Cost Accounting Standards - CAS
Throughout OMB Circular A-21 and stressed during this training program is the need for consistency--we must handle funds in the same manner within the System, System Components, departments and projects. Among the tools which assist in this effort are the DS-2, which will be discussed in another module, and the CAS or Cost Accounting Standards. At times, some individuals refer to these as CAS-B's - which is really a bit misleading as CAS-B refers to the CAS Board which developed the Cost Accounting Standards. Additionally, A-21 Appendix A contains the CAS for Educational Institutions, whereas Appendix B, contains the information pertaining to the CAS Board Disclosure Statements-- the DS-2.
There are 4 basic 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; and
CAS 506: Cost Accounting Period.
Each of these standards will be briefly examined below.
CAS 501: Consistency in Estimating, Accumulating, and Reporting Costs -
To be consistent within the guidelines of CAS 501, any institution must do the same thing between departments, between proposals, and even as far as between the proposal and the reporting of costs for that proposal. This is designed to ensure that the practices used to estimate costs for a proposal are consistent with those practices used for accumulating and reporting the costs - from the time we propose it till we spend it! Consistency is essential for comparable transactions to be treated alike. As a result, reliable cost estimates may be prepared for use in pricing a proposal and for comparing the costs of performance of the agreement. These comparisons provide a basis for financial control of costs and the accountability for the costs in accordance with the intent of the agreement approved by both parties.
CAS 502: Consistency in Allocating Costs Incurred for the Same Purpose -
502 is designed to require each type of cost to be allocated only once and on only one basis to any sponsored agreement or other cost objective. - Make it the same for all similar objectives. This is necessary to prevent overcharging or double counting. The double counting commonly occurs when a cost item is allocated directly but not eliminating the cost item from the indirect cost pool which may be allocated to that cost objective.
CAS 505: Accounting for Unallowable Costs -
This standard has been included to facilitate the negotiation, audit, administration, and settlement of sponsored agreements by establishing some basic guidelines. These guidelines cover the (1) identification of costs which have been specifically identified as unallowable and (2) the cost accounting treatment for these unallowable costs to promote consistent application of sound cost accounting principles (help the full disclosure of an audit trail). The idea is that the costs of carrying on the various activities of an educational institution, even if they are unallowable, are allocated to the cost objectives with which they are identified due to their beneficial or causal relationships.
CAS 506: Cost Accounting Period -
The purpose of 506 is to provide some basic criteria for selecting the time periods which are to be used for cost estimating, accumulating, and reporting (another connection to 501). In addition it can reduce the effects of variations in the flow of costs within each cost accounting period, may enhance objectivity, consistency, and the ability to verify the costs; plus it can promote uniformity and comparability. Generally, a fiscal year is to be used as the cost accounting period. Of course, there may be some exceptions to this general guideline, and if you perceive the need for an exception, discuss it with your Contracts and Grants office to use any other period. Again, be sure to follow consistent practices when selecting a cost accounting period for which expenses are accumulated and allocated.
Click the right arrow below to proceed
|
|
|