The Cost Accounting Standards (CAS) applicable to educational institutions are defined in OMB Circular A21, Cost Principles for Educational Institutions. It is a set of 19 standards issues by the United States Government to achieve uniformity and consistency in the cost accounting practices governing the measurement, assignment and allocation of costs to contracts with the United States. One of the 19 is 9905.502, consistency in allocating costs incurred for the same purposes. The purpose of this standard is to require that each type of cost is allocated only once and on only one basis (direct and F&A costs) to any sponsored agreement. Exceptions to 9905.502 are commonly referred to as CAS exceptions.
What are the Cost Accounting Standards (CAS)?
The Cost Accounting Standards (CAS) applicable to educational institutions are defined in OMB Circular A-21 (http://www.whitehouse.gov/omb/circulars_a021_2004 ). This Circular establishes principles for determining costs applicable to grants, contracts, and other agreements with educational institutions. The principles are designed to provide that the Federal Government bear its fair share of total costs, determined in accordance with generally accepted accounting principles, except where restricted or prohibited by law. A primary purpose is to require that each type of cost is allocated consistently, only once and on only one basis (direct or F&A) to any sponsored agreement. Exceptions to this regulation are commonly called CAS exceptions.
What is the difference between direct and F&A costs?
Facilities and Administration (F&A) – sometimes referred to as indirect costs, or overhead are real costs incurred in support of sponsored programs. They represent the costs of doing business that are not easily identifiable with any single project. Examples of F&A costs include buildings, electricity, utilities, and administrative research support.
Direct costs can be assigned fully to a specific project with a high degree of accuracy. Direct costs include: salaries for faculty, technicians and students; fringe benefits; human subject incentives; animal costs; consultant pay and scientific supplies.
Who decided which costs will be charged to direct and which are F&A?
The decision is based on Emory’s approved F&A rate proposal as well as the Disclosure Statement (DS-2) that outlines and explains which costs will be consistently charged to direct and F&A categories.
My former university allowed this cost to be charged as a direct cost, why won¿t Emory?
Each university must abide by its own approved DS-2 and F&A rate agreements. Therefore, what may be allowed at one university is not necessarily allowable at another.
Is it possible for a cost normally charged as F&A to be charged as a direct cost to a project?
Yes, in certain circumstances expenditures normally charged to F&A may be charged as a direct cost to a project. For the cost to be directly charged there must be circumstances that are different that those which normally classify the charge as F&A. When an unlike circumstance meets this criteria it is called a CAS exception.
Examples of activities that might have unlike circumstances are:
What are examples of acceptable/unacceptable CAS exceptions?
What information is important when preparing a CAS exception?