Which of the following best describes how AOR criteria are used in grant costs?

• A. AOR criteria applied to each cost.
• B. The budgeting process alone.
• C. Grant application submission.
• D. Employee performance reviews.

Answer: (A)

When charging grant funds, every expense must meet Allowable, Allocable, and Reasonable criteria, and those checks should be applied to each individual cost. Allowable means the expense is permitted under the grant terms and the cost principles. Allocable means the cost benefits the project and can be assigned to the grant with a logical basis, such as time or usage. Reasonable means the cost is prudent and reflects what a typical, informed person would pay under the circumstances.

Applying these criteria to each cost ensures the entire grant is compliant, auditable, and stays within approved purposes. It prevents unallowable charges from slipping in and avoids issues during audits. The other options miss this ongoing, item-by-item verification: budgeting alone sets a plan but doesn’t confirm actual charges; grant application submission is about requesting funds, not validating every cost; employee performance reviews are unrelated to how costs are charged to the grant.