Cost Accounting Standards & UAF Disclosure Statement · 2020-02-14 · Firm fixed price contracts ... assignment of cost to cost accounting period, or measurement of cost CAS 9903.302-1

Cost Accounting Standards & Disclosure Statement

Ginger Baker, Manager SW Systems OfficeCost Analysis and Sponsored Program [email protected](907) 474-6496

mailto:[email protected]

2

Today’s Topics� Overview and History� Cost Accounting Standards� Disclosure Statement� Navigating the Disclosure Statement� Applying the Disclosure Statement� Non-Compliance Issues

Acronyms

Common Terms

Overview and History

5

Overview and History� Concern about pricing and accounting

practices of defense contractors� No consistency

� 1968 � Amendments - Defense Production Act� Government Accounting Office (GAO)

� Study to determine feasibility of � Establishing & applying cost accounting standards� Greater uniformity in cost accounting � Negotiating & administering procurement contracts

6

Overview and History� Recommendations

� CAS � Feasible - greater uniformity and consistency� Should not be limited to Defense contracts� Benefits vs. costs� Eliminate alternative practices

� Contractor should be required to maintain records

7

Overview and History� 1970

� Congress created CASB � Tasked to increase uniformity and consistency� CASB created CAS

� 19 commercial standards� Implemented standards in 1980

� Applied to negotiated defense contracts in excess of $100,000

� 1978� Educational Institutions were exempted from

CAS

8


� CASB dissolved

� 1988� CASB reestablished

� Permanent, independent board� Office of Federal Procurement Policy in OMB

� Increased contract threshold to $500,000� Extended coverage to all Federal contracts

9

Overview and History� 1990-1993

� F&A cost concerns� Scandals

� 1994 � CAS coverage extended to colleges and

universities� 1995

� Four standards� Negotiated Federal contracts and

subcontracts greater than $500,000

10

Overview and History� CAS Exemptions

� Negotiated contracts and subcontracts less than $500,000

� Sealed bid contracts� Contracts and subcontracts with small businesses or

foreign governments or foreign concerns� Contracts and subcontracts in which prices are set by law� Firm fixed price contracts� Contracts and subcontracts performed outside U.S.

� Disclosure Statement required if meet certain thresholds

11


� Amendment to A-21� Emphasis on consistency among and within

institutions� Incorporates the four cost accounting

standards� Disclosure Statement Requirements

� Circular A-21, C.14� Extends coverage of A-21 to all sponsored

agreements� Contracts and grants regardless of award amount

12


� Focus is on� Consistency and standardization

� Institutions must be proactive in identifying compliance problems

Definitions

14

DefinitionsDefinitions� Cost objective

� A specific or major function of the institution, a particular service or project, sponsored agreement, or a F&A cost activity

OMB Circular A-21, Section B.2.3.

15

DefinitionsDefinitions� Allocation

� Process of assigning a cost, or a group of costs, to one or more cost objective, in reasonable and realistic proportion to the benefit provided or other equitable relationship.

OMB Circular A-21, Section B.2.3.

16

DefinitionsDefinitions� Allocable

� A cost is allocable if� It is chargeable or assignable to a particular

cost objective according to the relative benefit received or other equitable relationship.

OMB Circular A-21, Section C.4.a.

17

DefinitionsDefinitions� Specifically, a cost is allocable to

sponsored agreements if the cost� Is incurred to advance the work

under the sponsored agreement� Benefits sponsored and other work

� Proportions can be reasonably estimated

� Is necessary for the overall operation of the institution

OMB Circular A-21, Section C.4.a.

18

DefinitionsDefinitions� Direct cost

� Those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to these activities relatively easily with a high degree of accuracy.

OMB Circular A-21, Section D.1.

19

DefinitionsDefinitions� F&A costs (indirect costs)

� Those costs incurred for common or joint objectives and therefore, cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.

OMB Circular A-21, Section E.1.

20

DefinitionsDefinitions� Allowable Costs

� Costs that are reasonable, allocable to sponsored agreements under principles and methods outlined A-21, given consistent treatment through application of those principles and methods, conform to any limitations or exclusions in A-21 or in the sponsored agreement as to types or amounts of cost items.

OMB Circular A-21, C.2.

21

DefinitionsDefinitions

� Unallowable cost� Any cost, which, under the provisions of

any pertinent law, regulation, or sponsored agreement, cannot be included in prices, cost reimbursements, or settlements under Government sponsored agreement to which is is allocable.

CAS 9905.505-30 (4)

22

Definitions� Cost accounting practice

� Any disclosed or established accounting method or technique which is used for allocation of cost to cost objectives, assignment of cost to cost accounting period, or measurement of cost

CAS 9903.302-1

Cost Accounting Standards

Consistency, Consistency, Consistency!!!!

CAS Perspective

Describes how UniversityBusiness is Conducted

University to complywith existingstandards

RequiredM

ust I

nclu

de

OMB CIRCULAR

A-21

COST ACCOUNTING STANDARDSCAS 501CAS 502CAS 505CAS 506

DISCLOSURESTATEMENT

(DS-2)

25

Cost Accounting Standards� OMB Circular A-21

� Section C.10 – C.13� Appendix A

� Four standards� CAS 501� CAS 502� CAS 505� CAS 506

26

Cost Accounting Standards� Designed to achieve uniformity and

consistency in the measurement, assignment, and allocation of costs to government contracts

� Promulgated by the government in the interest of the government

27

Cost Accounting Standards� Cost Accounting Standards vs. Cost

Principles (A-21)� CAS addresses measurement, assignment,

and allocation� A-21 addresses cost allowability

� Costs that are not accounted for in accordance with CAS are unallowable

28

Cost Accounting Standards� Federal regulations affect the

accounting of funds from all funding sources because of� F&A� Cost sharing

29

Cost Accounting Standards� F&A

� University funds are included in the calculation of the F&A rate charged on federal sponsored agreements

� Distorted F&A cost rate� Incorrect assignment and allocation of costs � Results in an over or under recovery of F&A

costs each time a project is billed for F&A� Accumulated over recovery can result in

repayment to the government� University funds sacrificed

30

Cost Accounting Standards

� Cost sharing� University funds are included in total project costs funded by the federal government

� Incorrect assignment of costs in rate calculation

� Unallowable costs� Must be accounted for and reported

31

CAS 501CAS 501

� Consistency in estimating, accumulating and reporting costs

32

CAS 501� Purpose

� Estimating practices for a proposal are consistent with cost accounting practices used in accumulating and reporting costs

� Comparable transactions are treated alike� Cost estimates are reliable� Improved cost control� Enhanced accountability

33

CAS 501CAS 501� Fundamental requirements

� Estimate costs same way that incurred costs are accumulated and reported

� Accumulate and report costs consistent with cost estimating procedures

� Actual costs may be recorded in more detail than those provided in proposal estimates, but not vice versa

34

CAS 501� Techniques for application

� Comparability� Must be able to compare costs estimated in

proposal with actual costs

� Consistency� Direct or indirect� Assignment to F&A cost pools � Allocation methodologies

35

CAS 501� Example of consistent practice

� Proposal estimate� Average direct labor rate by category

� Actual� Actual labor recorded by the individual

� Proposal estimate� Individual costs are estimated and identified to

project in budget� Actual

� Costs are charged directly to the project as incurred

36

CAS 501� Examples of inconsistent practice

� Proposal estimate� PI effort proposed on a research project is the

anticipated effort required to successfully perform the project

� Actual� Effort devoted to the project is charged to the

restricted fund to the extent of available funding. Effort devoted to the project, but paid from general funds, is charged to an instruction account

37

CAS 502

� Consistency in allocating costs incurred for the same purpose

38

CAS 502� Purpose

� Each type of cost is allocated only once and on only one basis to any contract or other cost objective

� Criteria for allocating costs to sponsored agreements is same for all similar cost objectives

� Prevent overcharging, double counting, or double dipping

39

CAS 502� Fundamental requirements

� All costs incurred for the same purpose in like circumstances are either direct or indirect only

� If a sponsored agreement is charged directly for a cost, no other similar costs incurred for the same purpose, in like circumstances, can be in the F&A cost pools and subsequently the F&A rate (and vice versa)

40


� Apply to estimates used in proposals and to actual costs

� Describe in DS-2 which cost items are direct which are indirect

� Describe criteria of dissimilar circumstances and/or different purposes for hybrid costs

41

CAS 502� Example of costs incurred for same

purpose� Purchasing support

� Indirect cost� Sponsored project requires disproportionate

amount of subcontract administration� Costs cannot be charged both directly and

indirectly

42

CAS 502� Examples of costs not incurred for same

purpose� Test equipment costs

� Special - charged directly� General purpose - normally indirect� Accounting treatment disclosed

43

CAS 502� Costs incurred in preparing and

submitting proposal� Renewal proposal

� Existing award’s specific requirement � Direct cost of existing contract

� Existing award has no specific requirement � Indirect cost of department

� New Proposals� Indirect cost of department

44

CAS 502� Fire protection

� 10 general firefighters� Indirect cost

� New contract requires 3 firemen at fixed post 24 hours due to high risk materials

� Direct cost

45

Circular A-21, Section F.6.b� Dept administration expenses

� “…special care should be exercised to ensure that costs incurred for the same purpose, in like circumstances, are treated consistently as either direct costs or F&A costs.”

46

Circular A-21, Section F.6.b� Normally direct

� Technical staff salaries, lab supplies, telephone toll charges, animals and care costs, computer costs travel costs, and specialized shop costs

� Identifiable to particular project

47

Circular A-21, Section F.6.b� Normally F&A

� Administrative & clerical salaries� Office supplies� Postage� Local telephone costs� Memberships

48

Circular A-21, Section F.6.b� Potential different circumstances

� Nature of activity is not the same� Direct charging of administrative & clerical

salaries may be appropriate where a major project or activity

� Explicitly budgets for administrative or clerical services AND

� Individuals can be specifically identified with project or activity

49

Circular A-21, Section F.6.b� “Major project is defined as a project

that requires an extensive amount of administrative or clerical support, which is significantly greater than the routine level of such services provided by academic departments.”

50

Circular A-21, Exhibit C� Criteria

� Inappropriate to charge these costs directly to a specific sponsored agreement if, in similar circumstances, the costs of performing the same type of activity for other sponsored agreements is included in department administration costs.

51

CAS 505

� Accounting for Unallowable Costs

52

CAS 505� Purpose

� Facilitate the negotiation, audit, administration and settlement of sponsored agreements by establishing the guidelines covering

� Identification of unallowable costs� Consistent cost accounting treatment of all

costs, including unallowable costs

� Does not address which costs are allowable

53

CAS 505� Fundamental requirements

� Two types� Costs expressly unallowable by sponsor, laws,

or rules� Costs directly associated with unallowable costs

� Identify and exclude all costs from any billing, claim, application or proposal that are

� Expressly unallowable OR� Mutually agreed to be unallowable

54

CAS 505� All unallowable costs are subject to

the same cost accounting principles as allowable costs� Allocable

55

CAS 505� Fully allocate overrun costs to

agreements� Cost overruns must be identified

� Amount over ceiling� Not thru specific identification of

particular cost items

56


� Documentation required as support for proposals, billings, or claims must be adequate to

� Identify unallowable costs through specific account codes and program codes

� Identify cost accounting treatment of the unallowable costs

57

CAS 505� A-21, Section J� Examples of unallowables

� Advertising� Alumni activities� Bad debt� Dependent/spouse tuition waivers� Alcoholic beverages� Donations

58

CAS 506

� Cost Accounting Period

59

CAS 506� Purpose

� Provide criteria for the selection of cost accounting time periods for F&A rate development

� Enhance objectivity, consistency, and verifiability, and promote uniformity and comparability in sponsored agreement measurements

60

CAS 506� Fundamental requirement

� Use fiscal year, except� Costs of indirect function which exists for part

of fiscal year may be allocated to cost objectives of same period

� Another annual period may be used if an established practice at institution

� Recharge activities may have a different year

61

CAS 506� Same accounting period used for both F&A

pool and direct base costs

62


� Government can agree to allow institution to use a fixed annual period other than its fiscal year

63

10 minute break!10 minute break!

Disclosure Statement (DS-2)

65

Disclosure Statement (DS-2)� What is it?

� A written description of an educational institution’s cost accounting practices and procedures

� Meets requirements of Public Law 100-679

66

Disclosure Statement (DS-2)� When is it required?

� A-21, Section B� Total federal sponsored awards of $25

million or more in most recent fiscal year

67

Disclosure Statement (DS-2)� What is required?

� Submit for each business unit� Significantly different practices

� Maintain accurate DS-2� Actual practices consistent with disclosed� Amend for any changes

� If material impact, changes must be approved in advance by ONR

� Cost impact study required� Proposal year – prior to proposal preparation

68

Disclosure Statement (DS-2)� SW original, submitted December 1997

� Effective August 17, 1995� Revision 1, effective July 1998� Revision 2, effective July 2001

� Pending determination of adequacy from ONR

69

Disclosure Statement (DS-2)� UAF original, submitted December 1997

� Effective August 17, 1995

� Revision 1, effective July 1997� Revision 2, effective July 1998� Revision 3, effective July 2001

� Pending determination of adequacy from ONR

70

Disclosure Statement (DS-2)� Disclosure statement must be both

� Adequate� Compliant

� Adequacy audit to determine if DS-2 is� Current� Accurate� Complete

71

Disclosure Statement Submittal� Compliance audit to determine if

disclosed practices comply with� CAS� Circular A-21

� Cost adjustments plus interest if fail to� Disclose practices� Consistently follow practice

Navigating the DS-2

73

Disclosure Statement (DS-2)� Cover Sheet

� Name & address of institution� Type or reporting unit� Official contact information� Statement type and effective date� Cognizant federal agency and auditor

� Certification� Complete and accurate disclosure of

accounting practices� Signed by VP for Finance

Graphical Picture of Disclosure Statement (DS-2)

I. General Information

VII. Central Systems & Group Expenses

II. Direct Costs

DS-2VI. Deferred

Compensation & Insurance Costs

V. Leave Costs & Applicable Credits

IV. Depreciation & Use Allowance

III. Indirect Costs

Specialized Service Centers

75

Disclosure Statement (DS-2)� Format

� Select from methods described

� Continuation sheets� Description of hybrid practices� Descriptions of specific cost practices

76

Disclosure Statement (DS-2)� SW Systems Office DS-2

� Current� Cover Sheet� Certification� Part I� Part VII

� Future� Complete Parts IV, V, and VI if these types of

cost amounts incurred are material

77

Disclosure Statement (DS-2)� UAF DS-2

� Cover sheet� Certifications� Part I – Part VI

78

DS-2 Part IGeneral Information� 1.1.0 Description of accounting system

� Accrual� 1.2.0 Integration of cost accounting and

financial accounting

79

DS-2 Part IGeneral Information � 1.3.0 Unallowable costs

� Hybrid (continuation sheet)� Specific account and program codes� Query of responsible individuals for costs not

formally identified in accounting system� GCS monitors compliance with A-21 and federal

agency policy� Travel and cost transfers reviewed for propriety� Shifting losses prohibited

80

DS-2 Part IGeneral Information

� 1.3.1 Treatment of unallowable costs (continuation sheet)

� Unallowable expense� In direct cost bases – remain in base� In F&A pool – excluded from calculations

� Unallowable activities - OIA� Unallowable activities space – OIA� Procedure assures that

� Appropriate share of F&A gets allocated to unallowable activities

� Other activities are not charged for support costs that benefit unallowable expenses and activities

81

DS-2 Part IGeneral Information� 1.4.0 Cost accounting period� 1.5.0 State Laws or Regulations

82

DS-2 Part IIDirect Costs� 2.1.0 Criteria for determining how costs

are charged to federally sponsored agreements or similar cost objectives� Describe on continuation sheet institution’s

criteria for determining when costs incurred for the same purpose, in like circumstances, are treated either as direct costs only or as indirect costs only with respect to final cost objectives

83

DS-2 Part IIDirect Costs

� Direct Costs� Identified specifically with OR, IN, OSA, OIA� With relative ease� High degree of accuracy� Allowable, A-21� Not expressly disallowed in budget

84


� Multiple projects - assign costs based on relative benefits received by that project

� Must also be � Reasonable� Necessary� Allowable� In accordance with T&C of sponsored award

� Cost sharing, mandatory and voluntary� Separately budgeted and accounted for� Included in appropriate direct base for F&A rate

development

85


� Cost categories� Salaries, wages & related fringe benefits -Programmatic

personnel necessary to meet the objectives of the project/activity

� Materials� Project supplies� Travel� Telephone - non-routine expenses� Subcontract, subgrants, subawards� Services - recharge center charges, professional &

consultants� Capitalized scientific and technical equipment� Postage - special handling� Miscellaneous - participant expenses and fees

86


� Indirect Costs� General institutional costs incurred for common

and joint objectives that cannot be identified� Readily AND� Specifically with a particular direct activity

� Indirect pools include O&M, depreciation, GA & DA expenses, SPA & OSP, library costs, and SS

� Allocated in accordance with A-21

87


� Use organization codes with their corresponding program codes to identify activity types by unit

� Direct type costs can be charged to indirect pools if

� Not material OR� For general institutional purposes

� GA & DA are normally indirect activities� GA - Financial Services, Purchasing, Personnel, Post

Office, Business Office, Provost, Chancellor, Vice Chancellor

� DA - Expenses incurred to support the normal core operations of the unit

88


� Cost categories� Salaries, wages and related fringe benefits - clerical

& administrative personnel that perform a broad range of baseline general support activities

� Office supplies - routine expenditures� Postage - general & routine mailings not requiring

special handling� Telephone - local recurring phone charges,

installation, and telephone equipment rentals� Equipment - general and office� Repair and maintenance

89


� Indirect costs Considered Direct Costs� Costs incurred for the same purpose, in like

circumstances, are consistently treated as direct or indirect

� Costs normally charged indirectly may be charged as direct costs if

� Purpose and circumstances are different� Size, nature, and complexity of project - important

considerations� Existence of unlike circumstances evaluated on case

by case basis

90


� May be appropriate where� Services are required by the project scope� Individuals or cost can be accurately and specifically

identified with the project with relative ease� Approved project budget clearly describes the need

for services

� Other key factors are� Specific type and nature of services required � Nature of work preformed is functionally different

91


� Examples of activities where is may be appropriate to charge (Circular A-21, Exhibit C)

� Large, complex programs� Extensive data accumulation, analysis and tabulation� Preparation and production of manuals, large

reports, or books� Extensive travel and meeting arrangements for large

numbers of participants� Management of a project in locations that are

remote from campus� Individual projects requiring project-specific technical

or administrative work

92


� Non-federal agreements� Indirect type costs may be charged as direct

costs � When not expressly prohibited by sponsor

� Technical violation of CAS and A-21� Federally sponsored agreements are not

adversely impacted financially

93

DS-2 Part IIDirect Costs� 2.2.0 Description of direct materials

(continuation sheet)� Direct materials are always related to the

project� Project, teaching, professional, technical, and

scientific supplies� Periodical subscriptions and books� Other supplies/commodities and materials

when readily identifiable to a specific project

94

DS-2 Part IIDirect Costs� 2.3.0 Methods of charging direct

materials and supplies� 2.3.1 Direct purchases for projects are

charged to projects at� Actual invoiced costs net of discounts taken

� 2.3.2 Inventory requisitions from central or common, institution-owned inventory

� Various methods� Describes specific practices by inventory

(continuation sheet)

95

DS-2 Part IIDirect Costs� 2.4.0 Description of direct personal

services (continuation sheet)� Salaries and wages plus fringe benefits� Job group descriptions

96

DS-2 Part IIDirect Costs� 2.5.0 Method of charging direct salaries

and wages � Two methods

� Payroll distribution records� Staff & students

� After-the-fact activity records� Faculty, staff, & students

� Continuation sheet� Staff � Students

97


� 2.5.1 Salary and wage cost distribution system

� Methods described in 2.5.0 are used by all employees within each major function or activity

98


� 2.5.2 Salary and wage cost accumulation system (continuation sheet)

� Describes process for � Charging original labor costs� Labor reallocation

� Employees charging sponsored projects subject to bi-weekly leave/effort reporting using after-the-fact activity records

99

DS-2 Part IIDirect Costs� 2.6.0 Description of fringe benefits

(continuation sheet)� Recovered through the computed benefit

rates � Lists

� Compensated absences � Staff benefits

100


� 2.6.1 Method of charging direct fringe benefits (continuation sheet)

� Recharge rates� Established annually based on projected

expenses� Over or under recovery carried forward and

liquidated� Employees grouped by benefit received� Describes base to which charge is applied

101

DS-2 Part IIDirect Costs� 2.7.0 Description of other direct costs

� Lists other items (continuation sheet)� Travel� Sub-agreements� Contractual services� Recharge activities� Equipment� Student aid� Miscellaneous

102

DS-2 Part IIDirect Costs� 2.8.0 Cost Transfers

� Cost transfers are not always based on the same amount or rate originally used to charge or allocate costs to a project (continuation sheet)

� Costs transfer for direct costs is always based on original actual cost

� Current F&A rate at the time of the transfer is applied which may vary from original rate

103

DS-2 Part IIDirect Costs� 2.9.0 Interorganizational transfers

� Interorganizational transfers for materials, supplies, and services are charged at full cost excluding indirect costs attributed to group or central office

104

DS-2 Part IIIIndirect Costs� 3.1.0 Indirect cost categories -

accumulation and allocation� Accumulation method, base, and allocation

sequence for all applicable indirect cost categories

105

DS-2 Part IIIIndirect Costs� 3.2.0 Service centers

� Select codes that describe service centers including

� Type of cost objectives billed� Amount of indirect costs allocated� Basis for billing rates� Describe rates� Frequency of comparison of actual costs to revenue� Over and under recovery accounting

106

DS-2 Part IIIIndirect Costs

� Continuation sheet� Describe service centers that specifically meet

the following criteria� Annual operating budgets greater than $1 M OR� Charge significant amounts to federally sponsored

agreements either directly or indirectly

� Explain� Circumstances where users are charged at different

rates� Handling of over or under recoveries

107

DS-2 Part IIIIndirect Costs� 3.3.0 Indirect cost pools and allocation

bases� Indirect costs are allocated to instruction,

organized research, other sponsored activities, and other institutional activity based on MTDC

108

DS-2 Part IIIIndirect Costs� 3.4.0 Composition of indirect cost pools

� Describe major organizational components, subgroupings of expense and elements of cost included (continuation sheet)

� F&A pools include� Salaries, wages and related fringe benefits� Materials & supplies� Services� Travel

109


� F&A pools exclude� Equipment and other capital expenditures� Financial aid� Unallowable expenses

� Pools are� Depreciation/Use Allowance/Interest� O&M� GA� DA� SPA

110


� Library� Student Administration and Services� Service Centers

� 3.5.0 Composition of allocation bases� Describe each allocation base used for

each pool (continuation sheet)� Listed by pool and describes allocation base

used in F&A rate development

111


� Excluded� Equipment and

capital expenditures� Charges for patient

care� Tuition remission� Long-term space

rentals� Scholarships and

fellowships� Subgrants and

subcontracts, > $25K

� MTDC base defined� Included

� Salaries, wages and related fringe benefits

� Materials and supplies� Services� Travel� Subgrants and

subcontracts, <= $25K

112

DS-2 Part IIIIndirect Costs� 3.6.0 Allocation of indirect costs to

programs that pay less than full indirect costs� Appropriate direct costs are included in the

allocation bases regardless of whether F&A costs are fully reimbursed by the sponsoring organization

113

DS-2 Part IVDepreciation & Use Allowances� 4.1.0 Depreciation charged to federally

sponsored agreements or similar cost objectives� By asset class (continuation sheet)

� Depreciation method � Useful life� Property unit � Residual value

114

DS-2 Part IVDepreciation & Use Allowances

� 4.1.1 Asset valuations and useful lives� Asset valuations and useful lives are consistent

with our financial statements

� 4.2.0 Fully depreciated assets� No usage charge for fully depreciated

assets is charged to any cost objective

115

DS-2 Part IVDepreciation & Use Allowances� 4.3.0 Treatment of gains and losses on

disposition of depreciable property� Credited or charged to the same pools

where depreciation of the assets originally was charged

116

DS-2 Part IVDepreciation & Use Allowances� 4.4.0 Criteria for Capitalization

� Minimum dollar amount of $2,500� Minimum life of greater than 1 year� Continuation sheet

� Specific capitalization criteria by asset class

117

DS-2 Part IVDepreciation & Use Allowances� 4.5.0 Group or mass purchase

� Group or mass purchases or similar items are not capitalized unless they individually meet the criteria

118

DS-2 Part VOther Costs and Credits� 5.1.0 Method of charging leave costs

� Accrual (continuation sheet)� Compensated absences charged on accrual

basis� Sabbatical leave is not charged to sponsored

programs unless specifically budgeted

119

DS-2 Part VOther Costs and Credits� 5.2.0 Applicable credits

� Hybrid method (continuation sheet)� Specifically identified with a particular

expenditure � Offset against expenditure to which they relate

� Other miscellaneous receipts � Offset against the applicable F&A cost pool� Or if in sponsored projects or other direct cost

accounts� Program receipts - not offset against expense

120

DS-2 Part VIDeferred Compensation & Insurance

� 6.1.0 Pension Plans� 6.1.1 Defined-contribution pension plans� 6.1.2 Defined-benefit pension plan

� 6.2.0 Post retirement benefits other than pension� 6.2.1 Determination of PRB costs

121


� 6.3.0 Self-insurance programs (Employee group insurance)� Costs of program charged using multiple

methods (continuation sheet)� Describes types of coverage� Charged through staff benefit recharge rate

122


� 6.4.0 Self-insurance programs (worker’s compensation & casualty insurance) (continuation sheet)� Describes types of coverage� Administered at system level� Allocated to each major campus

123


� 6.4.1 Worker’s compensation and liability� Costs are charged using multiple methods

(continuation sheet)� Worker’s compensation� Liability� Marine coverage

124


� 6.4.2 Casualty insurance� Costs are charged using multiple methods

(continuation sheet)� Liability accrued based on estimated repair or

replacement costs� Costs less credit for estimated interest allocated to

major campuses based on risk exposure adjusted for loss experience

125

10 minute break!10 minute break!

Applying the DS-2

127

Applying the DS-2� Questions to consider

� Is this cost allowable?� If not allowable, where should this type of

cost be charged?� Is this cost for items or activities that we

routinely charge to department administration accounts?

� Is the project federally funded?

128

Applying the DS-2� Is the project funded with federal pass thru

funds?� Are these costs part of cost sharing?� Am I treating costs consistently?

129

Applying the DS-2� Direct vs. indirect

� Critical that faculty and staff can distinguish

� Think outside the box� How do other departments treat this cost or

activity?� Network

130

Applying the DS-2� We cannot charges costs normally treated as

indirect costs directly to sponsored programs� Unless we can substantiate that those costs are

� Not also being covered in whole or in part by department administrative funds

� Indirectly to the program

Non-Compliance

132

Common Areas of Noncompliance� Effort Certification� Cost Transfers� Cost Overruns� Inconsistent

Charging Practices� Recharge Centers� Unallowables

� Indirect Costs� Prior Approvals� Period of

Performance� Cost Sharing

133

Effort Certification� Certify budgeted instead of actual� Don’t match effort and charges� Certification must be by individual with

“first hand” knowledge of all employee’s effort

� Cost sharing not captured

134

Percent of Effort

� Principal Investigator (PI) works 100 hours for the pay period - 60 hours on instruction and 40 hours on a sponsored project� Percent of effort is 60% to the instruction

org and 40% to the project org

135

Percent of Effort� Conversion to hours is 48 hours

instruction and 32 hours project� It is not correct to code 40 actual hours

to the project with remainder (80 - 40 = 40) to instruction

136

Actual Practices at “U of X”� Charge labor to a project or org with

budget� Labor not charged to activity actually

taking place� Work, but not charge project, so don’t

have overruns� Convert the dollar amount funded by

instruction into hours allowed to charge

137

Actual Practices at “U of X”� Record hours worked on research,

remainder to other; not based on percentage of effort

� Labor charged first to restricted funds, then remainder to unrestricted research orgs or instruction orgs

138

Cost Transfers� Can raise compliance concerns

� High volume� Timing� Insufficient documentation� Inconsistent with effort certification

� Auditors may assume transfers are done to accommodate funding needs

139

Cost Overruns� A-21 - Overruns� UA budget mechanisms make overrun

accounting painful� Negative connotations

� Unplanned cost sharing� How long in overdraft status

� Charge to departmental “guarantee” org after deadline

140

Inconsistent Charging Practices� Rotating costs based on funding

availability� Distribution base not reflective of

usage/benefit� Charges without actual costs incurred� Noncompliance with recharge policy

141

Recharge Centers� Rates are not cost-based� Rates are not adequately documented� Inappropriate treatment of surpluses

and deficits� Surpluses used to fund equipment� Deficits included in F&A pools

142

Recharge Centers� Costs included in rates and also in F&A

� Equipment depreciation

� Rates charged to federal users may subsidize other users� Must charge all users� Feds must be charged lowest rate

143

Unallowables� Unallowables to allowable account

codes � Catering� Unallowable dues & memberships

144

Indirect Costs� Charged as direct costs to sponsored

projects� Admin/Clerical salaries� Administrative Travel� Office supplies

145

Prior Approvals� Must obtain in accordance with federal

regulations, agency requirements, or terms and conditions of award for:� Equipment purchases� Foreign travel and� Significant rebudgeting

� Include these items in proposal if possible

146

Period of Performance� Costs incurred outside performance

period are unallowable� Pre-award costs usually approved up to

90 days prior to start date� Costs posted after date are allowable if

incurred prior to end date

147

Period of Performance� Equipment purchased at end of project

= red flag� No cost extensions are routinely

granted and should be requested when costs are expected to be incurred late in the award

148

Cost Sharing� Represents the portion of the project not

borne by the sponsoring agency� Must be documented� Must be included in the related direct cost

base� CAS 501 requires consistency between

proposal and accounting� If include cost sharing in proposal, must account

for it

149

Cost Sharing

� Mandatory� Required by legislation or by sponsoring

agency� May be fixed dollar amount or fixed ratio

150

Cost Sharing

� Voluntary� Not mandatory or exceeds mandatory

match� If incorporated in proposal, it becomes a

condition of the award, ie. it is committed� Committed M/CS requires same

accounting as mandatory

151

Cost Sharing� Verifiable from University records� Not included as contribution on another

federal program� Not charged directly or indirectly to feds

under another sponsored agreement unless specified in award document

� Necessary and reasonable

152

Cost Sharing� Allowable costs under A-21� Not claimed as part of indirect costs

� Administrative and support staff salaries� Depreciation charges for equipment

� Not paid for with program income unless feds expressly permit this

� Incurred during period of performance

153

Cost Sharing� Allowable

� Salaries and fringe benefits� Travel, contractual, commodities� Graduate assistant tuition remission� Equipment cost

� only if include as line item in budget

� Waived F&A costs� recorded via memo to the file, not in Banner

� Third party contributions, cash or in-kind

154

Cost Sharing� Unallowable

� Clerical and administrative support� University owned facilities� University owned equipment� Other costs included in F&A rates

155

Other Support� A.K.A. “co-funding”, “as needed effort”� Cash or in-kind contributions pledged to

support the project, but not required by federal legislation or award document

� Not required to be documented or accounted for as M/CS

� Critical it’s not characterized as M/CS

156

Results of Non-Compliance

� Overcharges Feds� Violates CAS � Provides unreliable internal

management information � Reputation� Dollars!!!!!

157

Miscellaneous� Disclosure Statements Available on Web

� http://www.uaf.edu/grcon/disclosure/index.html

� Questions� Future Training Opportunities

� February – Cost Sharing� March - Recharge

158

Contacts� University of Alaska Fairbanks

� Grants & Contracts Personnel� Statewide Systems Office

Cost Analysis and Sponsored Program Administration Dept.� Ginger Baker, Manager

� [email protected]� 474-6496

� Tanya Hollis, Accountant� [email protected]� 474-6488



159

Please completePlease completefeedback sheets.feedback sheets.Thanks for coming!Thanks for coming!

Documents

Cost Accounting Standards & UAF Disclosure Statement · 2020-02-14 · Firm fixed price contracts ... assignment of cost to cost accounting period, or measurement of cost CAS 9903.302-1