Effective January, 1995 educational institutions are required to comply with standards issued by the Cost Accounting Standards Board. The standards are intended to supplement other federal requirements, such as OMB Circular A-21, by providing a framework for the allocation of costs to appropriate cost objectives. In addition to the issuance of accounting standards for educational institutions, some institutions are required to file a disclosure statement to identify and certify specific accounting practices.
Cost Accounting Standards
CAS 501: Consistency in Estimating, Accumulating and Reporting Costs
The purpose of this standard is to ensure that each institution’s practices used in estimating costs for a proposal are consistent with cost accounting practices used by the institution in accumulating and reporting costs. Consistency in the application of cost accounting practices is necessary to ensure comparable transactions are treated alike. With respect to individual sponsored agreements, the consistent application of cost accounting practices will facilitate the preparation of reliable cost estimates used in pricing a proposal and their comparison to the actual costs of the sponsored agreement.
CAS 502: Consistency in Allocating Costs Incurred for the Same Purpose
The purpose of this standard is to require that each type of cost is allocated only once and only on one basis to any sponsored agreement or other cost objective. The criteria for determining the allocation of costs to a sponsored agreement or other cost objective should be the same for all similar objectives. Adherence to these cost accounting concepts is necessary to guard against the overcharging of some cost objectives and to prevent double counting. Double counting occurs most commonly when cost items are allocated directly to a sponsored agreement and also included in indirect cost pools that are charged to the sponsored agreement.
CAS 505: Accounting for Unallowable Costs
The purpose of this standard is to establish guidelines covering (1) identification of costs specifically described as unallowable at the time the costs first become designated as unallowable, and (2) the cost accounting treatment to be applied to those unallowable costs in order to promote consistent application of sound accounting principles. This standard does not govern the allowability of costs, only their treatment once identified as unallowable.
CAS 506: Cost Accounting Period
The purpose of this standard is to provide criteria for the selection of time periods to be used as cost accounting periods for sponsored agreement cost estimating, accumulating and reporting.
CAS Disclosure Statement
In addition to cost accounting standards, institutions that come under full CAS coverage are required to submit a disclosure statement to summarize institutional accounting practices and policies. It identifies charging practices for direct costs and the formulation of facilities & administrative rates. In addition, an institutional official is required to certify the completeness and accuracy of the statement.
The university’s disclosure statement was revised on October 22, 2004. Copies are available from the Accounting Office.