University Business Policies and Procedures Manual

2400
COST ACCOUNTING STANDARDS
Effective Date: July 15, 1998
Subject to Change Without Notice 

1. General

The U.S. Government Office of Management and Budget (OMB) Circular A-21, "Principles for Determining Costs Applicable to Grants, Contracts, and Other Agreements with Educational Institutions" requires the University to comply with applicable cost accounting standards published by the Cost Accounting Standards Board (CASB) and to submit a Disclosure Statement (Form DS-2) to the University's cognizant audit agency. The DS-2 describes the University's cost accounting practices. These cost accounting practices must be followed by all University units, departments, and programs that use University funds.

2. Cost Accounting Standards

Circular A-21 identifies four (4) cost accounting standards that apply to educational institutions.

2.1. Cost Accounting Standard 501

This standard requires that costs be estimated, accumulated, and reported consistently. A cost that is included in a contract or grant proposal as a direct cost must be accumulated as a direct charge in the accounting records. The same rule applies to indirect charges.

2.2. Cost Accounting Standard 502

This standard requires that costs incurred for the same purpose be accounted for in the same manner. A department cannot account for such costs in one manner while another department accounts for them differently. Therefore, this standard requires that the University have established cost accounting practices that are applied consistently throughout the campus.

2.3. Cost Accounting Standard 505

This standard requires that unallowable costs be identified and excluded from any costs charged to federal contracts and grants. The University's policies and procedures for complying with this standard are described in "Accounting for Federally-Defined Allowable and Unallowable Costs" Policy 2410, UBP.

2.4. Cost Accounting Standard 506

This standard requires that the University's cost accounting period be the same as the University's fiscal year.

 

3. Disclosure Statement (DS-2)

The University Controller is responsible for submitting a Disclosure Statement (DS-2) to the cognizant agency. The DS-2 discloses the University's cost accounting practices, which must comply with Circular A-21 and applicable cost accounting standards. The Controller is also responsible for maintaining an accurate DS-2 and filing amendments to the DS-2 when disclosed practices are changed to comply with a new or modified standard, or are changed for other reasons. Costs will be disallowed if the University fails to comply with Circular A-21 or fails to consistently follow its established or disclosed cost accounting practices (DS-2) when estimating, accumulating or reporting the costs of sponsored agreements.

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