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) Employee recreational activities and counseling services;
(3) Charges for investment counsel incurred to enhance income from investments;
(4) Lobbying activities undertaken to obtain a grant;
(5) Depreciation; and
(6) Insurance.
Required
a. What document will you research to determine the allow ability of the costs?
b. Write a short memo to document your opinion about whether these costs would be allowable indirect costs to be recovered in part by federal grants. If certain limitations or specifications must be met for allow ability, note them in your memo.
