Basics_of_US_Cost_Accounting_Standards_ - A Guide for...

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A Guide for UW-Madison Administrators & Faculty Basics of the Cost Accounting Standards (CAS), OMB Circular A-21, and Cost Principles March 28, 2006 Robert Andresen Carol Hillmer Assistant Director, Post-Award Services Assistant Dean, Research Division Research and Sponsor Programs College of Agricultural and Life Sciences
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Overview Cost Accounting Standards (CAS) OMB Circular A-21 Cost Principles Allowable vs. Unallowable Exceptions Questions
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Cost Accounting Standards (CAS) What is the CAS Board? What are CAS? Why are there CAS? How are CAS applied to educational institutions?
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What is the Cost Accounting Standards Board? The Board is an independent legislatively-established board located within the Office of Federal Procurement Policy (a section of the Office of Management and Budget). The Board issues rules and regulations by which government agencies, contractors, and subcontractors are required to comply. The Board has exclusive authority to make, promulgate, and amend cost accounting standards and interpretations designed to achieve uniformity and consistency in the cost accounting practices governing the measurement, assignment, and allocation of costs.
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What are Cost Accounting Standards? CAS incorporates three areas of cost accounting: Measurement of costs Assignment of cost to cost accounting period Allocation of cost to cost objectives There are 19 standards, 4 of which apply to educational institutions (see OMB Circular A-21, Subsections C.10-14).
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Why are there Cost Accounting Standards? CAS were designed to achieve uniformity and consistency in the measurement, assignment, and allocation of costs. The standards are based on examinations of common cost accounting practices. CAS establish limits and constraints on what is considered appropriate, with the goal of providing consistency and uniformity in cost accounting.
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Cost Accounting Standards applied to Educ. Institutions OMB Circular A-21 Subsections C.10-14 impose 4 of the 19 standards on educational institutions: 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 Cost Accounting Period
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Cost Accounting Standards applied to Educ. Institutions CAS 501 Consistency in Estimating, Accumulating and Reporting Costs Requires that an institution’s practices in estimating costs in pricing a proposal be consistent with the institution's cost accounting practices used in accumulating and reporting costs. Requires that an institution's cost accounting practices used in accumulating and reporting actual costs for a sponsored agreement be consistent with its practices used in estimating costs in pricing the related proposal or application.
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Cost Accounting Standards applied to Educ. Institutions CAS 502 Consistency in Allocating Costs Incurred for the Same Purpose Requires that all costs incurred for the same purpose, in like circumstances, be treated as either direct costs only or F&A costs only with respect to final cost objectives.
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Cost Accounting Standards applied to Educ. Institutions
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