The purpose of this policy is to ensure controls for sponsored project funded expense provisions. When expenses are to be charged to a sponsored project account, the terms of the applicable contract or grant will take precedence over university expenditure policies. It is the responsibility of the person incurring the expense to consult the Department of Contracts and Grants to confirm if the expense is allowed.
Separation of unallowable expenses
Because the majority of sponsored project funding received by the university is from the federal government, the university must comply with requirements imposed by the Office of Management and Budget (OMB) and the U.S. Congress.
Government unallowable (G/U) expenses are those expenses that, although potentially appropriate and reimbursable from unrestricted funds, are not allocable to government activities per federal government regulations. The university is required by the federal government to separate “allowable” and “unallowable” costs as prescribed in 2 CFR 200 Uniform Guidance, regardless of funding source. The reason unallowable expenses must be identified on unrestricted accounts is to avoid government unallowable expenses from being reallocated to various government indirect cost categories.
Government unallowable expenses
An expense associated with any of the following business functions is considered a government unallowable expense and must be identified as such and separated from allowable expenses, regardless of the account type.
- Alumni events, including fund-raising expenses;
- Commencement, including student graduation parties;
- Development, including promotional gifts to donors;
- Public relations, including banquets and advertisements; and
- Student activities, including contributions to student organizations and events.
The following specific expenditures, regardless of business purpose, are considered government unallowable expenses and must be identified as such and separated from allowable expenses, regardless of the account type.
- Alcoholic beverages;
- First and business class airfare;
- Flowers and gifts;
- Sponsorships; and
- Donations to charities
Direct benefit to sponsored project
If a sponsored project account was used to purchase a good or service, the good or service must have been ordered and received before the contract or grant’s budget period end date.
A good or service ordered within thirty (30) days before contract or grant termination must be purchased with the understanding that the good or service will be received before termination of the budget period, and that the purchase will directly benefit the project.
Therefore, requisitions and payment requests submitted to Procurement Services or to Payment Services for a purchase or expense incurred within the last thirty (30) days before the termination date must be supported by a written justification explaining why the purchase or expense was necessary and how it directly benefits the project.
Non-USC funding restrictions
Money received directly by a USC employee from a third-party, such as National Institutes of Health (NIH), Co-Sponsors, etc., is considered funding from a “non-USC funding source.” Such funding may have been obtained to offset or pay expenses associated with a university business trip. A payment or reimbursement request must 1) disclose the name of any non-USC funding source, 2) identify the amount received, and 3) reduce the received or requested amount from the total to be paid or reimbursed by the university.
Responsible Office
Business Services
https://businessservices.usc.edu
(213) 740-2716
Issued by
Robert Abeles
Senior Vice President, Finance and Chief Financial Officer