Determining Allowability

From Knowledge base

Allowable or Unallowable:

Source: Federal Acquisition Regulation (FAR)

Allowable if:

  • Reasonable,
  • Allocable,
  • In accordance with Generally Accepted Accounting Principles (GAAP) and/or Cost Accounting Standards (CAS)appropriate with the circumstances,
  • In accordance with the terms of the contract, and
  • Within limitations of FAR 31.2

Cost Principles and Cost Accounting Standards (CAS)

Some Cost Principles incorporate rules or reference certain CAS

  • Allowability limited to the amounts determined under CAS


Determination, Categorization and Documentation - What a contractor needs to do:

  • Determine the cost appropriately,
  • Categorize the cost appropriately,
  • Have documentation available to demonstrate that the cost are determined allowable and categorized appropriately
    • Maintain records and supporting documentation, to demonstrate the cost have been paid, and are allowable and comply with the applicable cost principles.[1]

References and Notes

  1. FAR 31.201-2