Unallowable Costs

OMB Circular A-21 prohibits the charging of certain “unallowable” costs to Federally sponsored agreements. To avoid cost disallowances on sponsored agreements, the following GL accounts will not be allowed as charges to a WBS element (Cost Object).


Travel-Unallowable Cost




Non-Reimbursable Expenses


Promotion & Memorabilia


Public Relations




Recreation Related Expense


Alcoholic Beverages


Memberships and Dues-Social

In certain situations a sponsor may permit the charging of costs that would otherwise be unallowable. In these cases, the use of a GL account other than those listed above is recommended.

Meetings Expense

421000 Meetings – Food and Beverages

General ledger account 421000 should be used for the purchase of all food and/or beverages associated with a meeting. Expenses for meetings, retreats, seminars, symposia, workshops or events, including food and beverages, may be allowabe costs on a federal award unless the sponsor expressly states otherwise. But in order for the expense to be allowable, the meeting's primary purpose must be dissemination of technical information beyond MIT. The meeting must also be necessary and reasonable for successful performance of the federal award. Standard group meetings in which information is shared among laboratory members do not qualify as allowable costs.

421010 Meetings – Materials and Supplies

General ledger account 421010 should be used for materials and supplies that are purchased for meetings. Expenses that are categorized in this general ledger account will be recoverable from the Federal Government unless they are not allowed by the specific award.

Procurement and the VPF will continue reviewing invoices and requisitions to ensure the meeting expenditure is related to MIT business. For direct charges to WBS elements, care should be taken by the DLC that the specific charge is allowable on the sponsored project to which the charge is being made.

To substantiate the business purpose of the meeting expenditures, departments are still required to provide the following:

  1. the purpose of the meeting (i.e., content of discussion)
  2. a list of the attendees (names or group association) present at the meeting
  3. itemized receipts with requests for payments
  4. the date and location of the meeting, if it is not self-evident.

For questions, please contact John Larkin at 617-253-2729.

Air Travel

Federal regulations (OMB Circular A-21) states that air travel cost in excess of standard coach fare are unallowable as either a direct or indirect cost to sponsored projects. According to MIT policy, Business Class travel will be approved to destinations outside the continent of North America. For this purpose, the definition of North America includes Canada, Mexico, the continental U.S., Bermuda, and the Caribbean Islands.

To comply with Federal regulations, for trips where Business Class travel is permitted by MIT policy, only the lowest available coach fare should be charged to a WBS element. The difference in cost between the lowest available coach and business class fare should be charged to an appropriate departmental discretionary account.

Federal auditors require institutions to maintain consistent cost accounting policies and procedure for all research sponsors. This means that the difference between business class travel and commercial coach fare cannot be charged to either Federal or non-Federal WBS cost objects. One strategy to consider is to ensure that a non-Federal sponsored agreement allows for international business class travel. Many principal investigators have routinely included business class travel in their proposals to non-Federal sponsors by identifying international business rates in accordance with MIT policy. When an award is made, the allowability of business class travel will be noted in COEUS and the Travel Office will process the reimbursement for the sponsored cost object.

Federal regulations also require that individuals whose travel is supported by federal funds use American flag carrier airlines (for clarification on this issue, see Code Sharing below).

For foreign travel, when no justification is stated on the travel expense voucher and First Class transportation is used, the reimbursement will be reduced to the appropriate fare on the aircraft used.

The Institute has designated travel agencies as MIT authorized agencies (see Travel). When business class travel is used, our approved travel agencies provide the required documentation of the lowest available coach fare to be charged to the sponsored project.Travelers using other agencies are responsible for providing similar documentation from their agency.

Foreign Travel Trip Reports

In almost all cases Federal sponsors, especially those that use assistance agreements (i.e. grants and cooperative agreements) have eliminated both the requirements to (a) obtain approval to charge foreign travel expenses to an award and (b) submit a trip report. However, there are still awards that require one or both of these actions. COEUS has been modified to provide award specific information as to whether each action is required and Administrative Officers and Fiscal Officers are urged to consult their award in COEUS if they are unsure.

Code Sharing

A condition of reimbursement of cost for all international travel (including North America) under Federal awards, is the traveler’s compliance with the terms and conditions set forth in the Fly America Act. The act requires that all international travel being paid by the Federal Government utilize U. S. certified airlines to the maximum extent possible. Any possible exceptions should be reviewed with your Administrative or Fiscal Officer. With the advent of code-sharing, a mechanism by which a U.S. certified carrier leases space on an aircraft of a foreign air carrier, and visa versa, the allowability of cost of international travel has become somewhat more complicated.

In order to clarify code-sharing arrangements, Federal regulations have recently been revised to indicate that the ticket or documentation for an electronic ticket must identify the U.S. Flag air carrier’s two-letter designator code and flight number, which is located on the right hand section of the passenger receipt. This indicates that the flier is in a U.S. Flag carrier seat, regardless of the air carrier which owns the aircraft. The requirement that the ticket be issued by a U.S. flag carrier, as shown in the upper left hand corner of the ticket, has been eliminated.

For questions about air travel regulations, please contact Kathly McGrath at 617-253-8366.