Cost Accounting Standards -Policies and Procedures-

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Cost Accounting Standards-Policies and
Procedures-
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CAS Perspective
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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

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HHS Audit of Disclosure Statement

• General
• - Written Policies
• - Dissemination of Policies
• - How well policies are being followed

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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

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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

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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

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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

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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

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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
  Universitys accounting system.
• Specific items of cost must be consistently
  budgeted in similar circumstance (direct or
  indirect).

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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).

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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 Universitys
  financial records.

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Policies, continued

• The University shall consistently use the same
  accounting period for purposes of estimating,
  accumulating and reporting costs (6/30/XX).

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Procedures

• Salaries
• Benefits
• Operating
• Corrections

• Travel
• Equipment
• Aid
• FA Costs

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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.

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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 PARs to Accounting Department (attn Kim
  Eberhart, 542-4139 or Keber_at_uga.edu)
• Send JVs to Payroll Department

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Personnel Activity Report (PAR)
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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.

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Administrative Salaries

• Salaries and fringe benefits for departmental
  administrative and clerical support staff should
  be budgeted and charged to departmental
  administration (GJ).

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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

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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

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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.

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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.

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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.

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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

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Real Estate Rent(operating expense)

• Excluded from FA 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

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Utility and Custodial Services (operating
expense)

• May be contracted direct costs when space is
  rented and the off-campus FA rate is applied.

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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.

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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.

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Corrections, continued

• Submit journal voucher to the Contracts and
  Grants Department.
• http//www.busfin.uga.edu/forms/accounting_jv.pdf

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Cost Overruns / Deficits

• When its 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

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Subawards (operating expense)

• Subawards to other organizations should be
  budgeted, charged and reported as direct costs.
• The applicable FA 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).

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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.

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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 FA calculation under
  the MTDC basis.

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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 FA rate.

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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 FA
  calculation in an mtdc basis.

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Facilities and Administrative Costs (FA)

• The Universitys federally approved FA 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.

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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?

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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?

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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?

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Cost Accounting Standards

• Presented by
• Contracts and Grants Department
• (http//www.busfin.uga.edu/contracts_grants/)
• Tracy R. Walters, Director
• Tel [phone]
• Fax [phone]
• Email twalt01_at_arches.uga.edu