Systems and Procedures
A Division of The Corporate Controller's Office
Last Revision: 11/23/2020

Procedure CR2009 - Expenditure Guidelines For Costs Not Allowable Under Uniform Guidance


Policy Steward facilitating procedure: Associate Vice President for Finance and Corporate Controller

Table of Contents:


The Uniform Guidance details costs which are not allowable as charges on federally sponsored awards or grants. This procedure defines the unallowable process. See Policy RA30 - Facilities and Administrative (F&A) Costs.


For the purposes of this procedure, the following definitions (italicized) apply:



Uniform Guidance requirements for Federal Awards - Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards requires efficient and effective administration of Federal awards through the application of sound management practices. Costs which are unallowable as charges on federally sponsored awards or grants are also unallowable for the calculation of Facility & Administrative (F&A) rates. Certain expenses on general funds are excluded from the indirect costs pools used in the calculation of the F&A rate which are charged to the federal government. If the last digit of a general ledger account is "0" (zero) the expense is allowable. If the last digit is "1" the expense is unallowable (this is similar to X-Coding as it was IBIS). Further, entire Business Areas have been identified for exclusion (see the Chart of Accounts). The use of an allowable/unallowable general ledger account on a transaction within these Business Areas becomes irrelevant because the entire Business Area is automatically excluded from the calculation. Also see Policy RA30 Facilities and Administrative (F&A) Costs.

Activities and expenses which are unallowable for reimbursement on a federally funded award may still be appropriate and necessary. Departments may still incur these activities/expenses, but they MUST use a general ledger account ending in "1" so they can be readily identified and excluded from the indirect cost calculation.

Financial Officers and research administrators should also review the reference sections of the Uniform Guidance in relation to sponsored program accounts. Costs that are unallowable as part of the indirect cost pools would also be unallowable as direct costs on sponsored programs.


Subpart E of the Uniform Guidance provides principles to be applied in establishing the allowability of certain items involved in determining cost. These principles apply irrespective of whether a particular cost is direct or indirect. A condensed version of Subpart E, Uniform Guidance Select Items of Cost applies to general fund accounts that are included in the indirect cost pool. For direct costs, refer to the Uniform Guidance and the sponsored award terms.


Financial Officers should independently consult the Uniform Guidance, Subpart E, Cost Principles, to obtain clarification or better understanding of unallowable cost provisions. If it is unclear if an expenditure is unallowable, a conservative approach should be followed and the expenditure should be unallowable and a general ledger account ending in "1" used. Costs associated with an unallowable transaction, also referred to as directly associated costs, should also be charged to a general ledger account ending in "1". For example, if an alumni dinner is held, the dinner is unallowable. In addition, costs associated with the dinner such as physical plant set-up charges, would also be unallowable.

Certain expenses should be excluded based on function, including:

The Uniform Guidance Select Items of Cost contains guidance for excluding unallowable costs. If there are questions about a specific item, contact Cost Analysis.


Even if a cost is considered to be allowable under the Uniform Guidance, Reasonable Costs requires that a reasonableness test must also be applied. All expenses should be evaluated for reasonableness and necessity to conduct the business of the institution in a prudent and efficient manner. Any costs that are not considered reasonable should also be excluded using the procedures outlined below:

Accounts to be Excluded:

If a new general ledger account needs to be added to SIMBA, the Business Area completes a General Ledger Accounts Addition form and forwards to the Business Area Financial Officer for review. If the costs could potentially be considered unallowable, check "Yes" to "Is an Unallowable G&A GL needed as well?" and new general ledger accounts ending in "0" and "1" will be added to the SIMBA Master Data database.

If a general ledger account ending in "0" already exists without a correlated account ending in "1" the Financial Officer should complete the General Ledger Accounts Addition form requesting the addition of the correlated general ledger account.

If an entire Business Area is to be excluded for indirect cost purposes, the Financial Officer must consult with Cost Analysis. Once an account or Business Area is excluded, it will remain so until updated by the Financial Officer, either based on revisions to the Uniform Guidance impacting allowability or if directed to do so by Cost Analysis. There will be no need for annual reporting of excluded accounts.

Unallowable Costs within Allowable Accounts:

If a specific expenditure within a normally allowable general fund account must be coded as unallowable, the following procedures should be used:


The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for working with Internal Auditing when audits are being performed in the administrative area. Audits pertaining to sponsored activities or other audits performed by external auditors may also be performed. The Financial Officer is also be responsible for working with the external auditor and/or a central University office related to these procedures.


University Records retention must be managed in accordance with Policy AD35 - University Archives and Records Management, and retention schedules approved by the Records Management Advisory Committee, the Office of General Counsel, and Vice President for Administration. These records retention schedules are derived from - or based upon - federal, state, and local statutes or regulations, University Policy, industry standards, and business needs. All University Records must be maintained in such a manner to provide ease of access, establish a suitable audit trail for all transactions, and to be reviewed prior to disposition.

Upon completion of the retention period, University Records must be disposed of via secure destruction or transfer to University Archives, unless an exception to the disposition process set forth below applies. If the disposition method for University Records states "Review by Archives" on the records retention schedule, the employees responsible for those records should consult the University Archivist for a final determination of disposition. For University Records that must be securely destroyed, units may arrange for shredding services by either contacting the Blue/White Shredding Program or the Inactive Records Center.

Exceptions to the disposition process are as follows:

To safeguard the privacy of individuals, records that contain Personally Identifiable Information (PII), as defined in Policy AD53 Privacy Policy, or student records, as defined in Policy AD11 Confidentiality of Student Records, must be destroyed beyond recovery. For additional information regarding privacy and the protection of an individual's personal information, see AD53 Privacy Policy.

Additional questions may be directed to the Records Management Program.


No associated exhibits


For questions, additional detail, or to request changes to this procedure, please contact the Cost Analysis, a division of the Office of the Corporate Controller.



Date Approved:

November 23,2020

Most recent changes:

Revision History (and effective dates:)