Final answer:
2 CFR 220, or OMB Circular A-21, provides Cost Principles for Educational Institutions, detailing directives on direct and indirect costs associated with federal funding to ensure fiscal accountability and compliance.
Step-by-step explanation:
2 CFR 220, also known as OMB Circular A-21, addresses Cost Principles for Educational Institutions. It is a regulatory framework designed to establish principles for determining costs applicable to grants, contracts, and other agreements with educational institutions. The guidance within OMB Circular A-21 ensures proper fiscal management and accountability of federal funds by institutions of higher education, aligning their spending with federal requirements.
The regulation outlines acceptable practices for direct costs and indirect costs, emphasizing the importance of consistency in applying those costs to federally sponsored projects. Educational institutions must follow these principles to equitably distribute costs and to provide transparency in how federal funds are utilized. The Circular also includes sections on allowable and unallowable costs, ensuring that government spending aligns with established budgets and priorities.