Troy University Sponsored Program Accounting

Unallowable Costs

Direct costs must be allowable to the sponsored project; and properly justified with sufficient support documentation on the appropriate university form;

  1. In accordance with OMB Circular A-21, OMB Circular A-110 and CAS 505 the federal government will not reimburse universities for certain costs that it considers unallowable.  These unallowable costs are specifically identified in OMB Circular A-21, Section J. as unallowable costs on Federal grants and contracts.  The following list below is examples of unallowable costs.  This list is “not inclusive.” 

    Sponsored programs may have additional cost limitations included in the terms and conditions of the award.  In these instances, the provisions of the award document must be adhered to in addition to the OMB Circulars.  If a Federal sponsor does not allow a certain expense on a project or limits the amount of the cost, the unallowable cost cannot be charged to another Federal project.  For example, National Institutes of Health (NIH) has a Salary CAP as stated in the NIHGPS (Grants Policy Statement) available at

    • Alcohol and food
    • Entertainment
    • Fines and penalties
    • Personal use items
    • Losses on sponsored agreement (deficits)
    • Charitable donations

    These items should be excluded from budget data contained in proposals submitted to Federal agencies.
    Some sponsors have restrictions on other items such as:  foreign travel, equipment purchases, and consultant fees.