UNDERSTANDING A-21 - THE BIG PICTURE

OMB Circular A-21 was developed by the Federal Government for the main purpose of establishing those principles for determining costs applicable to grants, contracts, and other agreements with educational institutions.  Underlying this basic purpose was the desire of the Federal Government to ensure that it did not pay more than its fair share of the total costs.  With that in mind, the first versions were developed in the early 1970s, and have been most recently updated in October of 1998.

A-21 is divided into 11 basic sections plus 3 exhibits and two appendices.  The first three sections deal with the overall purpose of A-21, the definition of terms used throughout the circular, and some basic considerations.  The next four sections D, E, F, and G, plus section J and the appendices are the focus of this training and are the sections with which you must be very familiar.  These deal with the direct and F&A costs, the application and assignment, and determination and application of F&A costs, general provisions for selected items of cost, and the CAS or Cost Accounting Standards.

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