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Allowable and Unallowable costs on federally funded sponsored research
awards are defined in OMB Circular A-21. According to OMB Circular
A-21, the cost of a sponsored agreement is comprised of the allowable
direct costs incident to its performance, plus the allocable portion of the
allowable facility and administrative costs of the institution, less
applicable credits.The tests of allowability of costs under these principles
are: (a) they must be reasonable; (b) they must be allocable to sponsored
agreements under the principles and methods provided herein; (c) they must be
given consistent treatment through application of those generally accepted
accounting principles appropriate to the circumstances; and (d) they must
conform to any limitations or exclusions set forth in these principles or in
the sponsored agreement as to types or amounts of cost items.
The following items of cost are Unallowable according to Section J of
OMB Circular A-21:
- Advertising, Public Relations
- Alcoholic Beverages
- Alumni Activities
- Bad Debts
- Certain Legal Costs
- Charitable Contributions
- Contingencies
- Entertainment
- Fines and Penalties
- First Class Air Travel
- Fund Raising, Investment Management
- Goods and Services for Personal Use
- Housing of Officers
- Interest Expense for Operating Purposes
- Lobbying Costs
- Losses on Sponsored Research Agreements
- Memberships in Civil, Community and Social Organizations
- Selling and Marketing Costs
- Telephone Line Costs
Other items of cost may be Unallowable depending on the circumstances,
in these instances the Department Grant Administrator should discuss with their
OSP Sponsored Research Manager.
If an Unallowable cost is charged to a sponsored research award account, the
Department Grant Administrator for that particular award needs to fill out a
Cost Transfer Form (if moving non-payroll charges) or Labor Account
Distribution Change & Wage Transfer Form (if moving payroll charges) to
move that charge off the sponsored research award account. After the correct
form has been filled out to move the unallowable charge off the sponsored
research award account, the form needs to be reviewed and signed by the
Principal Investigator or Designee, Fiscal Office and OSP before
processing.
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