Cost Accounting Standards

Cost Accounting Standards (popularly known as CAS) are a set of 19 standards and rules promulgated by the United States Government for use in determining costs on negotiated procurements. CAS differs from the Federal Acquisition Regulation (FAR) in that FAR applies to substantially all contractors, whereas CAS applies primarily to the larger ones.

CAS Applicability

A company may be subject to "full" CAS coverage (required to follow all 19 standards), "modified" CAS coverage (required to follow only Standards 401, 402, 405, and 406), or be exempt from coverage. However, a company under "full" coverage is not subject to a standard where it does not apply (e.g., a company which does not use standard costing does not have to comply with CAS 407).

"Full" coverage applies only when a company receives either one CAS-covered contract of US$50 million or more, or a number of smaller CAS-covered contracts totalling US$50 million. In addition to complying with all 19 standards (where applicable), the company must also file a CAS Disclosure Statement, which spells out the company's accounting practices (such as if certain costs are treated as direct contract charges or as part of overhead expense). There are two versions of the CAS Disclosure Statement: DS-1 applies to commercial companies while DS-2 applies to educational institutions.

"Modified" coverage applies when a company receives a single CAS-covered contract of US$7.5 million or more.

In some instances, a contract may be exempt from CAS standards:

•     Contracts awarded to small businesses are exempt from CAS, regardless of contract size
•     Any contract less than US$7.5 million is exempt, provided the company has not been awarded a contract greater than US$7.5 million, and also any contract less than US$650,000 is always exempt
•     Contracts for commercial items
•     Contracts awarded under sealed bid procedures, or where "adequate price competition" was available (the latter meaning where at least two companies had the ability to bid and perform on a contract, even if only one bid was later received)
•     Contracts where the price is set by law or regulation
•     Contracts awarded to foreign governments
•     Contracts awarded to foreign concerns (only the disclosure statement and CAS 401 and 402 apply in this case) (See CFR 9903.201-1(b))
•     Expired as of October 11, 2011: Contracts where performance will be performed entirely outside the United States (including territories and possessions)

Furthermore, in some instances even where a company is subject to a standard, different rules may apply within the standard itself as to what a company is required to do. As an example, under CAS 403, if Company A's "residual expenses" (defined as those expenses incurred by the home office – usually the corporate office – which cannot be identified to a specific contract, group of contracts, or company segment) exceed a specified percentage of revenue, Company A must follow a dictated "three-factor" formula to allocate such expenses, but if Company B's residual expenses do not exceed the percentage (even if, in dollar terms, they are greater), Company B may follow the formula but is not required to do so.


Cost Accounting Standards as applied to Educational Institutions

• Located in A-21 (2 CFR 220)
• Federal sponsored grants and contracts
• Annual Disclosure Statement
• Entities receiving <4@25 million in federally sponsored agreements annually are exempt from Disclosure Statement
• Other exemptions apply

Four Basic Requirements:

• Consistency in estimating, accumulating and reporting costs
• Consistency in allocating costs
• Consistency in cost accounting periods
• Accounting for unallowable costs

Allocable Costs

A cost is allocable to a sponsored agreement if:

• it is incurred solely to advance the work under the sponsored agreement.
• if the cost is charged in accordance with relative benefits received or other equitable relationship.

Assistance vs. Procurement

Assistance: generally, what the proposer wants to do.  Awards are either grants or cooperative agreements.

Procurement: generally, what the government buys [can include research].  Awards are contracts.

Contract vs. Gift

Grant (assistance)

• project conceived by investigator
• agency supports or assists 
• performer defines details and retains scientific freedom
• agency maintains cognizance
• unilateral

Contract (procurement)

• project conceived by agency (BAA< RFQ, RFP) agency procure service
• agency exercises direction or control
• agency closely monitors
• bilateral

Cost Sharing

Cost Sharing:

• Must be verifiable from records
• Provided for in approved budget
• Only used for one award
• Conforms to Federal rules & regulations
• Un-recovered f&A costs may be included
• One Federal award cannot be used as cost sharing on another Federal award

   Mandatory Cost Sharing - University contributions to the sponsored project that are required as a condition of the award (normally, but not always, Federal) and which were agreed to between the University and the sponsor prior to the awarding of the grant or contract. This is printed on the FEC and includes the proposed amount agreed upon when the grant or contract was executed.

- represents contributions to a sponsored project or program required by the sponsor as a condition of award.  Mandatory cost sharing:

• may be a fixed percent or specific level of participation negotiated between the institution and the sponsor.
• must be included in the proposal and be provided by someone other than the sponsor.
• is a binding commitment and must be accounted for 
• may be reportable to the sponsor

     
Committed Cost Sharing- University contributions to the sponsored project not required as a condition of the award but included in the grant/contract proposal budget or budget justification with no corresponding funding requested or awarded. This budget number is printed on the FEC and includes the percent offered in the proposal.

    Aggregate Cost Sharing - University contributions required by the National Science Foundation (NSFi) to fulfill the requirement that the University provide one percent (1%) contribution (cost sharing) on the total of all unsolicited NSF funding. NSF is eliminating both program specific cost sharing and the 1% statutory cost sharing requirement on unsolicited proposals. These changes will be reflected in the terms and conditions of new awards or supplements issued after June 1, 2007. Awards issued before June 1st will continue to carry the 1% requirement or may have program specific cost sharing requirements that must be met.

    Salary Cap Cost Sharing - University contribution required by the National Institutes of Health (NIHi), the Substance Abuse and Mental Health Services Administration (SAMHSA) and the Agency for Healthcare Research and Quality (AHRQ) for faculty with salaries in excess of the salary cap applicable to the particular federal fiscal year. For effort reporting, the FEC will reflect the cap in effect during the period of expenditure.

    K Award Cost Sharing - NIH Career Development Awards, or K Awards, are intended to provide support and protected time for new faculty to develop research skills. Because the effort requirements are high and salary recovery is limited, cost share may be necessary to complete the 75% effort requirement.

    Voluntary Uncommitted Cost Sharing - Effort that was not required by the sponsor nor committed on the budget page or budget justification of the proposal (i.e. it is not mandatory or committed cost sharing). Include this type of effort with other non-grant activities on the FEC.

Voluntary Cost Sharing represents contributions to a sponsored project or program not required by the sponsor as a condition award.  Voluntary cost sharing is classified as either:

• Committed: quantified contributions reflected in the proposal.  These are binding commitments and must be accounted for.  They may be reportable to the sponsor.
• Uncommitted: contributions not quantified or reflected in the proposal. These are not binding commitments and do not require documentation or reporting. 

 Taken from: http://www.ncsu.edu/sparcs/budgeting/cost_sharing.php

Copyright is a legal concept, enacted by most governments, giving the creator of an original work exclusive rights to it, usually for a limited time. Generally, it is "the right to copy", but also gives the copyright holder the right to be credited for the work, to determine who may adapt the work to other forms, who may perform the work, who may financially benefit from it, and other related rights. It is an intellectual property form (like the patent, the trademark, and the trade secret) applicable to any expressible form of an idea or information that is substantive and discrete.

That is, by guaranteeing them a period of time in which they alone could profit from their works, they would be enabled and encouraged to invest the time required to create them, and this would be good for society as a whole. A right to profit from the work has been the philosophical underpinning for much legislation extending the duration of copyright, to the life of the creator and beyond, to his heirs.

Patent: A patent (  /ˈpætənt/ or /ˈpeɪtənt/) is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention.

The procedure for granting patents, the requirements placed on the patentee, and the extent of the exclusive rights vary widely between countries according to national laws and international agreements. Typically, however, a patent application must include one or more claims defining the invention which must meet the relevant patentability requirements such as novelty and non-obviousness. The exclusive right granted to a patentee in most countries is the right to prevent others from making, using, selling, or distributing the patented invention without permission.[1]


Trade Secret: A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers. In some jurisdictions, such secrets are referred to as "confidential information" or "classified information".


Trademark, trade mark, or trade-mark[1] is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or services from those of other entities.

A trademark may be designated by the following symbols:
•    ™ (for an unregistered trade mark, that is, a mark used to promote or brand goods)
•    ℠ (for an unregistered service mark, that is, a mark used to promote or brand services)
•    ® (for a registered trademark)

A trademark is typically a name, word, phrase, logo, symbol, design, image, or a combination of these elements.[2] There is also a range of non-conventional trademarks comprising marks which do not fall into these standard categories, such as those based on color, smell, or sound.

The owner of a registered trademark may commence legal proceedings for trademark infringement to prevent unauthorized use of that trademark. However, registration is not required. The owner of a common law trademark may also file suit, but an unregistered mark may be protectable only within the geographical area within which it has been used or in geographical areas into which it may be reasonably expected to expand.

The term trademark is also used informally to refer to any distinguishing attribute by which an individual is readily identified, such as the well-known characteristics of celebrities. When a trademark is used in relation to services rather than products, it may sometimes be called a service mark, particularly in the United States.[2]