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Cost Accounting Standards
Cost Accounting Standards (CAS), applicable to for profit companies since 1970, have been applicable to federally funded contracts awarded to educational institutions since 1994. The CAS were incorporated into OMB Circular A-21 in 1996 and amended also to include grants and cooperative agreements. The CAS were originally promulgated as a result of Public Law 100-679 and codified at 48 CFR 9905 (CAS for Educational Institutions).
There are four CAS standards applicable to colleges and universities (as they appear in C.10-13 and Appendix A of OMB Circular A-21), all four of which are of particular importance to our business practices.
An institution of higher education is required to:
- consistently follow its established cost accounting practices when estimating, accumulating, and reporting costs under that initial contract subject to CAS and any subsequent CAS-covered contract (CAS 501);
- consistently allocate costs incurred for the same purposes (CAS 502);
- identify unallowable costs and exclude from billing, claims, and proposals costs that are expressly unallowable or mutually agreed to be unallowable (CAS 505);
- consistently use the same cost accounting period for purposes of estimating, accumulating, and reporting costs (CAS 506).
The Institute filed its CAS-required Initial Disclosure Statement (DS-2) with the Office of Naval Research (ONR), our cognizant federal agency, on December 20, 2002 (as amended March 11, 2003). The intent of the DS-2 is to document how costs are measured, accumulated, directly assigned and/or allocated to federally sponsored grants, contracts and cooperative agreements. It is important for all those involved in any aspect of research accounting to consistently apply our disclosed accounting practices.
Accounting practices can include but are not limited to the following actions related to grants, contracts and cooperative agreements:
- Preparing proposals and budgets
- Preparing or processing purchase requisitions
- Preparing F&A rate proposals
- Effort reporting and payroll notices
- Grant and contract closeout
- Transfer of expenses
If you encounter difficulties with the above or have any questions related to accounting practices they should immediately be directed to the Office of Sponsored Research. Sanctions for noncompliance with CAS can result in price adjustments and refunds to the government.
Presently our DS-2 is being updated to reflect changes in cost accounting practices since the original filing. A revised DS-2 will be submitted to ONR during FY07 for review and acceptance.
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