Costs are evaluated both during the application review stage as well as when recipients submit claims and during monitoring activities completed by FEMA. To be eligible, costs must meet the following criteria:[125]
- Be necessary and reasonable to accomplish the work properly and efficiently and be allocable according to the cost principles.
- Conform to any limitations or exclusion set forth in the award. Such limits can be statutory or policy based and are typically set forth in the award or subaward terms that include the program’s NOFO announcement by reference.
- Be consistent with the recipient and subrecipient policies and procedures governing the expenditures and activities that are not charged to federal awards. Recipients and subrecipients are not allowed to charge costs to federal awards if those costs are prohibited by their own policies and procedures.
- Be consistent under the recipient and subrecipient policies and practices with respect to classifying them as a direct or indirect cost. For example, recipients may only charge costs to the federal award as indirect costs and the recipient consistently records those same costs as indirect costs when no federal award is involved or is being charged.
- Be determined in accordance with generally accepted accounting principles, as applicable to the recipient and subrecipient.
- Not be federally financed as part of the recipient’s cost share.
- Be adequately documented.
- Be incurred during the approved period of performance.
In addition, eligible costs must be reduced by applicable credits,[126] such as duplication of benefits (e.g., insurance claims) [127] and program income.[128]