Fiscal & Administrative Review Assistance for IDHS Providers: Allowable Costs Overview

Allowable Costs are charges incurred by your organization to support the implementation of a grant award. It is critical for your organization to understand the federal and state standards for allowability of costs.

Costs must meet the following general criteria to be allowable:

1. Be necessary and reasonable for your organization to implement the Federally funded grant award.
2. Be allocable to the grant award under the provisions of the applicable cost principles.
3. Be consistent with policies and procedures that apply uniformly to grant award and other activities of your organization.
4. Consistent treatment of direct and indirect costs.
5. Be determined in accordance with generally accepted accounting principles (GAAP)
6. Not included as cost or used to meet the cost sharing or matching requirements of another grant award.
7. Be adequately documented.
8. Incurred during the period performance and consistent with the approved award budget.

Your organization's financial management system must meet the following standards to account for allowable costs:

1. Accounting system that enables accurate and distinct tracking of transactions for grant awards.
2. Retention of supporting documentation for grant expenditures.
3. Effective internal controls to ensure compliance with statues and regulations.
4. Budget control over expenditures to ensure costs incurred reconcile with the approved budget.

Grantee Reminders:

1. Develop a consistent approach to assess eligibility of costs and cost allocation for grant programs.
2. Review your program's specific Notice of Funding Opportunity and grant agreement for requirements on allowable costs.
3. Request prior approval from IDHS if you cannot determine if a cost is allowable.

Information: 2 CFR 200.402-411