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Determining Allowable and Unallowable Costs

All sponsored project awards are categorized as restricted funds and these awards contain specific terms and conditions regarding allowable and unallowable expenditures.

Allowable Costs

Per OMB Uniform Guidance, costs must be necessary, reasonable, allocable, and consistently treated. To be allowable, all charges to sponsored projects must be:

  • a reasonable/necessary cost that a prudent person would incur to perform the contracted research and/or meet project objectives
  • allocable to the project
  • consistently treated with institutional policies and Federal Uniform Guidance

Allowable costs must also be:

  • included in the awarded budget and budget justification
  • incurred within the project's period of performance
  • in accordance with federal, state and university rules and regulations, sponsor policies and award terms and conditions

View Types of Allowable Costs

Unallowable Costs

If costs are not reasonable, allocable or treated consistently, then they are not allowable to sponsored programs and cannot be paid from the sponsored award.

View Types of Unallowable Costs

Non-Restricted Funds From Departments

If award management staff determine that an expense is not allowable or allocable to a sponsored project award, the PI and departmental research administrators will be notified and will need to determine if other ISU funding sources are available and can support the charge. Sometimes, unrestricted funding sources such as General Revenue, Agency, or Foundation can be utilized for expenditures that are not allowable on a sponsored project award.