Introduction: Cost Accounting Guidelines

For awards made before 12/26/14 which are not subject to the Uniform Guidance

Replaced by new guidance - 11/25/2014

This document is intended to establish some guidance, in keeping with sponsor specific guidelines, the federal OMB Circulars, and University purchasing regulations, to determine whether an item can be appropriately charged to a specific project. Principal investigators and their support staffs may experience some confusion in making decisions about purchasing specific items on sponsored projects. Expenditures that are determined to be unallowable must be removed from the grant or contract. All costs to a sponsored project must provide direct benefit to that project and must be allowed by the sponsor. When the University accepts awards for sponsored programs, we also accept the terms and conditions that accompany those awards. It is often the case that sponsoring agencies, both federal and non-federal, impose restrictions on certain items that can be purchased or services that can be charged to the project. Those restrictions on the expenditure of sponsored funds create uncertainties about the allowability of costs and the appropriateness of charging the cost to a specific project.

The Office of Management and Budget of the federal government has created two main circulars that address university responsibilities in managing federal awards: OMB Circular A-21, which deals specifically with cost principles, and OMB Circular A-110, which deals with administrative requirements. These two documents form the basis for managing sponsored programs at the University of Wisconsin - Madison. The standards offered in A-21 and A-110 are generally applied to all projects, regardless of funding source. The principles articulated are used in administering both federal and non-federal awards unless the particular award document or the written policies of the sponsor give us different guidance for managing the program.

There will be times when the information provided is insufficient to determine if an expenditure can be made on the sponsored program. In those instances, it may be appropriate to seek approval for an exception to the standard principles that apply to costs. At UW – Madison, the responsibility for approving expenditures resides in the office of the dean or director. By creating a consistent approach across colleges and school, the research community will find less uncertainty and greater efficiencies in making decisions about purchases. This document is intended to assist in the process of providing an explanation for a questioned purchase and for seeking approval for the purchase.

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