Integrated CSU Administrative Manual



Section 11000 Policies

Policy Number:  11000.003.005

Policy Title: Allowable Costs

Policy Effective Date: December 1, 2011

Last Revision Date: December 1, 2011

(see revision history)


It is the policy of the California State University (CSU) that each campus have financial controls and procedures in place that ensure costs charged to sponsored projects are reasonable, allowable, properly allocable, and treated consistently.


This policy provides guidance to the CSU for the appropriate charging of costs to sponsored projects and does not apply to non-sponsored agreements/projects and specialized service facilities.

The campus President or designee must ensure that processes for charging costs to sponsored projects are in compliance with federal cost principles, applicable standards of other sponsors, CSU regulations, and campus policies.

Each campus will maintain procedures for ensuring that the costs charged to sponsored awards are reasonable, allowable, properly allocable, and treated consistently. Procedures should also ensure that cost transfers are made only with adequate justification and in a reasonable period of time, with the reasons for the transfers explained and documented in accordance with the following.

There are four guiding principles or criteria used to determine whether a cost may be charged to a sponsored project: reasonableness, allocability, allowability, and consistency. These criteria apply for both direct and Facilities and Administrative (F&A) costs (including cost match), as described below. For a given cost to be charged to a sponsored project, all four of these criteria must be met and documented.

Allowability: The determination of whether or not costs can be charged to a sponsored project as a direct or F&A cost.

Allocability: A cost is allocable to a particular sponsored project, if the goods or services involved are chargeable or assignable in accordance with relative benefits received or other equitable relationship.

Consistency: A cost is considered to be treated consistently when the expense is treated as either a direct or F&A cost under like circumstances.

Reasonableness: A cost is reasonable if the nature of the goods or services acquired or applied, and the amount involved therefore, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made.

In accordance with federal regulations (2 CFR Part 220, Section F6b(2) and Exhibit C) and requirements of other entities, there may be certain circumstances when costs that are normally treated as F&A can be direct charged to a sponsored project.

Benjamin F. Quillian
Executive Vice-Chancellor/Chief Financial Officer

Date: October 31, 2011




  • February 28, 2014 (Annual Review conducted with no change to policy.) 


Useful Guidelines:


  • Direct Cost: A cost that can be identified specifically with a particular sponsored project, instruction or any other institutional activity or that can be directly assigned to such activities relatively easily with a high degree of accuracy.
  • Facilities and Administrative (F&A) Costs: A cost that is incurred for common or joint objectives and cannot be readily or specifically identified with a particular sponsored project, instruction or any other institutional activity.
  • Specialized Service Facilities: A specialized service facility (SSF), as defined by 2 CFR Part 220, Section J47 is an operating unit that provides highly complex or specialized services to internal or external users.
  • Sponsored Projects:  A grant, contract, or other agreement between the institution and a sponsor.


Related Principles:

  • This policy provides more specific direction toward implementation of section 3.5.2 of Executive Order 890, dated January 7, 2004
  • COGR Management Practices
  • Refer to Laws, State Codes, Regulations and Mandates and other guidelines as provided by sponsors.

Sound Business Practices:

Laws, State Codes, Regulations and Mandates:


CO Manager:

Ms. Sue DeRosa 
Director, Sponsored Programs
CSU Office of the Chancellor

Subject Expert:

Ms. Sandra Nordahl

Ms. Jeanne Dittman

Ms. Cindy Lopez

Ms. Carol Sager


Affinity Group: