What defines eligible costs in a project?

Eligible costs in a project are primarily defined by the expenses that meet criteria established by funding agencies, project guidelines, or regulations and are necessary for the execution of the project's goals. Usual accounting principles play a crucial role in this definition, as they help establish a framework for determining which costs can legitimately be classified as eligible. By adhering to accepted accounting practices, project managers can separate allowable costs from ineligible ones, ensuring compliance with financial rules and appropriate allocation of resources.

This classification aligns with the broader objective of managing project budgets effectively and ensuring transparency in financial reporting. It also helps in the preparation for audits and financial reviews, adding a layer of credibility to the project's financial management. Costs that do not adhere to these accounting principles may not be accepted as eligible, potentially jeopardizing funding or support for the project.