THE IMPORTANCE OF THE BUDGET JUSTIFICATION (also called BUDGET NARRATIVE)

The budget justification is the first step in documenting the allowability, allocobility, necessity, reasonableness and consistent treatment of possible award expenditures and serves a number of critical functions.

• Describes the need for or necessity of major categories of expense.

• Documents the reasonableness of the budget request, conveys the PI/PD's judgment as well as the feasibility of project approach in context of resources available and proposed.

• Serves as documentation for a sponsor’s prior approval of a cost that ordinarily is not be allowable as a direct cost.

• Facilitates OSA ‘pre-audit’ of high-risk expenditure categories following award.

  • The budget justification is the first place reviewed to confirm the allowability, allocobility, necessity, reasonableness and consistent treatment of an item charged to a sponsor, particularly if the justification in the purchase requisition is unclear.