cannot meet the criteria
listed in the previous slide, it is
unallowable, no matter what it is
for.
EXAMPLES of Unallowable Costs:
cannot be charged against Federal agreements, used as cost sharing
(match) or used as part of Indirect (F&A) cost base
Unallowable Activities (something you do)
-organized fund raising
-lobbying
-general public relations& alumni activities
-student activities
-managing investments solely to enhance
income
Unallowable Objects (something you buy, or a line item)
-advertising
-alcoholic beverages
-entertainment
-fines & penalties
-moving costs if employee resigns within twelve
months
-certain recruitment costs
OMB A-21 Constantly Changes
to tighten rules on allowability and allocation of
costs.
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to promote greater standardization in treatment of
costs.
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OSP assists in identifying what costs are
allowable, or unallowable under A-21.