What are unallowable costs under federal regulations?

Unallowable costs under federal regulations refer specifically to expenses that cannot be charged to federal awards. These costs are identified in the Office of Management and Budget (OMB) Circulars and the Uniform Guidance, which provide a comprehensive list of costs considered unallowable when funding federal grants and contracts.

Understanding unallowable costs is crucial for compliance with federal regulations. These costs typically include things like entertainment expenses, alcoholic beverages, and certain lobbying costs, among others. When organizations seek reimbursement from federal awards, they must ensure that the expenses align with the guidelines provided for allowable costs, thereby ensuring that federal funds are used appropriately and effectively.

While other options mention permissible costs or circumstances requiring additional documentation, they do not accurately define unallowable costs. Recognizing what falls into the category of unallowable costs helps organizations maintain compliance and avoid issues during audits or financial reviews related to federal funding.