Except where otherwise authorized by statute, costs shall meet the following general criteria in order to be allowable under federal awards:
(A) (1) Be necessary and reasonable for proper and efficient performance and administration of the federal award and be allocable thereto under these principles.
(2) To determine whether a cost is reasonable, consideration shall be given to:
(a) Whether a cost is a type generally recognized as ordinary and necessary for the operation of the city or the proper and efficient performance of the federal award;
(b) The restraints or requirements imposed by such factors as sound business practices, arm’s length bargaining, federal, state, local, tribal and other laws and regulations;
(c) Market prices for comparable goods or services for the geographic area;
(d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities; and
(e) Whether the cost represents any significant deviation from the established practices or policy of the City Council or the Board of Public Works and Safety which may increase the expense.
(3) While federal regulations do not provide specific descriptions of what satisfies the “necessary” element beyond its inclusion in the reasonableness analysis above, whether a cost is necessary is determined based on the needs of the program. Specifically, the expenditure must be necessary to achieve an important program objective. A key aspect in determining whether a cost is necessary is whether the city can demonstrate that the cost addresses an existing need, and can prove it.
When determining whether a cost is necessary, consideration may be given to whether:
(a) The cost is needed for the proper and efficient performance of the grant program;
(b) The cost is identified in the approved budget or application;
(c) There is a benefit to the city or its citizens associated with the cost;
(d) The cost aligns with identified needs based on results and findings from a needs assessment; and
(e) The cost addresses program goals and objectives and is based on program data.
(4) A cost is allocable to the federal award if the goods or services involved are chargeable or assignable to the federal award in accordance with the relative benefit received.
(B) Conform to any limitations or exclusions set forth as cost principles in Part 200 or in the terms and conditions of the federal award.
(C) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the city.
(D) Be afforded consistent treatment. A cost cannot be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been assigned as an indirect cost under another award.
(E) Be determined in accordance with generally accepted accounting principles.
(F) (1) Be representative of actual cost, net of all applicable credits or offsets.
(2) The term APPLICABLE CREDITS refers to those receipts or reductions of expenditures that operate to offset or reduce expense items allocable to the federal award. Typical examples of such transactions are: purchase discounts; rebates or allowances; recoveries or indemnities on losses; and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the state relate to the federal award, they shall be credited to the federal award, either as a cost reduction or a cash refund, as appropriate.
(G) Not be included as a match or cost-share, unless the specific federal program authorizes federal costs to be treated as such.
(H) Be adequately documented:
(1) In the case of personal services, the Clerk-Treasurer shall implement a system for city personnel to account for time and efforts expended on grant funded programs to assure that only permissible personnel expenses are allocated;
(2) In the case of other costs, all receipts and other invoice materials shall be retained, along with any documentation identifying the need and purpose for such expenditure if not otherwise clear.
(Ord. 05-2023, passed 6-27-23)