Nonprofit Accounting Basics

Activities Allowed or Unallowed


John Meriscko

National Association of County and City Health Officials

The specific requirements for activities allowed or unallowed are unique to each Federal program and are found in the laws, regulations, and the provisions of contract or grant agreements pertaining to the program.

Laws are established by Congress and are the controlling authority for providing the specific requirements. Laws may be too general to provide specific direction for individual contracts or grant agreements. Additional specific direction is provided through regulations and the provisions of the agreements. Regulations and the provisions of contract or grant agreements cannot be in conflict with or change laws.

Regulations are established by the Executive branch through various departments and agencies. The Office of Management and Budget (OMB) Circular A-133 is an example of a Federal regulation. This Circular is issued pursuant to two laws, the Single Audit Act of 1984, P.L. 98-502, and the Single Audit Act Amendments of 1996, P.L. 104-156.

A-133 sets forth standards for obtaining consistency and uniformity among Federal agencies for the audit of States, local governments, and non-profit organizations expending Federal awards.

Each contract or grant agreement contain provisions unique to that particular agreement. The provisions address various activities. Examples include: the use of human subjects, the acquisition and use of equipment, and the use of consultants and subrecipients.

The use of human subjects may be necessary for certain clinical studies. Provisions addressing the use will be described. If no human subjects are allowed, this limitation will be described in the agreement.

Some agreements will provide funding for equipment to be used to accomplish the activities funded by the agreement. The ownership of the equipment and what happens to the equipment after the agreement ends will be covered in the agreement.

Work performed by consultants and/or subrecipients may be critical to accomplishing the work of the agreement. Any limitations to the scope of this work will be covered in the agreement.