What does AOR stand for and why is it important in grant costs?

• A. Allowable, Allocable, Reasonable - criteria for determining whether costs are permissible per grant terms and federal regulations.
• B. Authorized Official Records; for audit.
• C. Actual Overhead Rate - used for budgeting.
• D. Allocated Onsite Resources - for staffing.

Answer: (A)

Allowable, Allocable, Reasonable describes the three criteria used to decide if a cost can be charged to a federal grant. This matters because grant funds must meet these tests to be reimbursed and to stay compliant with grant terms and the applicable cost principles, such as those in the OMB Uniform Guidance.

Allowable means the cost is permitted under the grant terms and the applicable cost principles; it isn’t prohibited by law, regulation, or the grant’s own conditions. Allocable means the cost benefits the project or is otherwise assignable to the grant with a rational basis, so you can trace why the expense belongs to that project. Reasonable means the cost reflects what a prudent person would pay under similar circumstances; it isn’t excessive or inappropriate for the work performed, given the timing, market conditions, and the project’s scope.

Understanding these three together helps ensure that charged costs are appropriate, auditable, and in line with expectations for federal funding. The other options describe unrelated concepts and do not capture the recognized criteria used to evaluate grant costs.