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.
Unallowable: All costs of alcoholic beverages.
Alumni and Development Activities
Unallowable: All costs incurred for or in support of alumni and development activities.
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
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.
Donations or Contributions
Unallowable: Donations or contributions, regardless of the recipient.
Employee Morale, Health and Welfare
Unallowable: Costs of flowers for employees, their families; Secretaries Week lunches, receptions, etc.; Christmas or other holiday parties/ receptions; picnics, receptions for new or promoted faculty.
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
Unallowable: Cost of membership in any civic, community organization, country club, social or dining club. Examples: Chamber of Commerce, Women's Network, country clubs.
Unallowable: Cost of professional and consulting services for fund raising and alumni relations/ activities.
Unallowable: Candidate spouse expenses, group meals, receptions, etc. for recruiting purposes; advertising that includes color or material for other than recruitment purposes, or is excessive in size; special emoluments, fringe benefits and salary allowances that do not meet the test of reasonableness or do not conform to the established practices of the institution. All expenses for recruitment of students.
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.
Unallowable: Any costs in excess of the institution's normal severance pay policy applicable to all persons employed by the institution. Examples: Early retirement incentives, tenure buyouts.
Unallowable: Taxes from which exemptions are available to the institution and special assessments on land which represent capital improvements.
Unallowable: Costs of travel via institution-owned, -leased or -chartered aircraft in excess of the cost of allowable commercial air travel.