Allowable Costs
Allowable costs are defined by the Office of Management and Budget (OMB) through established cost principles outlined in 2 C.F.R. Part 200 (Uniform Guidance).
The purpose of the cost principles is to provide a consistent and uniform approach to determining the allowability of costs under federal grant programs. The principles are designed to ensure the local government “bears its fair share” of the costs associated with federal awards. The principles also dictate that organizations employ sound management practices in the administration of federal awards.
To be allowable, all costs must:
- Be necessary, reasonable and allocable to the grant program.
- Comply with limitations of the grant agreement as well as other applicable federal and state laws and regulations.
- Be allocated to the grant on a basis consistent with policies that apply to all activities of the subgrantee.
- Be accounted for on a consistent basis and in accordance with generally accepted accounting principles. The State of Texas and its political subdivisions may follow the standards (statutory modified accrual basis of accounting) as defined in Texas Government Code, Title 10, Subtitle F, Chapter 2262, when other accounting bases conflict with state law.
- Not be allocated or included as a cost or used to meet cost sharing or matching requirements of any other federal award in either the current or a prior period, except where federal law or regulation permits.
- Be adequately documented. Documentation required may include, but is not limited to, travel records, time sheets, invoices, contracts, mileage records, billing records, telephone bills, and other documentation that verifies the expenditure amount and appropriateness of the grant.
The laws and regulations of the State of Texas and TxDOT policy also govern the Traffic Safety Program.
Policy or legislation provided by the National Highway Traffic Safety Administration (NHTSA) contains cost restrictions in addition to 2 C.F.R Part 200 (Uniform Guidance) and state laws and regulations. For example, the NHTSA
provides special rules regarding the use of federal NHTSA/Federal Highway Administration (FHWA) field-administered grants.