Tool III-1, Allowable & Unallowable Costs
                                          Allowable & Unallowable Costs
               The table below lists categories, examples, and conditions of allowable and unallowable costs.  In the 
               Notes & Restrictions column,  indicates an allowable cost; , unallowable.  The table shows only the 
               most commonly referred to restrictions, and should not be considered a complete list.  For more 
               information, refer to circulars published by the Office of Management and Budget (OMB), or contact 
               your local procurement office or State Grant Administrator.
                                NOTE:  Allowable costs are allowable only to the extent that
                                       they do not exceed the program’s funding limit.
                   Cost Category                     Examples                         Notes & Restrictions
                                        Radio, television, and newspaper    When incurred for:
                                           ads                                Recruitment of personnel
                    Advertising         Direct mail campaigns                Procurement of goods and services
                                                                              Promotion of the governmental unit
               Alcoholic Beverages                                            Unallowable
                                        Case or project reviews             Provided that the audits:
                                        Project inspections                  Comply with the provisions of the 
                                                                                 Single Audit Act (see OMB Circular 
                  Audit Services                                                 A-133)
                                                                                               OR
                                                                              Are otherwise required and/or 
                                                                                 approved by FEMA
                                        Uncollectible funds                  Losses arising from uncollectible 
                    Bad Debts                                                    amounts and other claims and related 
                                                                                 costs
                                        Costs associated with attaining      Provided that bonding is in 
                  Bonding Costs            surety bonds for employees and        accordance with sound business 
                                           officials                             practice
                                        Development                          Allowable
                                        Preparation
                 Budgeting Costs        Presentation
                                        Execution
                 Communications         Telephone                            Allowable
                                                                                                       Page 1 of 3
               Tool III-1, Allowable & Unallowable Costs
                   Cost Category                     Examples                          Notes & Restrictions
                                        Mail and messenger service
                                        Wages and salaries                    Provided that compensation is 
                  Compensation          Fringe benefits                         reasonable for the services provided
                Disbursing Services     Costs associated with the accounts    Allowable
                                            payable function
                                        Services volunteered by:               The values of donated services are 
                                        Technical personnel                     unallowable as either direct or 
                 Donated Services                                                indirect costs.  However, they may be
                                        Consultants                             used to meet cost sharing or matching
                                                                                 requirements.
                                        Skilled and unskilled labor
                                        The net invoice price of                Non-expendable items of equipment 
                                            equipment, including                 having a useful life of more than 1 
               Equipment and Other          modifications, attachments, or       year and costing $5,000 or more.  
               Capital Expenditures         accessories                          (Items of equipment costing less than 
                                        Ancillary charges, including taxes      $5,000 are considered supplies.)
                                            and freight
                                        Salaries and expenses of the          Unallowable
                                            Office of the Governor and/or 
                                            State legislatures, tribal councils, 
               General Government           or other local governmental bodies
                     Expenses           Costs associated with government 
                                            services normally provided to the 
                                            general public (e.g. fire and 
                                            police)
                                        Professional and/or support staff     Legal expenses required for program 
                                            time                                 administration
                  Legal Expenses        Filing fees                           Legal expenses for prosecutions of 
                                                                                 claims against the Federal 
                                                                                 Government
                                        Utilities                            Allowable if they:
                                        Insurance                             Keep property in efficient operating 
                                        Security                                condition
                   Maintenance,                                                Do not add to the permanent value of 
              Operation, and Repairs    Janitorial services
                                                                                 the property
                                        Equipment repairs                     Are not included in rental charges for 
                                                                                 space
               Page 2 of 3
                                                                                   Tool III-1, Allowable & Unallowable Costs
                     Cost Category                          Examples                             Notes & Restrictions
                                             Stationery                               Allowable after deducting:
                                             General office supplies                   Cash and/or trade discounts
                Materials and Supplies                                                  Rebates
                                             Items of equipment costing less 
                                                 than $5,000                            Other allowances
                                             Maintenance                               If charged to the program at a 
                      Motor Pools            Inspection                                    mileage or fixed rate
                                             Repair services
                                             Activities directed toward:               When:
                                             Maintaining the image of the              Incurred to communicate with the 
                                                 governmental unit                          public and press pertaining to the 
                                             Promoting understanding and                   specific program
                    Public Relations             favorable relations with the public    Necessary to conduct general liaison 
                                             Legal or Public Notices                       with the news media and government 
                                                                                            public affairs officers to keep the 
                                                                                            public informed
                                                                                        Incurred solely to promote the 
                                                                                            governmental unit
                                             Employee training                         To the extent that the training is 
                        Training                                                            required for sub-grant related 
                                                                                            activities
                                             Transportation                           Provided that:
                                             Lodging                                   Employees are traveling on official 
                         Travel              Subsistence                                   business
                                                                                        The costs do not exceed the amount 
                                                                                            normally allowed by the agency in its
                                                                                            regular operations
                                                                                                                     Page 3 of 3
                      This page intentionally left blank.