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Award Acceptance & Administration

Account Management

What expenses are usually unallowable?
Unallowable Costs on Federal or Federal Pass Through Accounts

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What: In addition to the limitations set by current I.U. Policy (see: Policies page) each agency has its own guidelines regarding what is and is not allowable, so the guidelines and terms and conditions of the award should be consulted for specific limitations. The federal government has given guidance to educational institutions as to the type of costs allowed and/or not allowed on federal or federal pass through accounts. Federal OMB Circular A-21 gives specific guidance on items of cost. To be allowed as a direct cost some considerations may be given:

  • Allocable? used solely to advance the project work can be identified specifically with a particular project or activity
  • Allowable?within agency guidelines allowable per OMB Circular A-21 allowable under IU policy
  • Reasonable? necessary can be justified for the project would pass the "newspaper test" is consistent with other established policies and practices

Why: Most of the items stated in Circular A-21 as unallowable direct costs are such because that classification of cost has been included in the indirect cost rate determination. You cannot classify one type of cost as both a direct cost and an indirect cost as that would be double charging the government. If a cost is included in the Facilities and Administrative (F&A) rate determination (indirect costs) it cannot be also booked as a direct expense to an account.

How: Costs that would be red flags to auditors are reviewed during the proposal development stage by the research offices. Costs that would normally fall in the unallowable category will require full justification to be included in the proposed budget. Once an account is active, staff in the Office of Research Administration will review monthly "Exception Reports" that detail charges which would be unallowable under OMB Circular A-21guidelines. The Office of Research Administration will work with the department to move the charge off the account if determined to be unallowable.




Agency Specific: Most federal agencies reference OMB Circular A-21 in the award document or grant handbook.

References:

Background check charges

What: A new university policy effective July 1, 2004 requires background checks (educational, employment, and security) for new hires to the university. Charges associated with background checks are not allowable on sponsored project accounts.

Why: Based on discussions between FMS and the IU Research Offices as well as a review of practices at other universities, it has been determined that charges associated with background checks are not considered to be an allowable cost on accounts falling in the sponsored project fund group (accounts in the 40-50 account series). This type of expense is considered to be an indirect cost rather than a direct cost.

How: Background check charges are to be placed on accounts under the dedicated object code 4871. The Office of Research Administration will periodically review activity on this object code to ensure that background check charges are not hitting accounts in the sponsored project fund group. If such charges have been booked under an object code other than 4871, please let us know and we will work together to get these moved off the sponsored project account.

Agency Specific: There may be occasional security or background checks required by a funding agency for a specific grant or contract. If listed in the budget, such charges would be allowable. An example would be a contract with the U.S. Department of Energy that requires a background check for all personnel working on the contract. If your grant or contract requires background checks, please indicate this on the documentation submitted with the payment request.

References:

Payroll Document charges

What: Payments made outside the regularly scheduled on-cycle payroll process will incur fees as follows:

  • Off-Cycle $50.00
  • Online $75.00

Why: The fee is assessed to comply with applicable regulations and strengthen internal controls.

How: Off-cycle payroll payments must be requested via a payroll adjustment voucher and have the proper approvals. Payments are scheduled to be issued each Thursday. The $50 charge will appear on a service billing under object code 5033.

Online payments are treated as special checks that are issued on demand, other than with on and off cycle days.

Fees may not be booked to accounts in the sponsored project fund group. The fee will be assessed against the organizational account on which the payroll payment is made. If a sponsored project account is inadvertently used, the system will look at the continuation account noted in the account and move the fee forward until it finds a non-sponsored project continuation account.

References:

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