01.09.04e - Allowable, Allocable, and Reasonable Costs

Allowable, Allocable, and Reasonable Costs Policy Number and Last Update (01.09.04e/03-2016)

Policy

Costs must be determined to be allowable, allocable, and reasonable before they are charged to a Head Start grant.

Procedures

1. A delegate agency with more than one program and funding source must use a cost allocation plan that meets the requirements of ACYF-IM-HS-01-06. The delegate Head Start director is responsible for developing this plan. The fiscal coordinator assigns costs according to the plan, and the check co-signer assures that all Migrant & Seasonal Head Start expenditures are correctly allocated to the contract.
2. Before signing a purchase requisition, the director ensures that it meets each of the three (3) criteria for payment. (If a requisition does not meet the requirement, the director aborts the purchase, or assigns it to a different funding source.)
3. The fiscal coordinator reviews all purchase requisitions for allowability, allocability, and reasonableness according to 45 CFR 75. If a requisition does not meet the criteria, the coordinator returns it to the director without signing/initialing and without ordering. In such a case, the fiscal coordinator advises the director, and documents for the file, allowability problems.
4. Co-signers of agency checks assure that Head Start costs meet requirements for allowability, allocability, and reasonableness.
5. Delegate agency personnel may contact the grantee director or fiscal manager for technical assistance in determining whether a cost is allowable, allocable, or reasonable.
6. The grantee fiscal manager will perform a desk audit of each delegate monthly expenditure report, testing every item for allowability, allocability, and reasonableness, according to and 45 CFR 75. Any expenditure which fails to meet the requirements will be disallowed with the approval of the grantee director.
7. The grantee officer, following department procedures, will recover disallowed expenses.