Cost Principles

Cost Principles are guidelines that establish how organizations should measure, record, and report expenses. They ensure transparency, consistency, and fairness in financial management by defining what qualifies as an allowable, reasonable, and allocable cost. This helps prevent misuse of funds, supports accurate financial reporting, and maintains integrity in managing resources, especially when public or grant money is involved. Essentially, Cost Principles serve as a standardized framework to ensure expenses are justified, properly documented, and aligned with organizational or regulatory policies.