Use of Object Code 8450 Unallowable Expense Object

Use of Object Code 8450

“Unallowable” Expense Object Codes � The following object codes fall under “Other Institutional Activity” (A-21 Code A 04) for functional reporting: 8450 Expenses Ineligible for Fed Reimbursement, GENERAL 8451 Advertising^Expenses Ineligible for Fed Reimbursement Charitable Contributions^Expenses Ineligible for Fed 8454 Reimbursement 8455 Events^Expenses Ineligible for Fed Reimbursement Alcoholic Beverages, INTERTUB Sales of^Expenses 8456 Ineligible for Fed Reimb Event+Program Svcs, INTERTUB Sales of^Expenses 8457 Ineligible for Fed Reimb Beer+Wine, Cost of Goods Sold^Expenses Ineligible for Fed 8458 Reimbursement Other Ineligible Expenses^Expenses Ineligible for Fed 8459 Reimbursement Includes alcoholic beverages, gifts, lobbying costs, memberships in lobbying organizations, flowers, fines & penalties, fine art, antiques, decorative objects for private offices, charitable contributions, fundraising & commencement expenses incurred… Includes rental of space, audio-visual equipment, catering, flowers, alcoholic beverages, etc. ; primarily for development events, but can be used for other unallowable events (all development events would be unallowable anyway, so mixing of rentals and f 2

“Unallowable” Expense Object Codes � The government will not reimburse, either directly or indirectly, certain kinds of expenses ◦ Referred to as “expenses ineligible for federal reimbursement” � These “ineligible” or “unallowable” expenses must be charged to the object code range 8450 -8459 to ensure they are not included in the overhead rate charged to federal sponsored projects ◦ “Unallowable” does not mean the University cannot spend the monies, just that they may not be charged to the government � � All spending, including non-sponsored spending, is subject to these rules Certain orgs & activities are not charged to federal sponsored projects (e. g. , development offices) 3

Unallowable Expense Categories � v v v v v Expenses ineligible for federal reimbursement include: Alumni relations spending Antiques, art or decorative objects for private offices Bad debts Non-business-related entertainment Charitable contributions to other organizations Employee celebratory events Excessive travel spending Flowers Fines & penalties Fundraising or commencement expenses v v v Gifts & awards to Harvard employees & non-Harvard personnel Institutional advertising & promotion, including printed materials Liquor, including liquor purchased with a meal Lobbying, including memberships in lobbying organizations Memberships in civic or community organization Dues for social or dining clubs 4

How to get the most out of your reporting � The challenge with using 8450 is not being able to track expenses by category. ◦ For example – 1 st class travel is an unallowable expense. If the entire cost of the ticket is coded to 8450, tracking actual travel expenses for that department becomes a challenge. � Best practice: ◦ Separate the unallowable costs from the allowable on an invoice or travel expense: ◦ Examples: � For 1 st class travel – calculate the estimate cost for an economy class ticket. Code that amount to 7651 and the code the remaining to 8450. � For catering – if there alcohol charges separately identified, charge the catering to 8060 and the alcohol to 8450. 5