Allowable Costs Under a Federal Grant

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Allowable Costs under a Federal Grant. You work for an auditing firm that is performing a local government audit. The government has received federal grant funding, and the audit manager on the engagement has asked you to perform the necessary research and review the following costs charged to the federal grant to determine whether or not they are allowable: (1) travel to a conference overseas, the primary purpose of which is the dissemination of technical information; (2) the travel costs for a dependent child accompanying a parent employee to a conference; (3) charges for investment counsel incurred to enhance income from investments; (4) lobbying activities undertaken to obtain a grant; (5) entity membership in a professional organization; and (6) insurance.


  1. What document will you research to determine the allowability of the costs?
  2. Write a short memo to document your opinion about whether each of these costs would be allowable indirect costs to be recovered in part by federal grants. If certain limitations or specifications must be met for allowability, note them in your memo.

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