Office of Research


Cost Accounting Standards

In August 2000, OMB Circular A-21 was revised to incorporate the four cost accounting standards. The four standards are being incorporated because they provide more explicit provisions and guidance regarding the consistent application of cost accounting practices at educational institutions. The cost accounting standards are:

  • 501—Consistency in estimating, accumulating and reporting costs—Costs should be budgeted, charged and reported in the same way as they are proposed. If cost sharing is proposed, cost sharing should be documented and reported.
  • 502—Consistency in allocating costs incurred for the same purpose—All costs incurred for the same purpose, in like circumstances, are either direct costs only or facilities and administrative costs only with respect to final cost objectives.
  • 505—Accounting for unallowable costs—Procedures are required to identify and exclude unallowable costs from sponsored projects.
  • 506—Cost accounting period—The cost accounting period must be the institution’s fiscal year.

Characteristics of Grants, Contracts and Cooperative Agreements

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Cooperative Agreement

Basic Purpose

Provide assistance with few restrictions

Provide assistance with substantial involvement between parties

Procure tangible goods and services

Solicitation Method

Application kit or guidelines

Request for proposal

Request for bid or quote

Award Instrument

Short, may refer to general conditions

Describes involvement, party relationships

Long, detailed specs, clauses, regulations and expected results

Award Acceptance

Usually not required

Usually required

Requires signature of authorized officials

Involvement by Sponsor

Generally none

Substantial involvement

May be extensive



Usually allowed

Occasionally allowed with restrictions

Equipment Title

Grantee or Grantor

Varies based upon agreement

Contractor or Sponsor or Federal Government

Performance Period


May be specified with flexible dates

Specified in contract

Patent Rights

Generally liberal

May be involved

Provision in contract



May ask to be informed

May require prior review and approval

Technical Reports

Annual summary reports

More frequent (quarterly) reports

Detailed reports, may be monthly