Accounting for Unallowable Costs - (Rev. 2, 08-30-02)

200.3 - Accounting for Unallowable Costs - (Rev. 2, 08-30-02) A1-1523, B1-4523 The purpose of this standard is to establish guidelines for the early identification of unallowable costs and the treatment to be accorded such costs. It is based on the premise that costs should be allocated to their appropriate cost objectives according to beneficial or casual relationships and without regard to their allowability. The standard is concerned with the broad accounting principles that govern cost allocation, not with making otherwise allowable costs unallowable. Generally, identification is required under varying circumstances for the following classes of unallowable costs: Those which are expressly unallowable or mutually agreed to be unallowable, Those which become designated as unallowable by reason of the Secretary's determination, Those which are directly associated with either (l) or (2), Those which arise out of a work project not contractually authorized, and Those costs for which reimbursement has been previously withheld by BHI. In addition, costs incurred for the same purpose under like circumstances as unallowable costs must be identified. Expressly unallowable costs consist primarily of those specified as unallowable in the principles of reimbursement. These costs, as well as costs mutually agreed to be unallowable or mutually agreed to be directly associated with unallowables, must be identified in the contractors' accounting records and excluded from any submitted budget and cost reports. When the Secretary's determination designates certain costs unallowable because they are directly associated with other unallowables, those costs, too, must be identified if used in budgets and cost reports. Costs designated as unallowable by the Secretary's determination, as well as costs incurred for the same purpose under like circumstances as those mutually agreed to be unallowable, must be identified if included in a budget or cost report. The costs of work not contractually authorized must be accounted for in a manner that permits ready separation from the costs of authorized work projects. 70exhibit1 Exhibit 1 70exhibit2 Exhibit 2 70exhibit3 Exhibit 3