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University of Colorado Denver | Anschutz Medical Campus

University of Colorado Denver
 

Financial Compliance and Training

Tools and Resources: Spotlight On ...


 

Unallowable Costs on Federally Sponsored Projects

   

Definition

Unallowable costs are not eligible for Federal reimbursement either directly or indirectly. All costs that do not meet all of the following criteria are considered unallowable and should not be directly charged to federal projects:

·         Reasonable and necessary for the performance of the project activities

·         Allocable to the project according to the benefit received

·         Treated consistently as either direct or indirect

 

Examples of Unallowable Costs

OMB Circular A-21, Section J discusses the principles in establishing the allowability of selected items of costs. Some items needing special attention include:

 

·         Advertising & Public Relations (except costs incurred for recruiting personnel required as part of a sponsored project)

·         Alcoholic Beverages            

·         Alumni Activities

·         Bad Debt (including collection costs and related legal costs)

·         Donations and Contributions

·         Entertainment Costs (including food)

·         Fines & Penalties

·         Fundraising

·         Goods or Services for Personal Use

·         Interest expenses (including interests incurred on borrowed capital, temporary use of endowment funds, or the use of the University’s own funds)                         

·         Lobbying

·         Membership to civic or community organizations                            

·         Proposal Costs (including time and effort, printing and postage, etc)

 

Methods for Managing Risk

 

·         Refer to the applicable policies and procedures and know who to ask questions.

o   Campus Policy - Direct Charges to Federally Sponsored Projects

o   System Policy - Propriety of Expenses policy

o   PSC Policy & Procedure Statement – Sensitive Expenses

o   Consult with your post-award administrator at the Office of Grants & Contracts or the Office of Financial Compliance on whether specific expense is allowable on a federal grant.

·         Train your department personnel involved in processing fiscal transactions on federal projects on appropriate charging by providing specific examples of the types of unallowable expenses.

·         Review procurement card transactions to ensure expenses charged to federal projects are allowable and the business purpose is adequately documented.

·         Review detail transactions statements on a monthly basis for any unallowable, unintended charges that need to be moved off the project.

·         Review and respond to the Quarterly Report of Sensitive and Administrative Type expenses on Federall Sponsored Projects to ensure sensitive type expenses are justified, documented or reallocated appropriately. 

 

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