Early 1970s

1
What Did We Do to Deserve CAS? Background

• Early 1970s
• 17 Cost Accounting Standards mandated for
  private industry
• Covered pricing/costing of goods/services paid
  with Federal dollars
• 1992 - proposed 4 standards for University
  (contracts gt 500K only)
• 1995 - required 4 standards for University
  (contracts gt 500K only)
• 1996 - A-21 revised to include 4 standards adding
  grants and cooperative agreements

2
Types of Awards and Applicable Guidance

• Three main types of awards with unique
  characteristics
• Grant -
• Contract -
• Cooperative Agreement -

3
CAS The Basic Philosophy

• CONSISTENCY ..
• In the budgeting, charging and reporting of costs
  on Federal sponsored awards.
• Consistency Must Be Achieved Across GROUNDS!!!

4

CAS Costing Basics
CAS Federal Regulations are included in the
Office of Management and Budgets Circular A-21
Cost Principles for Educational Institutions
in - Section C.10-14 - Exhibit C Major
Projects - Appendix A - Standards

• 1. Dont charge the Government twice for the
  same cost.
• (Direct Costs versus Facilities Administrative
  Costs)
• 2. Dont charge the government for any
  expressly unallowable costs.
• Philosophy of CAS Consistency!

5
CASFour Standards Applicable to Educational
Institutions

• Standard 9905.501 Consistency in estimating,
  accumulating, and reporting costs by educational
  institutions.
• In other words
• All costs 1) initially used in budgeting
  proposals, 2) subsequently included in
  charging/assigning costs to sponsored awards and
  finally 3) included in the reporting to sponsors
  are treated consistently as either direct or FA
  costs in like circumstances.

6
CASFour Standards Applicable to Educational
Institutions

• Standard 9905.502 Consistency in allocating
  costs incurred for the same purpose by
  educational institutions.
• In other words
• All costs incurred for the same purposes are
  either direct costs only or facilities and
  administrative (indirect) costs only.

7
CASFour Standards Applicable to Educational
Institutions

• Standard 9905.505 Accounting for unallowable
  costs Educational Institutions
• In other words
• Any costs considered as unallowable by
  provisions of any law, regulation or sponsored
  agreement cannot be included in the pricing, cost
  reimbursement or settlement under a Federally
  sponsored award and should be expressly
  identified and excluded from both direct costs
  and facilities and administrative (indirect)
  costs.

8
CASFour Standards Applicable to Educational
Institutions

• Standard 9905.506 Cost Accounting Period
  Educational Institutions
• In other words
• The institution should select a standard time
  period to be used for the accounting of costs.
  This normally coincides with the institutions
  fiscal year.

9
Definition - Unallowable Costs (Both Direct and
FA Considerations)

• Costs which cannot be proven to be necessary,
  reasonable, allocable and thus, the federal
  government will not cover/reimburse. Such costs
  are expressly UNALLOWABLE.
• Examples include
• alcoholic beverages
• Entertainment (lab gatherings, non-technical
  meetings)
• fines/penalties/fees (late payments to vendors)
• lobbying
• losses on other sponsored projects
• memberships in civic, community organizations and
  country clubs
• public relations
• This list is not inclusive see A-21 Section J.
  These costs cannot be charged direct OR recovered
  through an FA rate.

10

Definitions Allowable Costs

• There are 2 ways to charge allowable costs
• Direct Budgeted/charged to specific cost
  categories
• allocable and identifiable to a single project
• reasonably supports the technical
  goals/objectives/outcomes of the project
• identification is made with relative ease and a
  high degree of accuracy
• examples include PI and research assistant
  salary, travel, equipment, subcontractors, lab
  supplies, etc.
• FA Budgeted/charged to FA cost category only
  rate based
• benefit common objectives
• cannot be allocated to a single project with
  relative ease and a high degree of accuracy
• included in the Universitys FA cost rate
  proposal and negotiation
• examples include utilities, building
  maintenance, landscaping, payroll, procurement
  and other central office salaries, the BIG 5,
  etc.

11
To be Considered Direct The Cost Must Be

• Allowable - A cost must be allowable under both
  the provisions of OMB Circular A-21, Section J
  AND the terms of the particular award.
• Allocable - The project which pays the expense
  must directly benefit from it. The item charged
  to a grant must be directly related to the
  objectives of the science.

12
To be Considered Direct The Cost Must Be

• Reasonable - An expense must be reasonable, in
  that a prudent person would have paid the
  stated amount for the good/service and also would
  have applied the cost to a sponsored award in the
  same manner.
• Consistent - All costs incurred for the same
  purpose, in like circumstances, are either to be
  treated as direct OR FA (indirect) costs.

13
CAS Unlike Circumstances

• Exist when a cost that is normally considered an
  FA cost qualifies as a direct cost by..
• satisfying the definition of a direct cost,
• KEYS allocable and identifiable with relative
  ease high degree of accuracy
• being extensive in nature (over and above routine
  use at the University/support by the academic
  unit),

14
CAS Unlike Circumstances

• Exist when a cost that is normally considered an
  FA cost qualifies as a direct cost by..
• ensuring that the purpose of the award (survey
  creation, database building) is such that its
  activities are unlike those generally charged as
  FA costs and can support the direct charging of
  the questioned costs.

15
MAJOR PROJECTS OMB EXAMPLE 1
ADMINISTRATIVE - CLERICAL

• Large, complex research programs -

Coordination/management of a team of
researchers, units, departments,
institutions, centers

• Large consortiums

16
MAJOR PROJECTS OMB EXAMPLE 2
ADMINISTRATIVE - CLERICAL

• Projects that are geographically inaccessible to
  routine support, i.e., remote field locations

17
MAJOR PROJECTS OMB EXAMPLE 3
ADMINISTRATIVE - CLERICAL
Projects that require a large number of repeated
travel and/ or meeting arrangements for
large numbers of participants
18
MAJOR PROJECTS OMB EXAMPLE 4
ADMINISTRATIVE - CLERICAL

• Projects involving
• extensive surveying, data entry and collection,
  tabulation, cataloging, analysis

19
MAJOR PROJECTS OMB EXAMPLE 5
ADMINISTRATIVE - CLERICAL

• Projects focused on producing large numbers of
  reports, manuals, books, and monographs,
  excluding routine progress and technical reports

20
CAS The Disclosure Statement (DS-2)

• Institutions receiving an aggregate of sponsored
  agreements totaling 25 million or more during
  their most recently completed fiscal year must
  disclose costing practices by completing the DS-2
• DS-2 is submitted to the institutions Federal
  cognizant agency for review and approval
• Institutions must file amendments when disclosed
  practices change to comply with a new or modified
  standard or for any other accounting changes made
  to existing practices.
• Changes having material impacts on the
  institutions negotiated FA rates must obtain
  approval before any change is implemented

21
CAS The Disclosure Statement (DS-2)

• Parts of the DS-2 include
• - General Information
• - Direct Costs
• - FA Costs
• - Depreciation and Use Allowances
• - Other Costs and Credits
• - Deferred Compensation and Insurance Costs
• - Central System or Group Expenses

22
CAS The Disclosure Statement (DS-2)

• Cost Accounting Standards require
• that U.Va. discloses our costing practices in a
  formalized document, called the Disclosure
  Statement, or DS-2
• that we actually follow the costing practices
  weve outlined in the DS-2
• The DS-2 describes to the government how were
  treating costs at the University. In simplified
  terms, it details which costs we treat
  (allocate or assign) as direct costs, and
  which ones we treat as facilities
  administrative (FA) costs.
• The development and preparation of the FA rate
  agreement is regulated by OMB Circular A-21,
  Sections E-G.
• No two disclosure statements are alike!