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Rochester, Michigan 48309-4486
(248) 370-2762
(248) 370-4111


Allowable Direct Costs under Circular A -21

The Uniform Guidance (UG) sets forth principles for determining costs applicable to Federal grants, contracts, and other agreements with education institutions.  The UG prescribes which costs are allowable and not allowable for recovery and of the costs considered allowable, whether the institution most appropriately should classify the costs as direct or indirect.


The expenses listed below are considered unallowable as direct charges to federally sponsored programs:

Generally unallowable as a
direct charge to sponsored account

 Account Description

  Books and periodical subscriptions
  Clerical and administrative salaries
  General purpose office equipment, i.e., printers, copiers, etc.
  Office supplies

Always unallowable as a
charge to sponsored account

  Bad debts
  Losses on other sponsored agreements
  Alcoholic beverages
  Meals and entertainment
  Fines and penalties
  Donations and contributions

In order to justify classification of normally indirect charges as direct, the cost must be:

a)  budgeted as a direct cost as a clear indication of the planned need with sufficient justification (refer below to item c); and
b)  not prohibited by sponsor restriction as a direct charge; and
c)  used in quantity or circumstances beyond normal activity or in delivery of a major program.


All requests are subject to final approval by The Research Office.