Implementing Federal Cost Accounting Standards


The Cost Accounting Standards Board (CASB) within the Office of Management and Budget (OMB) issued four cost accounting standards for educational institutions. In April 1996, OMB Circular A-21 incorporated these four cost accounting standards. Appendix of A-21 provides details on the CAS, which are codified in part 99905 of 48 CFR 99. Since the CAS are now part of A-21, awards subject to A-21 are also subject to the CAS (see A-21, section A.3 "Application").

Four Standards

The following table lists the title and purpose of each cost accounting standard:





Consistency in estimating, accumulating and reporting costs by educational institutions

To ensure that cost accounting practices for estimating costs in a proposal are consistent with cost accounting practices for accumulating and reporting costs.


Consistency in allocating costs incurred for the same purpose by educational institutions

To ensure that each type of cost is allocated only once and on only one basis to any sponsored project or other cost objective.


Accounting for unallowable costs - educational institutions

To facilitate all aspects of sponsored projects by establishing guidelines covering the identification and treatment of unallowable costs.


Cost accounting period - educational institutions

To provide criteria for the selection of the time periods to be used as cost accounting periods for sponsored project cost estimating, accumulating, and reporting.

CAS Objectives

The objectives of the CAS are to:

Research Foundation Implementation

Since sponsored program management practices need to comply with the CAS, operating locations should:

Establishing Written Cost Accounting Policies

Since practices used in estimating costs in proposals should be consistent with the practices used in accumulating and reporting costs, operating locations should establish written policies that identify their cost accounting practices (regardless of the requirement to provide a written disclosure statement.

Note: Due to the complexity of establishing cost accounting policies, operating locations can contact the Treasurer's Office for assistance.

These cost accounting policies should include the operating location's treatment of direct and indirect costs. The following block describes some direct and indirect cost treatment issues. (Refer to "Guidelines for Determining Direct and Facilities & Administration (F&A) Costs" for definitions and additional information on direct and indirect costs.)

Treatment of Costs in Cost Accounting Policies

Costs Normally Treated as Indirect

When establishing their treatment of costs, operating locations should pay close attention to costs "normally treated" as indirect. The following list (from A-21, section F6b) includes specific examples of these costs:

Cost Sharing and Recharge Rates

Due to federal government scrutiny of these costs, operating locations should ensure that their cost sharing and recharge rates for service centers are appropriate and properly documented.

For more information on cost sharing, refer to the procedures on cost sharing under the Grants Management business area.

For more information on recharge rates, refer to "Service Center Guidelines."

Communicating Policies

Operating locations should communicate their cost accounting policies to appropriate campus personnel and establish a process to monitor their cost accounting practices to ensure compliance with the policies they have established based on the CAS. "Appropriate campus personnel" includes, but is not limited to:

Disclosure Statement

Educational institutions are required to prepare a disclosure statement (CASB-DS-2) when the institution receives


CAS requirements flow down to subrecipients of CAS-covered awards. The clause "Compliance with Laws and Regulations: General Obligations" in the Research Foundation's standard cost reimbursable subcontract and subgrant agreement serves as the flowdown mechanism.

Exhibit A - Costs Normally Treated as Indirect


This exhibit further describes costs listed in A-21, section F6b, that are "normally treated" as indirect costs.

Although normally treated as indirect, these costs can be charged directly. Operating locations who charge these costs directly must consider if each cost:

Office Supplies

The costs of general office supplies such as pencils, pens, paper clips, memo pads, and file folders, are normally treated as indirect costs.

The direct charging of office supply costs may be appropriate for such costs as research notebooks and computer paper used for a specific project.


The costs of postage for routine correspondence are normally treated as indirect costs.

The direct charging of postage cost may be appropriate for such costs as the shipment of materials, bulk mailings, and mailing of deliverables.

Local Telephone

The costs of basic service and local calls are normally treated as indirect costs.

The direct charging of local telephone costs may be appropriate for such costs as a separate telephone line dedicated solely for the performance of a sponsored project.

Note: Long distance toll charges that are reasonable and necessary to the perfomance of a project may be charged directly either by identifying them individually to the project they benefit, or on a proportional basis using documented, reasonable methods.

Memberships and Subscriptions

The costs of an institution's memberships in or subscriptions to business, technical, and professional organizations or periodicals are normally treated as indirect.

The direct charging of institutional and individual memberships or subscriptions costs is rarely appropriate. Operating locations who want to charge these costs directly should ensure that all criteria for direct charging are met.

Administrative and Clerical Services

The salaries of administrative and clerical staff are normally treated as indirect costs.

Direct charging of these costs would only be appropriate where a major project or activity explicitly budgets for administrative or clerical services and persons involved can be specifically identified with the project or activity. The following examples illustrate circumstances where direct charging the salaries of administrative or clerical staff may be appropriate.



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