cost accounting standards (()cas) · cost accounting standards (cas) what is casb? what are the...
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COST ACCOUNTING COST ACCOUNTING
STANDARDS (CAS)( )
OFFICE OF POST AWARD FINANCIAL AWARD FINANCIAL SERVICES (OPAFS)
Course Objectives
f f d l d Increase awareness of federal and campus costing policy
Understand applicability of federal policy to campus process
Learn by example and discussion among participants
Cost Accounting Standards (CAS)
What is CASB?
What are the CAS?
Why do CAS exist?
Wh i i ? What are cost accounting practices?
What is Cost Accounting Standards Board (CASB)?(CASB)?
An independent legislatively established board within An independent, legislatively established board within the executive branch of the federal government
Issues rules and regulations by which government Issues rules and regulations by which government agencies, contractors and subcontractors are required to comply
Has the authority to make and amend cost accounting standards designed to govern the measurement, alignment and allocation of cost alignment and allocation of cost
Cost Accounting Standards have the force of law (PL 100-679)679)
What are Cost Accounting Standards (CAS)? Cont’d(CAS)? Cont d
There are 19 standards, 4 of which apply to educational institutions
CAS 501 Consistency in Estimating, Accumulating and 5 y g, gReporting Costs
CAS 502 Consistency in Allocating Costs Incurred for the Same PurposeSame Purpose
CAS 505 Accounting for Unallowable Costs
CAS 506 Cost Accounting Period
Why does CAS exist?
T t th h i f ll bl t t To prevent the charging of unallowable costs to federal awards
T d di i i i i To standardize university costing practices
To standardize requirements for recipients of federal funds
What are Cost Accounting Practices?
H t d i d d ll t d How costs are measured, assigned, and allocated to final cost objectives
Either they are directly charged to individual projects and activities, or they are added as part projects and activities, or they are added as part of an overhead rate that is applied to all similar activities
Does CAS supersede OMB Circular A-21?
No - On May 8, 1996, OMB A-21 (Cost Principles for Educational Institutions receiving federal funds)
i d i l d h ’ fwas revised to include the CASB’s four Cost Accounting Standards
OMB Circular A-21, Subsections C. 10-14
What Awards Are Covered Under CAS?
N F d l t t ft J 1 1995 New Federal contracts after Jan 1, 1995
All F d l d ( t t d t ) ft All Federal awards (contracts and grants) after May 8, 1996
Disclosure Statement (DS-2)
A statement disclosing UCSD’s cost accounting practices
A Disclosure Statement is required by A-21 for i i i i h l f d l d universities with an annual federal awards
totaling $25 million or more
UCSD b itt d Di l St t t t UCSD submitted Disclosure Statement to Federal Government on June 30, 1996
Th Di l St t t itt d The Disclosure Statement was rewritten and resubmitted on 2006
Practices Disclosed in DS-2
The campus must disclose the specific criteria and circumstances to make distinctions between those circumstances to make distinctions between those type of costs that are sometimes accounted for as direct and sometimes as indirect.
CAS 501: Consistency in estimating, accumulating and reporting costsaccumulating and reporting costs
“To ensure that each educational institution’s ti d i ti ti t f l practices used in estimating costs for proposal are
consistent with cost accounting practices used by the institution in accumulating and reporting the institution in accumulating and reporting costs”
Cost Sharing
Definition:Definition: Commitment of University resources to supplement
externally sponsored projects
ib d b h i i i l di Resources contributed by the University including non-University resources (third party)
Type of Cost Sharing Type of Cost Sharing
Mandatory: Required by an agency as a condition of funding a sponsored projectfunding a sponsored project
Voluntary Committed: Included in proposed budget
Voluntary Uncommitted: Incurred at UCSD discretion
Formal Cost Sharing
C itt d t h i UCSD t ib ti Committed cost sharing are UCSD contributions that are included and quantified in
the proposal budget OR
the budget narrative OR
the award document
h d b k d d d These need to be tracked and reported
Formal Cost Sharing (cont’d)
Tracked on all awards after May 8, 1996y , 99
Cost Sharing System must be used for all awards after July, 1999, and may be used for awards y, 999, yprior to July 1, 1999
Tracked in the accounting recordsg
Included in project financial reports
Tracking commitments of 5% or less per person Tracking commitments of 5% or less per person per project is not required
Formal Cost Sharing
O l t th t ll bl d A 21 b Only costs that are allowable under A-21 can be cost shared
Cost Sharing on Sponsored Project PPM 150-45 http://adminrecords.ucsd.edu/ppm/docs/150-45.HTML
Allowable Costs
Reasonable It reflects what a prudent person might do
Allocable There is direct benefit to the project that paid the expense
Consistent treatmenth i i i dl f f d The accounting treatment is consistent regardless of fund
source
Allowable as defined by A-21 and/or by the Allowable as defined by A 21 and/or by the terms of the particular award
CAS 502: Consistency in Allocating Cost Incurred for the Same PurposeIncurred for the Same Purpose
To require that each type of cost is allocated only once and on only one basis to any project or
h bj iother cost objective.
h i i f d i i h ll i f The criteria for determining the allocation of costs should be the same for all similar objectives to prevent double countingto prevent double counting.
Direct and Indirect Cost
A “Direct Cost” is cost that can be identified specifically with a particular project relatively easy with a high degree of accuracy
Must be required to satisfy the project scope
Facilities and Administrative Costs
Indirect Cost is cost that are incurred for Indirect Cost is cost that are incurred for common or joint objectives, and cannot be identified with a particular project with a high degree of accuracy.
Normal Indirect Costs Specified in A-21:p Office Supplies
Postage
L l (B i ) T l h S i Local (Basic) Telephone Services
Membership Dues
Journals and Subscriptions Journals and Subscriptions
Major Projects
R i t i d i i t ti l i l Require extensive administrative or clerical support as defined by A-21
Require administrative or clerical support significantly greater than the routine level significantly greater than the routine level provided by departments
Examples of Major Projects I
L l j t Large, complex projects General Clinical Research Centers
Program Projects Program Projects
Environment Research Centers
Engineering Research Centers
Projects with extensive data accumulation, analysis, surveying cataloging and reportingsurveying, cataloging and reporting
Examples of Major Projects II
Projects with travel and meeting arrangements for j g glarge number of participants Conferences
S i Seminars
Projects with principal focus on production of Projects with principal focus on production of Manuals
Large reportsg p
Books
Monographs
E l di ti d t h i l t Excluding routine progress and technical reports
CAS 505: Accounting for Unallowable Costs
All ll bl t h ll b id tifi d d All unallowable costs shall be identified and excluded from any billing, claim, or proposal under a federal awardfederal award
Individual responsible for submitting proposals, Individual responsible for submitting proposals, classifying costs or preparing billings shall be familiar with and shall comply with the requirements imposed by CAS 505
CAS 505: Accounting for Unallowable Costs (cont’d)(cont d)
Cost of project not authorized by a sponsored agreement shall be accounted for in a manner which permits ready separation of what is authorized and what is notwhat is not
CAS 506: Cost Accounting Period
id i i f l i f i i d b Provide criteria for selection of time periods to be used as accounting period for cost estimating, accumulating and reportingaccumulating, and reporting
UCSD fiscal year July 1 – June 30 shall be used as UCSD fiscal year July 1 – June 30 shall be used as the cost accounting period
References
A-21 Cost Principles Applicable to Educational Institutionsp pp
http://www.whitehouse.gov/omb/circulars/a021/a21_2004.html
A-110 Uniform Administrative Requirements for Grants and
Agreements with Institutions of Higher Education
PPM 150-40 Cost Accounting Standards Compliance
PPM 150-42 Classification of Costs ad Direct or Facilities and PPM 150-42 Classification of Costs ad Direct or Facilities and
Administrative (Indirect)
PPM 150-43 Accounting for Unallowable Costs
PPM 150-45 Cost Sharing on Sponsored Projects
Agency Policy Statements
NIH G P li S NIH Grants Policy Statement
NSF Grants Manual