Unallowable Costs

Unallowable Costs Policy and Procedures

Responsible Offices: Sponsored Projects Accounting
Effective Date: June 2023

POLICY

Under the Office of Management and Budget’s (OMB) Uniform Guidance 2 CFR 200 (Uniform Guidance or UG) certain types of costs cannot be charged (directly or indirectly) to federally funded sponsored agreements. The items listed below have been deemed unallowable.

Unallowable Costs

  • Advertising, public relations and promotional costs – Institutional promotion of Washington University is unallowable. Some types of advertising, such as recruitment of study patients, may be allowable.
  • Alcoholic beverages
  • Alumni activities
  • Bad debts
  • Charitable contributions, donations or gifts (cash, services or property)
  • Commencement and convocation expenses
  • Contingency provisions (i.e., reserve for future unanticipated costs)
  • Entertainment
  • Fines and penalties (i.e., costs resulting from violations of Federal, State, and local or foreign laws and regulations)
  • Food costs for routine operations, working lunches/dinners, staff meals and/or lectures are not allowable. Meals and/or food costs associated with the following activities may be charged to sponsored projects:
    • Meals associated with project related travel for University faculty and staff.
    • Subject and patient meals specifically justified and approved as part of the project activity.
    • Food provided to participants in formal conferences and seminars when related to the specific needs/requirements of the sponsored project.
  • Fund raising and investment management costs
  • First class or other non-coach class travel
  • Housing and personal living expenses of University officers
  • Legal fees – May be allowable in certain instances; however, you should confer with Sponsored Projects Accounting (SPA) or the Office of Sponsored Research Services (OSRS), as applicable.
  • Lobbying costs
  • Losses (overruns) on sponsored agreements
  • Marketing and selling of goods
  • Malpractice insurance that does not involve human subjects (must be a direct charge)
  • Membership in any civic or community organization, country club, social or dining club
  • Personal use of goods or services
  • Student activity costs

Costs that are directly associated with unallowable costs are also unallowable. Directly associated costs are costs that are generated solely as a result of the incurrence of another cost. For example, if a trip is made to conduct fund raising, the travel expenses for the trip are directly associated with the unallowable fund raising expenses and are also unallowable.

Uniform Guidance also prohibits most administrative costs from being directly charged to federally funded projects. Please refer to the Administrative Cost Policies and Procedures for specific guidance on this issue.

PROCEDURES

Proposal / Award:

The Principal Investigator (PI), co-investigators, project staff and the departmental administrative support staff are responsible for ensuring that:

  • The unallowable items noted above should be excluded from the calculation and determination of the budget data contained in proposals submitted to Federal agencies.
  • Subsequent to the receipt of a Federal award, expenses in these cost categories may not be charged to the related sponsored or cost sharing Grant Lines.
  • Other cost items specifically restricted or deemed unallowable by the agency in the sponsored agreement are not charged to the project.

Within Workday (WD), Grant Lines are assigned specific Spend Restrictions which include the list of allowable object and spend categories associated with the funding (see Appendix A for a detailed list).  Accordingly, all of the other object and spend categories that are not included in the Spend Restriction are considered to be Unallowable by definition. Faculty/staff can only code expense items to the spend categories listed in the applicable Spend Restriction for that Grant Line.  

Noted: Sponsored Projects Accounting (SPA) is able to modify and update the Spend Restriction to accommodate new/other spend categories.  Please contact SPA directly if you a have request and sufficient justification to add a spend category to the Spend Restriction.

Transaction Approvals:

SPA will apply this policy to the WD transaction that route to them for approval. Transactions that appear to involve unallowable and/or questionable items will be “disapproved” and we will request the PI/department to provide additional justification/explanation for the item. SPA will make the final allowable/unallowable determination based upon the documentation provided.

Audits/Reviews:

Unallowable cost items charged to sponsored funds that are subsequently identified during a review or audit of the project must be removed by the PI/department as soon as possible. The PI/department is responsible for absorbing these cost(s).

Private (Non-Federal) Projects:

In general, it would not be appropriate or consistent to charge the cost(s) associated with the items noted above to a sponsored agreement awarded from a private and/or non-federal funding agency. The PI or their designee should ensure that these items are excluded from the proposal and any subsequent awards. The appropriate agency guidelines/policies should be consulted for specific cost determination.

Questions regarding the allowability and treatment of costs charged to sponsored funds should be directed to either SPA or OSRS.

ATTACHMENTS

Appendix A: Spend Restrictions