For each cost listed in Column B of Table 1, indicate with an A (allowable) in C

Question

For each cost listed in Column B of Table 1, indicate with an A (allowable) in Column A if the cost is always allowable under OMB guidance, an N (nonallowable) if the cost is not allowable under OMB guidance, and an M (may be allowable) if the cost is allowable under specific circumstances. For any costs marked with an M, explain the circumstance necessary for the cost to be allowable.

The United States Office of Management and Budget (OMB) provides guidance on the allowability of costs under federal grant agreements in Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Table 1 below lists costs being considered for reimbursement under a federal grant.

For each cost listed in Column B of Table 1, indicate with an A (allowable) in Column A if the cost is always allowable under OMB guidance, an N (nonallowable) if the cost is not allowable under OMB guidance, and an M (may be allowable) if the cost is allowable under specific circumstances. For any costs marked with an M, explain the circumstance necessary for the cost to be allowable.

Table 1: List of Costs Being Considered for Reimbursement. Column A Column B 1. Publication costs for electronic and print media, including distribution, promotion, and general
       handling. 2. Alcoholic beverages purchased to host a foreign dignitary. 3. Value Added Tax (VAT) charged for the purchase of goods or services that a nonfederal entity is
       legally required to pay to a foreign country. 4. Bad debts. 5. Recruiting costs. 6. Employee dependent care costs. 7. Costs of contributions and donations. 8. Necessary and reasonable expenses incurred for security to protect facilities, personnel, and work
       products. Explanations:

Explanation / Answer

1.Publication costs for electronic and print media, including distribution, promotion, and general
       handling.

1) Publication cost for electronic & print media, including distribution, promotion & general handling are allowable. If these costs are not identifiable with a particular cost objective, they should be allocated as indirect costs to all benefiting activities of the institution.

2) Page charges for professional journal publications are allowable where:

a) The publications report work supported by the Federal government; and

b) The charges are levied impartially on all items published by the journal, whether or not by

federally sponsored authors.

2. Alcoholic beverages purchased to host a foreign dignitary.

Costs of alcoholic beverages are unallowable.

3. Value Added Tax (VAT) charged for the purchase of goods or services that a nonfederal entity is

   legally required to pay to a foreign country.

(a) For states, local governments and Indian tribes:

(1) Taxes that a governmental unit is legally required to pay are allowable, except for self-assessed taxes that disproportionately affect Federal programs or changes in tax policies that disproportionately affect Federal programs.

(2) Gasoline taxes, motor vehicle fees, and other taxes that are in effect user fees for benefits provided to the Federal Government are allowable.

(3) This provision does not restrict the authority of the Federal awarding agency to identify taxes where Federal participation is inappropriate. Where the identification of the amount of unallowable taxes would require an inordinate amount of effort, the cognizant agency for indirect costs may accept a reasonable approximation thereof.

(b) For nonprofit organizations and IHEs:

(1) In general, taxes which the non-Federal entity is required to pay and which are paid or accrued in accordance with GAAP, and payments made to local governments in lieu of taxes which are commensurate with the local government services received are allowable, except for:

(i) Taxes from which exemptions are available to the non-Federal entity directly or which are available to the non-Federal entity based on an exemption afforded the Federal Government and, in the latter case, when the Federal awarding agency makes available the necessary exemption certificates,

(ii) Special assessments on land which represent capital improvements, and

(iii) Federal income taxes.

(2) Any refund of taxes, and any payment to the non-Federal entity of interest thereon, which were allowed as Federal award costs, will be credited either as a cost reduction or cash refund, as appropriate, to the Federal Government. However, any interest actually paid or credited to an non-Federal entity incident to a refund of tax, interest, and penalty will be paid or credited to the Federal Government only to the extent that such interest accrued over the period during which the non-Federal entity has been reimbursed by the Federal Government for the taxes, interest, and penalties.

(c) Value Added Tax (VAT) Foreign taxes charged for the purchase of goods or services that a non-Federal entity is legally required to pay in country is an allowable expense under Federal awards. Foreign tax refunds or applicable credits under Federal awards refer to receipts, or reduction of expenditures, which operate to offset or reduce expense items that are allocable to Federal awards as direct or indirect costs. To the extent that such credits accrued or received by the non-Federal entity relate to allowable cost, these costs must be credited to the Federal awarding agency either as costs or cash refunds. If the costs are credited back to the Federal award, the non-Federal entity may reduce the Federal share of costs by the amount of the foreign tax reimbursement, or where Federal award has not expired, use the foreign government tax refund for approved activities under the Federal award with prior approval of the Federal awarding agency.

4.Bad Debts:

Bad debts (debts which have been determined to be uncollectable , including losses (whether

actual or estimated) arising from uncollectable accounts and other claims,are unallowable .Related collection costs, and related legal costs,arising from such debts after they have been determined to be uncollectable are also unallowable.(But see also item C-8Collections of Improper Payments).

5.Recruiting Costs:

1) The size of the staff recruited and maintained is in keeping with workload requirements, costs of "help wanted" advertising, operating costs of an employment office necessary to secure and maintain an adequate staff, costs of operating an aptitude and educational testing program, travel costs of employees while engaged in recruiting personnel, travel costs of applicants for interviews for prospective employment, and relocation costs incurred incident to recruitment of new employees, are allowable to the extent that such costs are incurred pursuant to the recipient’s standard recruitment program. Where the entity uses employment agencies, costs not in excess of standard commercial rates for such services are allowable

(2) Special emoluments, fringe benefits, and salary allowances incurred to attract professional personnel from other non-Federal entities that do not meet the test of reasonableness or do not conform with the established practices of the entity, are unallowable.

3) Where relocation costs incurred incident to recruitment of a new employee have been allowed either as an allocable direct or indirect (F&A)cost, and the newly hired employee resigns for reasons within the employee’s control within 12 months after hire, the entity will be required to refund or credit such relocation costs to the Federal government

6. Employee Dependent Care cost:

This expenditure is allowable for the qualifying dependents

7.Cost of contribution & Donation:

(1) Costs of contributions and donations, including cash, property, and services, from the recipient to other entities, are unallowable.

(2) The value of donated services and property are not allowable either as a direct or

indirect (F&A ) cost, except that depreciation on donated assets is permitted in accordance with C-15Depreciation .In addition, the value of donated services and property may be used to meet cost

sharing or matching requirements (see section ___.502 Standards for Financial and Program Managment)

(3) Donated or volunteer services may be furnished to an entity by professional and technical personnel, consultants, and other skilled and unskilled labor. The value of these services is not allowable either as a direct or indirect cost. However, the value of donated services may be used

to meet cost sharing or matching requirements in accordance with the provisions of section ___.502 Standards for Financial and Program Management(f) of this guidance

8) Necessary and reasonable expenses incurred for security to protect facilities, personnel, and work

   products.

a) The costs of employee information publications, health or first-aid clinics and/or infirmaries, recreational activities, employee counseling services, and any other expenses incurred in accordance with the governmental unit's established practice or custom for the improvement of working conditions, employer-employee relations, employee morale, and employee performance are allowable.

b)Such costs will be equitably apportioned to all activities of the governmental unit. Income generated from any of these activities will be offset against expenses.

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