Cost Accounting Standards -Policies and Procedures- - PowerPoint PPT Presentation

Loading...

PPT – Cost Accounting Standards -Policies and Procedures- PowerPoint presentation | free to download - id: 857298-NGQ5M



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Cost Accounting Standards -Policies and Procedures-

Description:

Cost Accounting Standards -Policies and ... are posted as direct costs are charged to accounts Small Car Company, ... We can t do that every year Base ... – PowerPoint PPT presentation

Number of Views:68
Avg rating:3.0/5.0
Slides: 50
Provided by: Cont130
Learn more at: http://busfin.uga.edu
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Cost Accounting Standards -Policies and Procedures-


1
Cost Accounting Standards-Policies and
Procedures-
2
CAS Overview
3
What is OMB Circular A-21?
  • Circular A-21 first issued in 1958 by the Office
    of Management and Budget
  • Federal effort to establish government wide cost
    principles
  • Applicable to research and development grants,
    contracts, and other funding agreements with
    educational institutions
  • A-21 has undergone numerous revisions over the
    past 44 years

4
1996 A-21 Revisions
  • Facilities Administrative costs replaced the
    phrase indirect costs
  • Four Cost Accounting Standards (CAS) applicable
    to educational institutions incorporated into
    A-21
  • Institutions receiving more than 25 million in
    federal sponsored agreements must submit a
    Disclosure Statement

5
A-21 Highlights
  • Definition of Terms
  • Direct Costs
  • Facilities Administrative (FA) Costs
  • Determination and Application of FA Cost Rate or
    Rates
  • General Provisions for Selected Items of Cost
    Section J
  • www.whitehouse.gov/omb/circulars/a021/a021.html
    full text of A-21

6
OMB Circular A-21 Direct Costs
  • Direct costs are those costs that can be
    identified with a particular cost objective
    (grant, contract or direct functional activity)
    relatively easily with a high degree of accuracy

7
OMB Circular A-21 Facilities and Administrative
Costs (FA)
  • FA (formerly Indirect Costs) are those costs
    incurred for common or joint objectives and
    therefore cannot be identified readily and
    specifically with a particular sponsored project,
    instructional activity, or any other
    institutional activity.

8
OMB Circular A-21 Functional (Expense Purpose)
Categories
  • Indirect functions
  • Depreciation or Use Allowance
  • Buildings
  • Equipment
  • Operations Maintenance
  • General Administrative
  • Departmental Admin
  • Sponsored Projects Admin
  • Student Services Administration
  • Library
  • Direct functions
  • Instruction Departmental Research
  • Organized Research
  • Other Sponsored Activities
  • Other Institutional Activities

9
FA Rates
  • Rates are based on calculations performed once
    every 3 5 years
  • http//www.ovpr.uga.edu/sponprog/freqinfo.htmlInd
    irectCost UGAs Rates
  • FA costs are partial recovery of actual costs
    incurred
  • If distinction between direct and indirect (FA)
    is not maintained, government could be paying
    twice for the same type of cost
  • Negotiators/Auditors look for these type of
    errors

10
Cost Accounting Standards Why are they required?
  • As noted in the Federal Register
  • Based on information that some institutions of
    higher education were improperly allocating
    indirect costs to federal research programs and
    charging unallowable costs to federal awards...

11
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

12
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
  • Cost Sharing proposed is committed once proposal
    is accepted CAS 501

13
Main Principles of CAS
  • Administrative costs cannot be charged directly
    to a sponsored project CAS 502
  • Unallowables (entertainment, alcohol, bad debt
    expense, fines penalties) must be identifiable
    in accounting system CAS 505
  • Fiscal year must be used as cost accounting
    period CAS 506

14
Major Issues Involving CAS
  • Consistent Treatment of Costs (Direct vs.
    Facilities and Administrative Costs, FA)
  • Compliance with A-21 on departmental costing
    (normal direct/FA)
  • Identification and treatment of unallowable costs
  • Service Centers

15
What is a Disclosure Statement?
  • Describes educational institution and its cost
    accounting practices
  • UGA was required to submit a Disclosure
    Statement, (DS-2), in July 1996
  • Changes in costing practices will have to be
    approved by DHHS
  • Compliance to the CAS and our DS-2 will be
    audited by DHHS

16
HHS Audit of Disclosure Statement
  • General
  • - Written Policies
  • - Dissemination of Policies
  • - How well policies are being followed
  • The greatest vulnerability at most institutions
    is Standard 502 Consistency in allocating costs
    incurred for the same purpose

17
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

18
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).

19
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).

20
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.

21
Policies, continued
  • The University shall consistently use the same
    accounting period for purposes of estimating,
    accumulating and reporting costs (6/30/XX).

22
Procedures
  • Salaries
  • Benefits
  • Operating
  • Corrections
  • Travel
  • Equipment
  • Aid
  • FA Costs

23
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.

24
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

25
Personnel Activity Report (PAR)
26
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.

27
Administrative Salaries
  • Salaries and fringe benefits for departmental
    administrative and clerical support staff should
    be budgeted and charged to departmental
    administration (GJ).

28
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

29
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

30
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.

31
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.

32
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.

33
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

34
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

35
Utility and Custodial Services (operating
expense)
  • May be contracted direct costs when space is
    rented and the off-campus FA rate is applied.

36
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.

37
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.

38
Corrections, continued
  • Submit journal voucher to the Contracts and
    Grants Department.
  • http//www.busfin.uga.edu/forms/accounting_jv.pdf

39
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

40
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).

41
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.

42
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.

43
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.

44
Aid
  • Allowable 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.

45
Facilities and Administrative Costs (FA)
  • The Universitys federally approved FA rates are
    all to be calculated on a MTDC basis
  • Every effort should be made to used these rates.
    When absolutely necessary, other rates may be
    acceptable.

46
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?

47
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?

48
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?

49
Example 4
  • In regards to corrections made on restricted
    accounts, would the explanation to use up
    remaining grant funds suffice as an adequate
    explanation?
About PowerShow.com