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All expenditures charged to externally-sponsored projects must meet the following criteria: Costs must be reasonable. Both the nature and amount of a cost must reflect prudent action at the time the decision was made to incur the cost;Costs must be allocable: A cost must be incurred solely to advance the work under the sponsored agreement. It must reasonably benefit the sponsored agreement. It must be necessary to the overall operation of the institution and can be assignable to a specific sponsored project;Each cost must be given consistent treatment according to generally accepted accounting principles appropriate to the project; andEach cost must conform to principles outlined in OMB circulars or specific agency guidelines.
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