2. Cost Accounting Standards -Policies and Procedures-

3. CAS Perspective

4. 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

5. HHS Audit of Disclosure Statement  General - Written Policies - Dissemination of Policies - How well policies are being followed

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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 University’s accounting system.  Specific items of cost must be consistently budgeted in similar circumstance (direct or indirect).

12. 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).

13. 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 University’s financial records.

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

15. Procedures  Salaries  Benefits  Operating  Corrections  Travel  Equipment  Aid  F&A Costs

16. 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.

17. 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 http://www.busfin.uga.edu/accounting/par.htm –Send PAR’s to Accounting Department (attn: Kim Eberhart, 542-4139 or Keber@uga.edu)Keber@uga.edu –Send JV’s to Payroll Department

18. Personnel Activity Report (PAR)

19. 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.

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

21. 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

22. 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

23. 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.

24. 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.

25. 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.

26. 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

27. Real Estate Rent ( operating expense)  Excluded from F&A 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

28. Utility and Custodial Services (operating expense)  May be contracted direct costs when space is rented and the off-campus F&A rate is applied.

29. 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.

30. 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.

31. Corrections, continued  Submit journal voucher to the Contracts and Grants Department. –http://www.busfin.uga.edu/forms/accounting_jv.pdf

32. Cost Overruns / Deficits  When it’s 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

33. Subawards (operating expense)  Subawards to other organizations should be budgeted, charged and reported as direct costs.  The applicable F&A 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).

34. 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.

35. 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 F&A calculation under the MTDC basis.

36. 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 F&A rate.

37. 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 F&A calculation in an mtdc basis.

38. Facilities and Administrative Costs (F&A)  The University’s federally approved F&A rates are all to be calculated on a MTDC basis (see http://www.busfin.uga.edu/contracts_grants/). http://www.busfin.uga.edu/contracts_grants/  Every effort should be made to used these rates. When absolutely necessary, other rates may be acceptable.

39. 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?

40. 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?

41. 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?

42. Cost Accounting Standards Presented by: Contracts and Grants Department (http://www.busfin.uga.edu/contracts_grants/)http://www.busfin.uga.edu/contracts_grants/ Tracy R. Walters, Director Tel: (706) 542-3721 Fax: (706) 542-6883 Email: twalt01@arches.uga.edu