OMB Circular A-21 "Cost Principles for Educational Institutions"

Contents of Circular: 

• Sets forth allowability principles for the reimbursement of costs associated with Federally sponsored agreements (Direct and F&A)
• Describes what costs can be included in the F&A rate and methods for its calculation
• Prescribes methods to distribute F&A costs to various functions of the University (e.g., instruction, research, other activities)
• Determination  and application of F&A rates
• Simplified method for small institutions 
• General provisions for selected items of cost
• Certification of charges by "authorized official"

A-21, Section C.1:

• The cost of a sponsored agreement is comprised of the allocable direct costs incident to its performance, plus the allocable portion of the allowable F&A costs of the institution...
• Therefore, Federal sponsors reimburse the institution of the allowable costs of a project, including direct costs and F&A costs

Allocation and Documentation:
C.4.d. (1) Cost Principles.  The recipient institution is responsible for ensuring that costs charged to a sponsored agreement are allowable, allocable, and reasonable under these cost principles.
C. 4. d(2) Internal controls. The institution's financial management system shall enure that no one person has complete control over all aspects of a financial transaction.
C. 4. d. (4) Documentation
...if the institution authorizes the principal investigator or other individual to have primary responsibility, given the requirements of subsection d. (2), for the management of sponsored agreement funds, then the institution's documentation requirements for the actions of those individuals (e.g., signature or initials of the principal investigator or designee or use of a password) will normally be considered sufficient.

A-21 Section J:
J.1. Advertising:
Allowable for:

• Recruiting of personnel for the project
• Procurement of goods and services
• Disposal of scrap materials

Unallowable for:

• Advertising and public relations to promote the institution
• Cost of promotional items and memorabilia
• Cost of meetings related to other activities of the institution.

J.3 Alcoholic beverages are unallowable.
J. 5 Audit costs are allowable:

• A-133 audits are typically F&A 
• Certain audits can be charged directly if sponsor agrees.

J.9 Communication Costs.

• Local telephone normally F&A
• Long Distance cost may be direct 
• Postage normally F&A