Cost Accounting Standards
-Policies and Procedures-
CAS Perspective
OMB
CIRCULAR
A-21
University to comply COST ACCOUNTING
with existing
STANDARDS
standards
CAS 501
CAS 502
CAS 505
CAS 506
d
ire
qu
Re
Mu
st I
nc l
ude
Describes how University
Business is Conducted
DISCLOSURE
STATEMENT
(DS-2)
What are the Cost Accounting
Standards (CAS)?
 Originally designed for commercial contractors
 OMB Circular A-21 included application of four
CAS to institutions of higher education in 5/96
 UGA required to submit a Disclosure Statement
(DS-2) which documents the treatment of costs in
our financial system
 Compliance to the CAS and our DS-2 will be
audited by DHHS
HHS Audit of Disclosure
Statement
 General
- Written Policies
- Dissemination of Policies
- How well policies are being followed
HHS Audit of Disclosure
Statement (continued)
 Desk review by Division of Cost Allocation
 Audit by OIG auditors – adequacy and
compliance
 On-site Audits
 Audit report to DCA and University
 Resolution of audit findings by DCA
 On-going monitoring via A-133 audits
To Whom Do They Apply
 Disclosure Statement applies to larger
institutions
– All institutions receiving $25 million in Federal
Funding
– UGA filed Disclosure Statement (DS-2) as of
July 1, 1996
Applicable Standards
 CAS 501: Consistency in estimating,
accumulating and reporting costs
 CAS 502: Consistency in allocating costs
incurred for the same purpose
 CAS 505: Accounting for Unallowable Costs
 CAS 506: Accounting Period
Main Principles of CAS
 Costs must be treated in a consistent
manner for all sponsored projects (federal
and nonfederal) – CAS 501
 Amounts budgeted in proposal should
correspond to actual expenses incurred for
the project – CAS 501
 Administrative costs cannot be charged
directly to a sponsored project – CAS 502
Major Issues Involving CAS
 Consistent Treatment of Costs (Direct vs.
Facilities and Administrative Costs, FAC)
 Compliance with A-21 on departmental
costing (normal direct/fac)
 Identification and treatment of
unallowable costs
 Service Centers
Policies
 All proposals submitted under the UGA or
UGARF name must be reviewed by the
appropriate Sponsored Programs office.
 Proposal budgets must be developed using
cost items and categories that are consistent
with the University’s accounting system.
 Specific items of cost must be consistently
budgeted in similar circumstance (direct or
indirect).
Policies, continued
 Salaries and benefits for administrative and
clerical positions in academic units shall
normally be charged to the respective
departmental administrative account (GJ).
 General office supplies, postage and basic
telephone charges shall normally be charged
to the respective departmental administrative
account (GJ).
Policies, continued
 Total direct costs to complete sponsored
projects must be recorded in either the
sponsored or cost sharing account within the
same fund and activity.
 Costs that are considered “unallowable” by
the federal government must be identified
and accounted for separately in the
University’s financial records.
Policies, continued
 The University shall consistently use the
same accounting period for purposes of
estimating, accumulating and reporting
costs (6/30/XX).
Procedures
 Salaries
 Benefits
 Operating
 Corrections
 Travel
 Equipment
 Aid
 F&A Costs
Salaries & Benefits
 University employee salaries and benefits
required to complete a sponsored project
should be budgeted and charged as a direct
cost.
 Allowable project salaries and benefits
should be charged to a sponsored or cost
sharing account.
Salaries and Benefits, cont.
 When original charges for salaries must be
adjusted due to changes in actual workload,
appropriate Personal Activity Reports (PAR)
or journal vouchers should be submitted to
record the adjustment in the accounting
records.
– See PAR policies and procedures at
http://www.busfin.uga.edu/accounting/par.htm
– Send PAR’s to Accounting Department (attn: Kim
Eberhart, 542-4139 or Keber@uga.edu)
– Send JV’s to Payroll Department
Personnel Activity Report (PAR)
The University of Georgia Personnel Activity Report
School/College/Unit:
College of Arts and Sciences
Home Based Department:
Biochemistry
Employee:
Pay Type:
John Doe
11
123-45-678
Date Paid:
Account Number & Activity Description
6/30/98
Pay Period:
6/30/98
-- % of Activity-Payroll
Distribution
Should Be
10-11-GH168-XXX
Instruction - Instruction
22%
22%
10-25-GR168-XXX
Research - Departmental
78%
48%
10-21-CR168-123
NIH Hemoglobin/Doe
30%
Salaries and Benefits, cont.
 To correct a charge made in error to a
sponsored account, move the charges to
the appropriate paying account providing
adequate explanation.
 The explanation: “To move charge to
correct account” is not sufficient.
Administrative Salaries
 Salaries and fringe benefits for departmental
administrative and clerical support staff
should be budgeted and charged to
departmental administration (GJ).
Administrative Salary Exceptions
 In instances where sponsored projects require the
service of administrative or clerical staff beyond the
normal level of department administration, the total
costs of these services may budgeted/charged when:
– Type and nature of services is not provided by the
department administrative account (GJ)
– The services are required by the project scope
– Costs can be accurately identified to the project, and
– The approved budget narrative clearly describes the need
for the service
Administrative Salary Exceptions
 Salaries for administrative or clerical personnel
may be direct charged to a sponsored project if it
involves (per OMB A-21):
– Extensive data accumulation and analysis
– Preparation and production of manuals or large reports
or books
– Extensive travel and meeting arrangements for
conferences and seminars
– Management of a project at locations which are remote
from campus and similar situations
Fringe Benefits
 All fringe benefits, vacation pay (including
termination lump sum payments), holiday
pay, sick leave pay and other paid absences
are to be charged to the current paying
account(s), including sponsored accounts, in
such a manner that each paying account pays
its prorated share of the actual costs based on
the payroll distribution.
Operating Supplies and Expense
 Operating expense type costs which can be
specifically identified to a sponsored project
should be budgeted, charged and reported as
a direct cost to the project or cost sharing
account.
 Service or recharge center charges must be
based on actual utilization and cost-based
charge rates.
Telecommunication Charges
(operating expense)
 Telecom charges for academic department
required to support basic activities should be
charged to the departmental administration
account (GJ).
 Equipment and toll charges for phones needed
for field sites, cellular phones while on travel
status and large projects requiring dedicated
lines may be charged directly to a sponsored
account. These charges should be described in
the budget and approved by the sponsor.
Postage & Office Supplies
(operating expense)
 The cost of postage, general offices supplies (paper,
pencils, notebooks, etc.) and memberships should
normally be charged to the respective departmental
administration account (GJ).
 Postage and general office supplies can be direct
charged to sponsored account when:
– The project requires a substantial amount of this item and
it can be specifically identified
– The items are justified in the budget narrative and
approved by the sponsor
Real Estate Rent
(operating expense)
 Excluded from F&A calculation
 Rent / lease expense may occasionally be a
direct charge to a sponsored project when:
– It is in lieu of hotel (travel) costs for long term
field work
– Apartments are leased to provide lower-cost
housing
– University owned space is not available for the
completion of the project
Utility and Custodial Services
(operating expense)
 May be contracted direct costs when
space is rented and the off-campus F&A
rate is applied.
Motor Vehicle Expenses
(operating expense)
 Motor vehicle maintenance expenses of
project dedicated vehicles and vehicles used
in the field may be directly charged to a
sponsored project.
 Motor vehicle expenses incurred while on
travel status may be directly charged to a
sponsored project.
Corrections
 To correct a charge made in error to a
sponsored account, move the charge to the
appropriate paying account providing
adequate explanation as to how the error
occurred.
 The explanation: “To move charge to correct
account” is not sufficient.
Corrections, continued
 Submit journal voucher to the Contracts
and Grants Department.
– http://www.busfin.uga.edu/forms/accounting_jv
.pdf
Cost Overruns / Deficits
 When it’s necessary to remove excess charges
incurred with the operating supplies and
expense category, a Journal Voucher (JV)
should be prepared transferring the excess
expense to an account within the same function
as follows:
– To the cost sharing account when one exists
– To any other appropriate account in the same
function
Subawards
(operating expense)
 Subawards to other organizations should be
budgeted, charged and reported as direct
costs.
 The applicable F&A rate will be applied to
the first $25,000 of each subaward regardless
of the period covered by the subaward if the
basis is MTDC (modified total direct costs).
Travel
 Travel costs of University employees which
can be specifically identified to a sponsored
project can be a direct cost.
 Travel costs in academic departments which
are associated with the basic activities of the
University should be charged to the
appropriate non-sponsored activity account.
Equipment
 Definition: An item with a unit costs $5,000 or
more and a life expectancy of three years.
 The equipment item must be specifically identified
and utilized on a sponsored project.
 Equipment must be purchased within the project
period. Equipment purchased late in the project
period may require approval of the sponsor.
 Cost is excluded from the F&A calculation under
the MTDC basis.
Equipment – Cost Share
 Cost sharing on equipment items must be in
the form of an original purchase of
equipment within the project period.
 The costs of previously purchased equipment
cannot be included as direct cost sharing
since it is considered to be part of the F&A
rate.
Aid
 Allowable scholarships, stipends, fellowships
and tuition & fees that can be specifically
identified to a project can be charged as a
direct cost.
 This type of cost will be excluded from the
F&A calculation in an mtdc basis.
Facilities and Administrative
Costs (F&A)
 The University’s federally approved F&A
rates are all to be calculated on a MTDC
basis (see
http://www.busfin.uga.edu/contracts_grants/).
 Every effort should be made to used these
rates. When absolutely necessary, other
rates may be acceptable.
Example 1
 We received a Research Award (R01)
from NIH and my administrative
specialist tracks all the budgeting and
accounting can I charge part of their
salary to this grant?
Example 2
 We received a large program project
grant from NSF and my administrative
specialist coordinates multiple sites
subcontract budgets, data management,
and mass participant mailings can I
charge part of their salary to this grant?
Example 3
 Every year the Principal Investigator has
to mail in a technical/progress report to
the agency. Is this an allowable charge to
the grant?
Cost Accounting Standards
Presented by:
Contracts and Grants Department
(http://www.busfin.uga.edu/contracts_grants/)
Tracy R. Walters, Director
Tel: (706) 542-3721
Fax: (706) 542-6883
Email: twalt01@arches.uga.edu