Finance Office

Grant Accounting - Indirect Cost Reporting

The revision to Office of Management and Budget Circular A-21, dated October 3, 1991, specified certain costs that are unallowable as either direct or indirect charges to federally sponsored projects. In response to this revision and the "Final Revision of Circular A-21" dated July 26, 1993, we are now required to comply with Federal Cost Accounting Standards. The accounting standards as embraced by Circular A-21 dictate that unallowable costs be identified in the accounting system. Accordingly, we have established a one character mandatory identifier 'A' for allowable or 'U' for unallowable in order to identify and account for allowable costs and any unallowable costs that may be appropriate and allowable for university expenditure but unallowable for facilities and administrative (formerly indirect cost) recovery.


All costs must be identified when they occur and coded with the appropriate designator (A or U) effective July 1, 2017. The Allowable or Unallowable identifier must be used with all expense transactions.

A 'U' identifier should not be used on sponsored project accounts unless prior approval is obtained by the Office of the Vice President for Finance and Administration.


Advertising and Public Relations

  1. The term advertising costs means the costs of advertising media and corollary administrative costs. Advertising media include magazines, newspapers, radio and television programs, direct mail, exhibits, and the like.
  2. The term public relations includes community relations and means those activities dedicated to maintaining the image of the institution or maintaining or promoting understanding and favorable relations with the community or public at large or any segment of the public.
  3. Unallowable advertising and public relations costs

Costs of convocations or other events related toi nstruction or other institutional activities including:

  • Costs of displays, demonstrations and exhibits
  • Costs of meeting rooms and hospitality suites
  • Costs of promotional items and memorabilia


Costs of alcoholic beverages are unallowable for federal reimbursement. The cost of alcohol must be separated from other meal expenses. If the cost of alcohol cannot be separated, the entire cost of the meal must be classified as unallowable.

Alumni Activities

Costs incurred for, or in support of, alumni activities and similar services are unallowable for federal reimbursement.

Commercial Air Travel

Airfare costs in excess of the lowest available commercial discount airfare or customary standard (coach or equivalent) airfare are unallowable except when such accommodations would require circuitous routing, excessively prolong travel, greatly increase the duration of the flight or require travel during unreasonable hours. In order for airfare costs in excess of the customary standard commercial airfare to be allowable, e.g., use of first-class airfare, the institution must justify and document on a case-by-case basis the applicable conditions.

Donations and Contributions

Donations or contributions made by the institution, regardless of the recipient, are unallowable for federal reimbursement.


Costs of entertainment, including amusement, diversion, and social activities and any costs directly associated with such costs (such as tickets to shows or sporting events, meals, lodging, rentals, transportation, and gratuities) are unallowable for federal reimbursement.

Goods or Services for Personal Use

Costs of goods or services for personal use of the institution's employees are unallowable regardless of whether the cost is reported as taxable income to the employees. Flowers, gifts to employees, coffee and water service   would be considered unallowable. Artwork or other decorative furnishings is considered unallowable.

Fines and Penalties

Costs resulting from violations of, or failure of the institution to comply with federal, state, local or foreign laws and regulations are unallowable. A prime example would be a traffic violation ticket.


The use of limousines by the institution has been considered to be an unallowable cost. However, if it can be demonstrated and documented that the use of limousine service in a particular instance is the most economical method of transportation, this would be allowable.

Memberships, Social and Civil

Costs of membership in any civic or community organization are unallowable. Costs of membership in any country club or social or dining club or organization are unallowable.

Institutional membership in business, technical and professional organizations is allowable. Costs of the institution's subscription to business, professional and technical periodicals are allowable. Costs of meetings and conferences, when the primary purpose is the dissemination of technical information, are allowable. This includes costs of meals (less any alcohol), transportation, rental of facilities and other items incidental to such meetings or conferences.

Questions regarding policy issues should be directed to the Office of the Controller or Vice President for Finance and Administration.


The fund indicator is the first field of the accounting control key and is used to define the fund type.

Fund Type

There is only one fund type that may be used to process accounting entries related to external grants. Current Funds has a fund indicator of "1" and is the fund type most used by departmental administrators. Funds may have both internal and external restrictions that must be validated prior to processing accounting entries and require the approval of the Finance Office or the Office of Vice President for Finance and Administration.

Example of Current Funds "Unrestricted" format

Example of Current Funds "designated" or sometimes referred to as "restricted" format. The last digit of the source number as noted below determines the account designation.


Note that designated accounts often have specific restrictions on the account's use.




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