Understanding A-21 and Compliance

“Compliance” is one of those words that’s thrown around frequently within departments and research offices, but often lost in the shuffle is exactly why it is so important.  When you accept a sponsored award, your institution has the ethical and administrative responsibility to comply with all regulations, policies and guidance.  Compliance starts with YOU, but no single person should be solely responsible.   Remember, awards are made to institutions, not persons, so a team effort is required!

The ramifications of learning that a previously charged cost has been disallowed under an audit can be expensive and lead to further digging by the audit community, causing headaches for departmental and central administrators and the possibility of negative press for the institution.  Luckily, the federal government has provided guidance on costing practices in OMB A-21. Using the guide and following these 4 basic considerations can help prevent non-compliance and make for a clean audit.

To ensure compliance, make sure your costs are:

Allowable– As a direct or indirect cost

Allocable– Proportionally benefits the sponsored agreement, solely advances the work, assignable to the agreement

Reasonable– Does the nature of the good or service and amount applied reflect what a “prudent person” would decide under the same circumstances,

Consistent– Incurrence of cost is consistent with institutional policy and practices, in like circumstances

Under section J, you can find a list of items that may or may not be allowable costs on sponsored agreements.  Please remember that this list isn’t exhaustive, so the treatment of allowability for those items omitted should be compared to a similar or related item of cost when making your determination.

The principles of A-21 are just one small portion of the compliance arena, but by following its guidelines you’ll have made great strides in protecting your institution.