Office of Finance

A-21 Exclusions


The Office of Management & Budget (OMB) has published a revision to Circular A-21, Cost Principles for Educational Institutions which makes additional costs unallowable as either direct or indirect charges to grants and contracts.

The University of Missouri developed a procedure to segregate these costs so they can be excluded from the indirect cost pool by assigning special subcodes to be used on all such expenditures.

Some of these costs are not an issue because they are already prohibited by University policy which must always be the first criteria. If University policy permits an expenditure for an item shown as unallowable on the following list, use the special subcode in the major category where it would normally fall. For example; a reception for new faculty would be subcoded 5300 Supplies A-21 Exclusions. A complete list of the new "exclusion" subcodes is included in the expenditures subcode section. These subcodes are to be used on ALL accounts except grants and contracts.

Direct costs charged to grant or contract accounts may not include any of the items listed below as unallowable.

Indirect costs must be given special attention because all General Operating accounts affect the indirect cost rate. In addition, service operations and other ledger 3 accounts sell goods/services to University accounts (including general operating and grants). Therefore, it is important to use the "exclusion" subcodes for any costs listed below as unallowable to keep these costs out of the indirect cost calculation.

The following is a list of the costs specifically mentioned in A-21 as unallowable.

Advertising and Public Relations

Allowable: Personnel recruitment, procurement of goods and services, disposal of scrap or surplus material, communicating with the public and press about activities or accomplishments resulting from sponsored agreements.

Unallowable: Special events, conventions, trade shows, displays, demonstrations, exhibits, meeting rooms, hospitality suites, other special facilities in conjunction with shows and special events, salaries of employees to set up displays and exhibits, promotional items, memorabilia, gifts, souvenirs, advertising and public relations designed solely to promote the institution, and all other advertising and public relations costs except those specified above.

Alcoholic Beverage

Allowable: None

Unallowable: All costs of alcoholic beverages.

Alumni and Development Activities

Allowable: None

Unallowable: All costs incurred for or in support of alumni and development activities.

Bad Debts

Allowable: None

Unallowable: All losses from uncollectible accounts, including related legal and collection costs.

Civil Defense Costs

Allowable: Reasonable costs of civil defense measures on University premises as required by civil defense authorities.

Unallowable: Costs of local civil defense projects not on University premises; capital expenditures for civil defense purposes.

Commencement and Convocation

Allowable: None

Unallowable: All costs of commencement including convocations held by individual schools and colleges and receptions held in conjunction with these events.

Compensation for Personal Services

Unallowable: That portion of salaries in excess of $120,000 per annum and associated fringe benefits are unallowable as direct or indirect costs.

NOTE: These costs are captured in the Payroll system so special subcodes are not necessary.

Institution-Furnished Automobiles

Donations or Contributions

Unallowable: Donations or contributions, regardless of the recipient.

Employee Morale, Health and Welfare


Unallowable: Cost of entertainment, amusement, diversion and social activities including tickets to shows or sports events, meals, lodging, rentals, transportation and gratuities. Examples: football, basketball, theater, concert, etc. tickets for Advisory Councils, Boards, and other guests.

Fines and Penalties

Unallowable: Costs resulting from violations of, or failure of the University to comply with Federal, State, local or foreign laws and regulations, except when incurred as a result of compliance with specific provisions of the sponsored agreement or written instructions from the sponsoring agency.

Goods or Services for Personal Use

Housing and Personal Living Expense

Memberships, Subscriptions and Professional Activity Costs

Preagreement Costs

Professional Services



Sabbatical Leave

Scholarships and Student Aid

Selling and Marketing

Unallowable: Costs of selling and marketing any products or services of the institution. Example: advertising by service operations and auxiliary enterprises, promotional items.

Severance Pay

Student Activities