Apply the Selected Items of Cost section in 2 CFR to assess the allowability of specific expenses under federal awards. Use it alongside general cost principles to ensure compliance during budgeting, charging, and auditing processes.
Key Insights
- The Selected Items of Cost section outlines over 50 categories with specific guidance on whether costs are allowable, unallowable, or conditionally allowable under federal regulations.
- Effective cost assessment requires first applying the general principles of allowability, allocability, and reasonableness, then reviewing the Selected Items of Cost for any item-specific conditions.
- Auditors reference the Selected Items of Cost during single or program audits to determine compliance and verify whether expenses charged to federal awards meet regulatory requirements.
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After you determine overall if a cost is allowable by going through sections 403, 404, and 405, determining its allowability, allocability, and reasonableness, still lingering questions about that cost. The Selected Items of Cost section of 2CFR has 50-plus categories of costs, and within those categories, numerous examples of whether the cost is generally allowable, generally unallowable, and if allowable, perhaps there are conditions attached to its allowability. The purpose is to help grantees determine whether specific costs are allowable.
It's used as a reference guide when budgeting, charging, or reviewing expenses for compliance. It applies key principles for each cost item you want to evaluate against the allowability, allocability, and reasonable criteria first, and then you want to go to the Selected Items of Cost to determine if there are any specific conditions attached to that cost. It helps with decision-making.
If a cost is listed as unallowable, you know you can't charge it to a federal award. If allowable, you have to make sure it meets the adequate documentation and allocability requirements, and if it's conditionally allowable, the Selected Items of Cost will provide you guidance and examples on those conditions. Additionally, and ultimately, the Selected Items of Cost are used to determine whether you have, especially in a single or program audit, if a cost is allowable or unallowable.
Auditors dig deeper into the allowability of costs and activities in a single or programmatic audit.