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ALLOWABLE COSTS AND COSTS PRINCIPLES POLICY OVERVIEW Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, commonly called Uniform Guidance (UG), specifically Subpart E, defines those items of cost that are allowable, and which are unallowable. The tests of allowability under these principles are: (a)the costs must be reasonable; (b)they must be allocable to eligible projects under the applicable Federal Grant award; (c)they must be given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances; and (d)they must conform to any limitations or exclusions set forth in these principles or in the grant award as to types or amounts of cost items. Unallowable items fall into two categories: expenses which are by their nature unallowable(e.g., alcohol), and unallowable activities (e.g., fund raising). Lee County shall adhere to all applicable cost principles governing the use of federal grants. This policy addresses the proper classification of both direct and indirect charges to Federally funded projects and enacts procedures to ensure that proposed and actual expenditures are consistent with the grant award terms and all applicable federal regulations in the UG. Responsibility for following these guidelines lies with the Finance Department and legal team. Further, all County employees and officials who are involved in obligating, administering, expending, or monitoring grant funded projects should be well versed with the categories of costs that are generally allowable and unallowable. Questions on the allowability of costs should be directed to the Finance Department at Lee County. As questions on allowability of certain costs may require interpretation and judgment, local government personnel are encouraged to ask for assistance in making those determinations. GENERAL COST ALLOWABILITY CRITERIA All costs expended using Federal funds must meet the following general criteria: 1. Be necessary and reasonable for the proper and efficient performance and administration of the grant program.' A cost must be necessary to achieve a project object. When determining whether a cost is necessary, consideration may be given to: a) Whether the cost is needed for the proper and efficient performance of the grant project. b) Whether the cost is identified in the approved project budget or application. 2 C.F.R OMB Guidance Subpart E, pg. 155, 200.403(a) 4