Examples of Allowable or Unallowable Costs

Allowable (Section J., OMB A-21)
In general, any product, service or equipment specifically approved by the sponsor in the award notification/approved grant proposal is allowable. If such expense is not mentioned, A-21 and CUA policy together must be applied. One question that must be answered affirmatively is – does the expense fall within the active date of the award, within the available budget and does it directly further the stated research goals approved by the sponsor? Second, and only if allowable, is the expense allocable and applicable to the award?

Unallowable Expenses
Certain expenses are unallowable for reimbursement by the federal government. These expenses may be permitted under university policy and may be valid and appropriate for the project, but they cannot be claimed as direct or indirect costs of federally sponsored projects. It is important that all costs that are unallowable be classified as such, as failure to do so can have negative consequences for the university.

The Office of Sponsored Accounting has full authority to request more information or reject the reimbursement of a cost from an award if there is insufficient evidence to support cost allowability. If that is the case, the cost will need to be covered by a non-sponsored, departmental budget.

OMB Circular A-21 and other regulations define what is allowable and unallowable. Two general conditions define unallowable costs: 1) costs for an unallowable activity or 2) costs for an unallowable object.

Examples of specifically Unallowable Activities:

  • Organized fund raising;
  • Lobbying (not allowed on any type of CUA funds);
  • Commencement and Convocation;
  • General public relations and alumni activities;
  • Student intramural activities and clubs;
  • Defense or prosecution of criminal, civil, and administrative proceedings, including claims against the federal government; and
  • Other items specified in federal or sponsor regulations.

All expenses in support of these activities are unallowable and are generally recorded in separate organizations or accounts to ensure that the transactions are identified for reporting.

Examples of specifically Unallowable Costs:

  • Most advertising and recruitment costs;
  • Alcoholic beverages (itemized receipts required to ensure there is no alcohol on meal charges);
  • Entertainment;
  • Losses or overspending on another grant or contract;
  • Fines and penalties;
  • Promotional materials (employee morale items are allowable);
  • Moving costs if employee resigns within 12 months;
  • Certain types of travel costs (e.g., first class travel except for documented medical requirements);
  • Cash donations to other parties;
  • Memberships in civic, community or social organizations;
  • Goods and services for personal use of employees (e.g., automobiles);
  • Investment management costs;
  • Lobbying costs (not allowable using any type of CUA funds);
  • Housing and personal expenses of university officers; and
  • Any other items listed in the unallowable cost section of OMB Circular A-21.

All questions about allowability or the proper recording of expenses should be directed to the Office of
Sponsored Accounting.

The full OMB A-21 Policy is at: http://www.whitehouse.gov/omb/circulars_a021_2004#exa