Allowable and Unallowable Costs Reference Guide
Allowable
Description
1 Advertizing and Public Relations §200.421
The term advertising costs means the costs of advertising media and corollary
administrative costs. Advertising media include magazines, newspapers, radio and
television, direct mail, exhibits, electronic or computer transmittals, and the like.
The term “public relations” includes community relations and means those activities
dedicated to maintaining the image of the non-Federal entity or maintaining or
promoting understanding and favorable relations with the community or public at large
or any segment of the public
Advertizing and Public relations costs for:
Unallowable
Advertizing and Public relations costs for:
1) The recruitment of personnel required by the non-Federal entity
for performance of a Federal award. The procurement of goods and
services for the performance of a Federal award.
1) Costs of meetings, conventions, convocations, or
other events related to other activities of the entity
2) The Procurement of goods and services for the performance of a including:
Federal award.
(i) Costs of displays, demonstrations, and exhibits.
(ii) Costs of meeting rooms, hospitality suites, and other
special facilities used in conjunction with shows and
3) The disposal of scrap or surplus materials acquired in the
other special events.
performance of a Federal award except when non-Federal entities (iii) Salaries and wages of employees engaged in setting
are reimbursed for disposal costs at a predetermined amount.
up and displaying exhibits, making demonstrations, and
providing briefings.
4) Program outreach and other specific purposes necessary to meet
the requirements of the Federal award.
5) Costs of communicating with the public and press pertaining to
specific activities or accomplishments which result from
2) Costs of promotional items and memorabilia,
performance of the Federal award (these costs are considered
including models, gifts, souvenirs and T. Shirts.
necessary as part of the outreach effort for the Federal award)
6) Costs of conducting general liaison with news media and
government public relations officers, to the extent that such
activities are limited to communication and liaison necessary to
keep the public informed on matters of public concern, such as
notices of funding opportunities, financial matters, etc.
2 Advisory councils
§200.422
3) Costs of advertising and public relations designed
solely to promote the non-Federal entity.
Costs incurred by advisory councils or committees are
unallowable unless authorized by statute, the Federal
awarding agency or as an indirect cost where allocable
to Federal awards.
3 Alcoholic beverages
§200.423
Costs of alcoholic beverages.
4 Alumni/ae activities
§200.424
Costs incurred by IHEs for, or in support of, alumni/ae
activities.
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Description
Allowable and Unallowable Costs Reference Guide
Allowable
5 Audit services §200.425
6 Bad debts
Unallowable
A reasonably proportionate share of the costs of audits required by,
and performed in accordance with, the Single Audit Act
Amendments of 1996 (31 U.S.C. 7501-7507), as implemented by
requirements of this part.
Any costs when audits required by the Single Audit Act
and Subpart F—Audit Requirements of this part have
not been conducted or have been conducted but not in
accordance therewith.
Pass-through entities may charge Federal awards for the cost of
agreed-upon-procedures engagements to monitor subrecipients (in
accordance with Subpart D—Post Federal Award Requirements of
this part, §§200.330 Subrecipient and contractor determinations
through 200.332 Fixed Amount Subawards) who are exempted
from the requirements of the Single Audit Act and Subpart
F—Audit Requirements of this part. This cost is allowable only if
the agreed-upon-procedures engagements are:
(1) Conducted in accordance with GAGAS attestation standards;
(2) Paid for and arranged by the pass-through entity; and
(3) Limited in scope to one or more of the following types of
compliance requirements: activities allowed or unallowed;
allowable costs/cost principles; eligibility; and reporting.
Any costs of auditing a non-Federal entity that is
exempted from having an audit conducted under the
Single Audit Act and Subpart F—Audit Requirements
of this part because its expenditures under Federal
awards are less than $750,000 during the non-Federal
entity's fiscal year.
Bad debts (debts which have been determined to be
uncollectable), including losses (whether actual or
estimated) arising from uncollectable accounts and other
claims. Related collection costs, and related legal costs,
arising from such debts after they have been determined
to be uncollectable.
§200.426
7 Bonding costs §200.427
Bonding costs arise when the Federal awarding agency requires assurance against
financial loss to itself or others by reason of the act or default of the non-Federal entity.
They arise also in instances where the non-Federal entity requires similar assurance,
including: bonds as bid, performance, payment, advance payment, infringement, and
fidelity bonds for employees and officials.
8 Collections of improper payments §200.428
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Costs of bonding required pursuant to the terms and conditions of
the Federal award.
Costs of bonding required by the non-Federal entity in
the general conduct of its operations are allowable as an
indirect cost to the extent that such bonding is in
accordance with sound business practice and the rates
and premiums are reasonable under the circumstances.
The costs incurred by a non-Federal entity to recover improper
payments are allowable as either direct or indirect costs, as
appropriate.
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Description
Allowable and Unallowable Costs Reference Guide
Allowable
Unallowable
For IHEs, costs incurred for commencements and
convocations are unallowable, except as provided for in
Appendix III to Part 200—Indirect (F&A) Costs
Identification and Assignment, and Rate Determination
for Institutions of Higher Education (IHEs), paragraph
(B)(9) Student Administration and Services, as student
activity costs.
9 Commencement and convocation costs §200.429
10 Compensation—personal services §200.430
Costs of compensation are allowable to the extent that they satisfy
the specific requirements of this part, and that the total
compensation for individual employees:
(1) Is reasonable for the services rendered and conform to the
established written policy of the non-Federal entity consistently
applied to both federal and non-Federal entities.
(2) Follows an appointment made in accordance with a non-Federal
entity laws and /or rules or written policies and meets the
requirements of Federal statute, where applicable.
General. Compensation for personal services includes all remuneration, paid currently or (3) Is determined and supported as provided in the Standards for
accrued, for services of employees rendered during the period of performance under the Documentation of Personnel Expenses when applicable.
Federal award, including but not necessarily limited to wages and salaries.
Compensation for personal services may also include fringe benefits.
Reasonable amounts of charges for activities contributing and
directly related to work under an agreement, such as delivering
special lectures about specific aspects of the ongoing activity,
writing reports and articles, developing and maintaining protocols
(human, animals, etc.), managing substances/chemicals, managing
and securing project-specific data, coordinating research subjects,
participating in appropriate seminars, consulting with colleagues
and graduate students, and attending meetings and conferences.
Charges for work performed on Federal awards by faculty members
during the academic year are allowable at the IBS rate. Except as
noted in paragraph (h)(1)(ii) of this section, in no event will
charges to Federal awards, irrespective of the basis of computation,
exceed the proportionate share of the IBS for that period. This
principle applies to all members of faculty at an institution. IBS is
defined as the annual compensation paid by an IHE for an
individual's appointment, whether that individual's time is spent on
research, instruction, administration, or other activities. IBS
excludes any income that an individual earns outside of duties
performed for the IHE.
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Unless there is prior approval by the Federal awarding
agency, charges of a faculty member's salary to a
Federal award must not exceed the proportionate share
of the IBS for the period during which the faculty
member worked on the award.
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Allowable and Unallowable Costs Reference Guide
Allowable
Description
Unallowable
11 Compensation—fringe benefits §200.431
Leave. The cost of fringe benefits in the form of regular
compensation paid to employees during periods of authorized
absences from the job, such as for annual leave, family-related
leave, sick leave, holidays, court leave, military leave,
Fringe benefits are allowances and services provided by employers to their employees as administrative leave, and other similar benefits, are allowable if all
compensation in addition to regular salaries and wages. Fringe benefits include, but are of the following criteria are met:
not limited to, the costs of leave (vacation, family-related, sick or military), employee
(1) They are provided under established written leave policies.
insurance, pensions, and unemployment benefit plans.
(2) The costs are equitably allocated to all related activities,
including Federal awards.
(3) The accounting basis (cash or accrual) selected for costing each
type of leave is consistently followed by the non-Federal entity or
specified grouping of employees.
The cost of fringe benefits in the form of employer contributions or
expenses for social security; employee life, health, unemployment,
and worker's compensation insurance (except as indicated in
§200.447 Insurance and indemnification); pension plan costs and
other similar benefits are allowable, provided such benefits are
granted under established written policies.
12 Conferences
Increases to normal and past service pension costs
caused by a delay in funding the actuarial liability
beyond 30 calendar days after each quarter of the year to
which such costs are assignable are unallowable. NonFederal entity may elect to follow the “Cost Accounting
Standard for Composition and Measurement of Pension
Costs” (48 CFR 9904.412).
§200.432
A conference is defined as a meeting, retreat, seminar, symposium, workshop or event
whose primary purpose is the dissemination of technical information beyond the nonFederal entity and is necessary and reasonable for successful performance under the
Federal award.
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Automobiles. That portion of automobile costs
furnished by the entity that relates to personal use by
employees (including transportation to and from work)
is unallowable as fringe benefit or indirect (F&A) costs
regardless of whether the cost is reported as taxable
income to the employees.
Allowable conference costs paid by the non-Federal entity as a
sponsor or host of the conference may include rental of facilities,
speakers' fees, costs of meals and refreshments, local
Conference costs restricted by the terms and conditions
transportation, and other items incidental to such conferences
of the Federal Award.
unless further restricted by the terms and conditions of the Federal
award. As needed, the costs of identifying, but not providing,
locally available dependent-care resources are allowable.
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Allowable and Unallowable Costs Reference Guide
Allowable
Description
13 Entertainment costs
Costs of entertainment, including amusement, diversion,
and social activities and any associated costs are
unallowable, except where specific costs that might
otherwise be considered entertainment have a
programmatic purpose and are authorized either in the
approved budget for the Federal award or with prior
written approval of the Federal awarding agency.
§200.438
14 Equipment and other capital expenditures §200.439
Unallowable
Capital expenditures for special purpose equipment are allowable
as direct costs, provided that items with a unit cost of $5,000 or
more have the prior written approval of the Federal awarding
agency or pass-through entity.
Capital expenditures for general purpose equipment,
buildings, and land are unallowable as direct charges,
except with the prior written approval of the Federal
awarding agency or pass-through entity.
Cost increases for fluctuations in exchange rates are allowable costs
subject to the availability of funding, and prior approval by the
Federal awarding agency.
15 Exchange rates
§200.440
16 Fines, penalties, damages and other settlements §200.441
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The non-Federal entity is required to make reviews of local
currency gains to determine the need for additional federal funding
before the expiration date of the Federal award. Subsequent
adjustments for currency increases may be allowable only when the
non-Federal entity provides the Federal awarding agency with
adequate source documentation from a commonly used source in
effect at the time the expense was made, and to the extent that
sufficient Federal funds are available.
Costs resulting from non-Federal entity violations of,
alleged violations of, or failure to comply with, Federal,
state, tribal, local or foreign laws and regulations are
unallowable, except when incurred as a result of
compliance with specific provisions of the Federal
award, or with prior written approval of the Federal
awarding agency.
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Description
Allowable and Unallowable Costs Reference Guide
Allowable
17 Goods or services for personal use §200.445
Costs of housing (e.g., depreciation, maintenance, utilities,
furnishings, rent), housing allowances and personal living expenses
are only allowable as direct costs regardless of whether reported as
taxable income to the employees. In addition, to be allowable direct
costs must be approved in advance by a Federal awarding agency.
Unallowable
Costs of goods or services for personal use of the nonFederal entity's employees are unallowable regardless of
whether the cost is reported as taxable income to the
employees.
Costs incurred for materials, supplies, and fabricated parts
necessary to carry out a Federal award are allowable.
18 Materials and supplies costs, including costs of computing devices §200.453
Materials and supplies used for the performance of a Federal award
may be charged as direct costs. In the specific case of computing
devices, charging as direct costs is allowable for devices that are
essential and allocable, but not solely dedicated, to the performance
of a Federal award.
Costs of the non-Federal entity's membership in business, technical, Costs of membership in any country club or social or
and professional organizations are allowable.
dining club or organization are unallowable.
19 Memberships, subscriptions, and professional activity costs §200.454
Costs of the non-Federal entity's subscriptions to business,
professional, and technical periodicals are allowable.
Costs of membership in organizations whose primary
purpose is lobbying are unallowable.
Costs of membership in any civic or community organization are
allowable with prior approval by the Federal awarding agency or
pass-through entity.
20 Participant support costs §200.456
Participant support costs are allowable with the prior approval of
the Federal awarding agency.
21 Taxes (including Value Added Tax) §200.470
Taxes that a governmental unit is legally required to pay are
allowable.
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Self-assessed taxes that disproportionately affect
Federal programs or changes in tax policies that
disproportionately affect Federal programs.
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Allowable and Unallowable Costs Reference Guide
Allowable
Description
22 Student activity costs
Unallowable
Costs incurred for intramural activities, student
publications, student clubs, and other student activities,
are unallowable, unless specifically provided for in the
Federal award.
§200.469
Costs incurred for ordinary and normal rearrangement and
alteration of facilities are allowable as indirect costs. Special
arrangements and alterations costs incurred specifically for a
Federal award are allowable as a direct cost with the prior approval
of the Federal awarding agency or pass-through entity.
23 Rearrangement and reconversion costs §200.462
Costs incurred in the restoration or rehabilitation of the non-Federal
entity's facilities to approximately the same condition existing
immediately prior to commencement of Federal awards, less costs
related to normal wear and tear, are allowable.
24 Interest §200.449
Costs incurred for interest on borrowed capital,
Financing costs (including interest) to acquire, construct, or replace
temporary use of endowment funds, or the use of the
capital assets are allowable, subject to the conditions in this
non-Federal entity's own funds, however represented,
section.
are unallowable.
25 Training and education costs §200.472
The cost of training and education provided for employee
development is allowable.
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Description
Allowable and Unallowable Costs Reference Guide
Allowable
Unallowable
Costs of organized fund raising, including financial
Fund raising costs for the purposes of meeting the Federal program
campaigns, endowment drives, solicitation of gifts and
objectives are allowable with prior written approval from the
bequests, and similar expenses incurred to raise capital
Federal awarding agency.
or obtain contributions are unallowable.
26 Fund raising and investment management costs §200.442
Costs of investment counsel and staff and similar
Costs of investment counsel and staff and similar expenses incurred expenses incurred to enhance income from investments
to enhance income from investments associated with investments NOT associated with investments covering pension,
covering pension, self-insurance, or other funds which include
self-insurance, or other funds which include Federal
Federal participation allowed by this part.
participation allowed by this part.
Cost must be allocated as an appropriate share of indirect costs
under conditions described in §200.413 Direct costs
Cost must be allocated as an appropriate share of
indirect costs under conditions described in §200.413
Direct costs
Costs related to the physical custody and control of monies and
securities are allowable.
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Gains and losses on disposition of depreciable assets. §200.443
Gains and losses on the sale, retirement, or other disposition of
depreciable property must be included in the year in which they
occur as credits or charges to the asset cost grouping(s) in which
the property was included. The amount of the gain or loss to be
included as a credit or charge to the appropriate asset cost
grouping(s) is the difference between the amount realized on the
property and the undepreciated basis of the property.
Gains and losses from the disposition of depreciable
property must not be recognized as a separate credit or
charge under the following conditions:
(1) The gain or loss is processed through a depreciation
account and is reflected in the depreciation allowable
under §§200.436 Depreciation and 200.439 Equipment
and other capital expenditures.
(2) The property is given in exchange as part of the
purchase price of a similar item and the gain or loss is
taken into account in determining the depreciation cost
basis of the new item.
(3) A loss results from the failure to maintain
permissible insurance, except as otherwise provided in
§46*200.447 Insurance and indemnification.
(4) Compensation for the use of the property was
provided through use allowances in lieu of depreciation.
Gains or losses of any nature arising from the sale or
exchange of property other than the property covered in
paragraph (a) of this section, e.g., land, must be
excluded in computing Federal award costs.
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