Tips:
When you are unsure if sponsored project funds can be used for an expenditure, review the following and/or contact Grants Accounting or ORSP before making the purchase.
- Notice of Award Terms and Conditions, Proposal Announcement
- Approved project budget and justification, budget modification thresholds
- State and USD Policies and Procedures, www.usd.edu/policies
- Code of Federal Regulations (2 CFR Part 200), Office of Management & Budget (OMB)
When using sponsored project funds, expenses must meet three key requirements: they must be allowable, allocable, and reasonable.
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Allowable: The expense is permitted under the terms and conditions of the sponsored award, applicable regulations, and USD policies.
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Allocable: The expense benefits the sponsored project and can be assigned to the project in proportion to the benefit received.
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Reasonable: The cost is necessary for the project and reflects what a prudent person would consider appropriate under the circumstances.
Unallowable Costs
Some expenses cannot be charged to sponsored projects because they are prohibited by federal regulations, sponsor requirements, or USD policies. Examples may include:
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Alcohol
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Entertainment and social activities
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Fines and penalties
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Certain personal expenses
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Expenses that do not benefit or support the sponsored project
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Costs specifically identified as unallowable by the sponsor or applicable regulations
An expense may also be unallowable even if it is reasonable or benefits the project if the award terms, regulations, or USD policies specifically prohibit the cost.
Before charging an expense to a sponsored project, consider whether the expense is permitted, directly benefits the project, and is appropriate and necessary to accomplish the project's objectives.