Contracts & Grants: Budget Preparation
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**New: The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards were effective 12/26/2014. Please review as there are important changes to the federal guidelines which you will need to be aware of if you work on federal grants or cooperative agreements.**
Budget Preparation Overview
- The budget reflects the Principal Investigator's best estimate of the actual costs for conducting the scope of work.
- Your budget justification provides an explanation of why the projected costs are necessary for the research or project, and a description of the types of costs that make up a larger budget category such as "other" or "supplies".
- Always Review Sponsor Guidelines Before Preparing a Budget. Most will provide instructions relating to budget categories.
Budget Calculator 1) Version for Projects less than 12 Months in Duration (Updated 4/27/17); 2) Expanded Version (updated 4/27/17)
ANR and its Principal Investigators are jointly responsible for the stewardship of extramural funds in compliance with federal cost principles established by the federal Office of Management and Budget (OMB). The OMB has combined eight existing federal circulars into a single guidance document (known as Uniform Guidance (UG), or 2 CFR 200). This is a major reform of how the federal government provides assistance awards with the goal of increasing accountability and transparency while reducing the administrative burden borne by the parties. These new regulations are effective for new Federal awards or increments of funding issued after 12/26/2014. These principles are described in the Uniform Guidance and incorporated into University policies and procedures for administering research awards.
Please note that awards issued prior to 12/26/2014 may continue to follow the old circulars through June 30, 2015. If you are unsure about which circular to follow for your existing award, contact OCG.
Adherence to all cost principles is required for proper and appropriate accounting for the expenses of conducting extramurally funded activities at ANR. The consequences of failing to comply with costing principles may range from disallowance of specific incurred costs by the sponsor, to termination of the award, to federal sanctions, depending on the particular cost and circumstances in question.
The key concept of the cost principles is “allowability.” For a cost to be allowable on a specific sponsored award, it must be:
- Reasonable. It is necessary for the performance of the project and is within what a “prudent person” would pay for the particular goods or services obtained.
- Allocable. The project that pays the cost is the project that benefits from it. Expenses shared across multiple projects benefit all projects proportionately (when benefit can be clearly allocated) or reasonably (when proportionate value cannot be readily determined due to the interrelationship of the work involved).
- Consistently treated. The University consistently designates that type of cost as either direct or indirect when incurred for the same purpose in like circumstances.
When preparing your budget justification, or prior to incurring costs against an existing award, ask yourself: Is this cost Reasonable, Allocable and Consistently Treated by the University?
Additionally, the cost must not be explicitly excluded by the Uniform Guidance or the terms or conditions of the award. Some expenses that may directly benefit a project may still be prohibited by the sponsor and therefore not allowable on the award.