The term disallowed costs refers to expenses charged to a grant or award that the Secretary of Education determines are not allowable under federal cost principles or specific conditions set forth in the grant agreement. In simpler terms, these are costs that cannot be reimbursed or paid for by federal funds.
Disallowed costs are primarily relevant in the context of federal grants and educational funding. They are used in the administration of grants to institutions of higher education, non-profit organizations, and hospitals. Understanding disallowed costs is essential for grant recipients to ensure compliance with federal regulations and avoid financial penalties. Users can manage related documentation and compliance processes through legal templates provided by services like US Legal Forms.
Here are a couple of examples of abatement:
Example 1: A university receives federal funding to support a research project. If the university uses some of the funds to pay for an extravagant dinner unrelated to the project, that cost may be deemed disallowed.
Example 2: A non-profit organization charges travel expenses to a federal grant for a conference that is not relevant to the funded project. These expenses can also be classified as disallowed costs.
Disallowed costs are governed by the Code of Federal Regulations, specifically 34 CFR 74.2, which outlines the administration of grants and agreements in education. This regulation details the criteria for allowable costs and the responsibilities of grant recipients.
| Term | Definition | Difference |
|---|---|---|
| Allowable Costs | Expenses that can be reimbursed under the terms of a grant. | Disallowed costs are specifically those that cannot be reimbursed. |
| Unallowable Costs | Costs that are not permitted under any circumstances. | Disallowed costs may be permissible under certain conditions but are rejected in specific contexts. |
If you suspect that certain costs may be disallowed under your grant, it is crucial to review the terms of your award carefully. Document all expenses and ensure they align with federal cost principles. For assistance, consider using US Legal Forms' templates to help manage your compliance. If you face complex issues regarding disallowed costs, seeking advice from a legal professional may be necessary.
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Examples include lavish meals, personal expenses, and costs not directly related to the grant objectives.