2.  The following object codes fall under “Other Institutional Activity” (A-21 Code A04) for functional reporting: 2 “Unallowable” Expense Object Codes 8450Expenses Ineligible for Fed Reimbursement, GENERAL 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… 8451Advertising^Expenses Ineligible for Fed Reimbursement 8454 Charitable Contributions^Expenses Ineligible for Fed Reimbursement 8455Events^Expenses Ineligible for Fed Reimbursement 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 8456 Alcoholic Beverages, INTERTUB Sales of^Expenses Ineligible for Fed Reimb 8457 Event+Program Svcs, INTERTUB Sales of^Expenses Ineligible for Fed Reimb 8458 Beer+Wine, Cost of Goods Sold^Expenses Ineligible for Fed Reimbursement 8459 Other Ineligible Expenses^Expenses Ineligible for Fed Reimbursement

3.  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 Object Codes

4.  Expenses ineligible for federal reimbursement include: 4 Unallowable Expense Categories  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  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

5.  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 are alcohol charges separately identified, charge the catering to 8060 and the alcohol to 8450. 5 How to get the most out of your reporting