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An internal auditor reviewing company education benefits (FAR 31.205-44), questioned certain tuition fees as entertainment (31.205-14). 

The auditor questioned $999 as expressly unallowable under the entertainment cost principle (FAR 31.205-14) as follows: 

$698 for Service and Activities Fees: The fee funds student activities and programs as allocated by student led committees.

$201 in student union building fees:  The fee funds social engagement aspects of student life, and are not essential to obtainment of training/education.

$100 for student orientation fee: Funds cost of a t-shirt, meals and other giveaways.

I considered these questioned cost to be unfounded, assuming that they are mandatory fees. Therefore I called the University admissions office and verified that the subject fees are mandatory and included in the tuition payment. In addition, the admissions office told me that the "student activities and programs" cover tutoring among other things that are not entertainment.  I recommended to the IA manager that the costs are allowable because if a person is to be admitted to this university then the person must pay these fees which are wrapped up in the tuition charge and she agreed with me and reversed the auditor.

I decided to post this as FYI and/or sanity check because I have never seen anyone pick apart education cost and sort out what might be deemed as entertainment.


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For what it may be worth, I concur with your assessment. If the fees are mandatory then I would have evaluated the total amount and not the internal elements. However, each auditor is an individual with an individual application of judgment, so what can you do?

There may be some helpful language in the DCAA CAM regarding annual memberships in organizations that perform a de minimis amount of ancillary lobbying, if you care to go look for it. On the other hand, for $999 maybe everybody should just let it go or agree it's unallowable without being expressly unallowable?

Hope this helps.

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