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Allowable and Unallowable FSEA Costs

Directive Statement

Costs that are allowable and may be recovered in the recharge/service center billing rates must meet the following criteria:

  1. Are reasonable and necessary to provide goods and/or services by the recharge/service center.
  2. Conform to any limitations or exclusions set forth in cost principles in the Uniform Guidance or other applicable cost standards established by federal agencies or the university.
  3. Are consistent with applicable university policies and procedures.
  4. Are accorded consistent treatment for the same type of cost in like circumstances.
  5. Are not included as a cost or used to meet cost sharing or matching requirements of any federally-financed program in either the current or a prior period.
  6. Supported by adequate documentation the cost was incurred.

Cost Accounting regulations (commonly referred to as Uniform Guidance) identify certain expenses that are not allowed to be included in the recharge/service center rate calculation.

Fee-for-Service Educational Activity (FSEA) should not incur unallowable costs unless other sources of funds (e.g. surcharges from external customers) are available and charged.

  • These costs must be a necessary business expense for the center, e.g., advertising
  • Costs determined to be unallowable should not be recovered from internal users nor expensed on a center’s Chartfield.  Only costs expensed on the operating account can be included in the internal rate(s).

Reason for Directive

Fee-for-Service Educational Activities (FSEA), no matter the size, are subject to the cost principles set forth in the U.S. Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards 2 C.F.R. §200 Subpart E §200.468 (“Uniform Guidance”).

Fee-for-Service Educational Activities (FSEA) must develop a rate structure that is maintained and published, keeping in concordance with the required cost principles set forth in the Federal Uniform Guidance.  Non-compliance with the regulations could result in fines or disallowed costs by the government or sponsors and could harm the reputation of the University.

Who must comply?

All UF departments with fee-for-service educational activities.

Allowable Direct Costs

Direct costs are those that can be specifically assigned to a FSEA activity with relative ease and high degree of accuracy.  The unit should keep supporting evidence to substantiate allocability, allowability, and reasonableness of these costs.  Examples include materials and supplies used to deliver the service, salaries of technical personnel, etc.

  • Direct Salaries: Salary and benefit expenses directly related to sale of the product or service provided. (6xxxxx Accounts)
  • Other Operating Expenses: Expenses that are directly related to the cost of providing the product or service. (7xxxxx accounts)

Unallowable Costs

The numerator in calculating rates (expenses) cannot include unallowable costs.  Please see below a list of unallowable costs for recovery through internal rates.

  • Advertising
  • Alcoholic beverages
  • Alumni costs
  • Center personnel salary expense funded on sponsored projects
  • Commencement/Convocation costs
  • Contingency Reserve costs
  • Dependent tuition benefit costs
  • Depreciation expense (To ensure that these expenses are not double counted for charges to Federal projects as depreciation expense is included as part of the Indirect Cost (IDC) rate pool of the University)
  • Donations or Contributions (including donated materials and supplies where no actual expense is incurred by the center)
  • Entertainment (unrelated to the business purpose)
  • Fines and Penalties
  • Fund Raising
  • Housing Allowances/Personal Living Expenses
  • Interest
  • Intramural Activities
  • Legal costs
  • Lobbying
  • Membership to Community or Civic Organizations
  • Membership to Social or Dining Clubs
  • Personal use of UF or State-Owned Vehicles
  • Personal use of Supplies or Services
  • Public Relations
  • Renovations or decorating
  • Space rental costs (whether the rent expense relates to UF space or non-UF space)
  • Student Clubs
  • Student Publications
  • Travel and Subsistence Costs of Trustees
  • University administration (indirect costs, including the administrative overhead fee that is charged to FSEAs to address the use of university-wide resources such as human resources, accounting, legal, etc

In general, any cost designated as unallowable per OMB Uniform Guidance.  These unallowable costs are referenced at: OMB Uniform Guidance, Subpart E, §200.420 through §200.475 and Cost Analysis Directives and Procedures.

Last Reviewed

Last reviewed on 03/20/2024


Audit Requirements for Federal Awards 2 C.F.R. §200 Subpart E §200.468 (“Uniform Guidance”)

OMB Uniform Guidance, Subpart E, §200.420 through §200.475

FSEA Authoritative Guidance


Auxiliary Accounting: (352) 294-7236

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