To define and set forth policies for the charging of allowable and unallowable costs. AUI receives a Management Fee from NSF, which is used to pay for legitimate operating expenses that fall outside of the Government definition of “allowable” expenses under the NSF Cooperative Agreements and Office of Management and Budget (OMB) Circular A-122. Any “unallowable or unallocable” expenses must be charged to the AUI Management Fee. AUI requires that NRAO makes a good faith effort to properly record costs for allowable costs, which should be charged to the NSF Cooperative Agreements and unallowable costs that should be charged to AUI Corporate Management Fee funds.
AUI requires that all expenses supported by enough detail to ensure an individual not associated with the Organization will be able to make a determination that the expenses are appropriate. Auditors review expenses annually to determine if AUI is correctly classifying expenses as allowable or unallowable, properly assigning account numbers, and obtaining appropriate approval.
The AUI’s Commitment Authorization list and a list of cost principles of the OMB Circular A-122 are made available to the NRAO staff. If further clarification is required in determining allowable costs, NRAO encourages employees to contact the NRAO Fiscal Officer, AUI/NRAO Chief Accountant, or AUI Controller.
Unallowable Costs using AUI Management Fee
Below is a listing of certain categories of unallowable costs that are made available to the AUI and NRAO staff to aid in the determination of whether a charge is allowable or unallowable — the full listing may be reviewed here.
- Airfare Costs: The cost of airfare in excess of customary economy class commercial airfare is unallowable except when such accommodations (AUI Business Class Travel Policy):
- Would not satisfy the medical needs of the traveler.
- Require circuitous travel.
- Excessively prolong travel.
- Require travel during unreasonable hours.
Each exception must be documented in order for the cost to be allowable.
- Alcoholic beverages: The cost of alcoholic beverages is unallowable. If possible, these should be on a separate invoice or receipt, otherwise the cost applicable to alcohol (including associated tax and gratuity) should be indicated on the receipt.
- Meals: Spouse, family members, and visitor meals, associated with a group business or conference, are considered unallowable and should be charged to AUI. To simplify the allocation, there is a two-step process. From the total expense for the group meal, all expenses associated with alcohol are charged to an AUI unallowable account. The remaining cost is then divided by the total number of attendees, yielding a cost per person. Total cost charged to AUI unallowable account is calculated as number of visitor(s) or spouse(s) multiplied by the cost per person.
- Contributions & Donations: Contributions or donations to an individual or organization are unallowable.
- Entertainment costs: Costs of amusement, diversion, social activities, ceremonials, and related costs such as meals, lodging, rentals, transportation, and gratuities are unallowable. Exceptions: ceremonials such as service awards and retirement awards (meal costs for honored employee and his/her guest are allowable). Costs such as tickets to shows or sports events, and birthday cakes are unallowable. This includes bar setup and bartending costs.
- Fines and penalties: Fines and penalties resulting from violations or failure of the organization to comply with Federal, State and local laws and regulations are unallowable. Exception: fines or penalties incurred as a result of compliance with specific provisions of an award or instructions in writing from the awarding agency (NSF).
- Goods or services for personal use: Gifts purchased for an employee’s retirement, for distribution at holiday or special events are unallowable. Cost of goods or services for personal use of the organization’s employees are unallowable regardless of whether the cost is reported as taxable income.
- Interest expense: Interest or penalties for overdue payments are unallowable.
- Memberships: Cost of membership in any country, social or dining club or organization is unallowable.
Allowable charges to the Cooperative Agreement:
- Working meals (such as business lunches and colloquium dinners): Meal expenses for a Colloquium speaker and non-NRAO participants, for example, scientists/astronomers are considered an allowable expense. This is part of our mission of educational & scientific outreach.
- Meetings and conferences: Expenses incurred when the primary purpose is the dissemination of technical information are allowable. This includes costs of meals, transportation, rental of facilities, and other items incidental to such meetings or conferences, including speakers’ fees. The revenue from registration fees charged to participants may be used to offset the cost of unallowable costs (i.e. alcoholic beverages and spousal & non-employee meal costs).
- Employee morale, health, and welfare costs: Expenses incurred for health or first-aid clinics, recreational activities, employees’ counseling services, the organizations established practice or custom for the improvement of working conditions, employer-employee relations and employee performance are allowable. (Meal costs for an honored employee and his/her guest at the event are allowable to the Cooperative Agreement as being considered employee morale). In addition, star and safety awards are allowable.
- Memberships: Cost of membership in business, technical, and professional organizations is allowable.