Unallowable Costs on Federal Awards – LR 603.18

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University of Arkansas at Little Rock
Policy Name: Unallowable Costs on Federal Awards
Policy Number: LR 603.18
Effective Date: August 25, 2016
Revised Dates: –
Most Recent Review Date: –

Policy Statement

Unallowable costs are costs that cannot be charged, directly or indirectly, to a sponsored project due to sponsor, federal, and/or UALR policies, regulations, and restrictions. The Federal Office of Management and Budget’s (OMB) Uniform Guidance 2 CFR §200 identifies costs that are generally unallowable as charges to federally-sponsored projects (including federal flow-through projects). All UALR personnel participating in sponsored projects should work directly with ORSP to determine the allowableness of a purchase before using sponsored funds to make it.

Policy Guidelines

A cost may be either expressly unallowable or directly associated with unallowable activities. To be allowable, costs should be adequately documented; necessary and reasonable for the performance of the award; conform to any limitations or exclusions set forth in the award agreement or federal regulations; be consistent with UALR policies and procedures; be treated consistently with similar costs on other federal awards; be determined in accordance with generally accepted accounting principles; and not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period.

According to OMB Uniform Guidance 2 CFR §200, the following items should be considered unallowable on federally sponsored projects. This list is not comprehensive, and some exceptions may apply. UALR personnel should contact ORSP to discuss any specific cost concerns.

  • Advertising, public relations, and promotional costs (promotion of UALR is unallowable; some types of advertising, such as recruitment for a study, may be permitted)
  • Advisory councils
  • Alumni activities
  • Bad debts
  • Charitable contributions, donations, or gifts
  • Commencement and convocation expenses
  • Entertainment
  • Fines and penalties
  • Food costs and alcoholic beverages
  • Fund raising and investment management costs
  • First class or other non-coach class travel
  • Housing and personal living expenses of university officers (current and past)
  • Legal fees (may be allowable in certain narrow circumstances)
  • Lobbying
  • Losses/overruns on other sponsored projects
  • Marketing and selling costs
  • Certain types of insurance
  • Membership in any country club, social club, or dining club
  • Organization costs
  • Personal use of goods or services
  • Student activity costs

To Whom Does This Policy Apply

All UALR personnel working on a sponsored project.

Roles and Responsibilities

Principal investigators, co-investigators, project staff, and departmental administrative support staff are responsible for monitoring their expenditure of sponsored funds to ensure that all purchases are allowable. The Office of Research and Sponsored Programs is responsible for reviewing the award notice/sponsored agreement to determine unallowable cost regulations for the awarded funds.


Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200).

Source: Initial Policy
Status: Active
Approved By: Interim Chancellor and Executive Vice Chancellor and Provost Zulma Toro, August 30, 2016
Custodian: Office of Research and Sponsored Programs