(Introduction Continued)

The application of these principles should not require changes in accepted accounting practices, however, they do require that the accumulation of costs provide for adequate documentation to support costs charged to sponsored agreements.  These principles are also used in determining costs of work performed under subgrants, subcontracts, and other awards made under sponsored agreements.

Circular A-21 provides the necessary guidance to determine if a cost is reasonable, allocable, applicable and consistent under the circumstances to the particular research agreement.   A-21 prohibits shifting costs one particular sponsored agreement to any other sponsored agreements to meet deficiencies caused by overruns or other funding considerations.  A-21 also prohibits shifting costs from activities sponsored by industry, foreign governments, or other sponsors to federally-sponsored agreements.

This training program will help you understand the restrictions placed on the expenditure of funds under sponsored agreements.  By knowing the rules, you will be able to monitor the expenses of your research agreements, which will enable you to bring the awards in at budget, and which will help you better survive those dreaded audits of your research program.  Throughout this training program, the term “Sponsored Agreements” is used to mean any grant contract, or other agreement of this institution.  

To better understand OMB Circular A-21, lets next review some important terms.

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