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AC 150/5100-10A Appendix 4 ernment whereby the Federal Government provides funds or aid in kind to carry out specified programs, services, or activities. The principles and policies stated in this appendix applicable to grants in general also apply to any Federally sponsored cost reimbursement type of agreement performed by a State or local government, including contracts, subcon- tracts and subgrants. 7. Grant program means those activities and operations of the grantee which are necessary to carry out the purposes of the grant,includ- ing any portion of the program financed by the grantee. 8. Grantee means the department or agency of State or local government which is respon- sible for administration of the grant. 9. Local unit means any political subdivision of government below the State level. 10. Other State or local agencies means de- partments or agencies of the State or Local unit which provide goods, facilities, and serv- ices to a grantee. 11. Services, as used herein, means goods and facilities, as well as services. 12. Supporting services means auxiliary functions necessary to sustain the direct effort involved in administering a grant program or an activity providing service to the grant pro- gram. These services may be centralized in the grantee department or in some other agency, and include procurement, payroll, personnel functions, maintenance and opera- tion of space, data processing, accounting, budgeting, auditing, mail and messenger serv- ice, and the like. C. Basic guidelines. 1. Factors affecting allowability of costs. To be allowable under a grant program, costs must meet the following general criteria: a. Be necessary and reasonable for proper and efficient administration of the grant program, be allocable thereto under these principles, and, except as specifically pro- vided herein. not be a general expense re- quired to carry out the overall responsibili- ties of State or local governments. Page 2 4113/76 b. Be authorized or not prohibited under State or local laws or regulations. c. Conform to any limitations or exclu- sions set forth in these principles, Federal laws, or other governing limitations as to types or amounts of cost items. d. Be consistent with policies, regulations, and procedures that apply uniformly to both Federally assisted and other activities of the unit of government of which the grantee is a part. e. Be accorded consistent treatment through application of generally accepted accounting principles appropriate to the circumstances. f. Not be allocable to or included as a cost of any other Federally financed program in either the current or a prior period. g. Be net of all applicable credits. 2. Allocable costs. a. A cost is allocable to a particular cost objective to the extent of benefits received by such objective. b. Any cost allocable to a particular grant or cost objective under the principles pro- vided for in this Appendix may not be shifted to other Federal grant programs to overcome fund deficiencies, avoid restrictions imposed by law or grant agreements, or for other reasons. c. Where an allocation of joint cost will ultimately result in charges to a grant pro- gram, an allocation plan will be required as prescribed in section J. 3. Applicable credits. a. Applicable credits refer to those re- ceipts or reduction of expenditure -type transactions which offset or reduce expense items allocable to grants as direct or indirect costs. Examples of such transactions are: purchase discounts; rebates or allowances; recoveries or indemnities on losses; sale of publications, equipment, and scrap; income from personal or incidental services; and adjustments of overpayments or erroneous charges. b. Applicable credits may also arise when Federal funds are received or are available • • •