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:

  1. 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.
  2. 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.
  3. 505—Accounting for unallowable costs—Procedures are required to identify and exclude unallowable costs from sponsored projects.
  4. 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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GrantCooperative AgreementContract
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
Re-budgeting Flexible Usually allowed Occasionally allowed with restrictions
Equipment Title Grantee or Grantor Varies based upon agreement Contractor or Sponsor or Federal Government
Performance Period Flexible May be specified with flexible dates Specified in contract
Patent Rights Generally liberal May be involved Provision in contract
Publications Unrestricted 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