[Federal Register Volume 60, Number 24 (Monday, February 6, 1995)]
[Notices]
[Pages 7104-7105]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2872]
[[Page 7103]]
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Part III
Office of Management and Budget
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Cost Principles for Educational Institutions; Proposed Revisions to
Circular A-21 and Proposed Recission of Circular A-88; Notices
Federal Register / Vol. 60, No. 24 / Monday, February 6, 1995 /
Notices
[[Page 7104]]
OFFICE OF MANAGEMENT AND BUDGET
Cost Principles for Educational Institutions
AGENCY: Office of Management and Budget.
ACTION: Proposed revision of OMB Circular A-21.
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SUMMARY: The Office of Management and Budget (OMB) proposes to revise
OMB Circular A-21, ``Cost Principles for Educational Institutions'' by
extending the applicability of certain Cost Accounting Standards Board
(CASB) Cost Accounting Standards (CAS) and the CASB Disclosure
Statement for sponsored agreements received by certain educational
institutions, and amending the definition of equipment at educational
institutions receiving Federal funds and covered by this Circular.
DATES: Comments should be received on or before March 8, 1995.
ADDRESSES: Financial Standards and Reporting Branch, Office of Federal
Financial Management, Office of Management and Budget, Room 6025, New
Executive Office Building, Washington, DC 20503.
FOR FURTHER INFORMATION CONTACT: Federal agencies should contact the
Financial Standards and Reporting Branch, Office of Management and
Budget, (202) 395-3993. Non-Federal organizations should contact the
organization's cognizant Federal funding agency.
SUPPLEMENTARY INFORMATION:
A. Purpose of Circular A-21
Office of Management and Budget (OMB) Circular A-21, ``Cost
Principles for Educational Institutions,'' establishes principles for
determining costs applicable to Federal grants, contracts, and other
sponsored agreements with educational institutions.
B. Recent Prior Revisions
Circular A-21 was last amended in 1991 and 1993. The 1991 revisions
excluded certain specified costs from reimbursements paid to colleges
and universities receiving Federal awards and placed a limit on the
amount of reimbursable administrative costs. That revision also
required a certification to accompany each indirect cost proposal. The
1991 revision also added an exhibit containing a list of colleges and
universities subject to Section J.9.F of Circular A-21. The 1993
revisions further clarified and standardized the Circular's principles
for determining applicable costs.
C. Current revisions
The proposed revision incorporates the cost accounting standards
for educational institutions published by the Cost Accounting Standards
Board (CASB) on November 8, 1994, in the Federal Register (59 FR
55770), and extends the applicability of these standards to all
sponsored agreements subject to this Circular (See Sections A.3 and
B.2. of Circular A-21). This proposed revision also extends the
applicability of the CASB Disclosure Statement (Form CASB DS-2 (REV 10/
94)), published by the CASB on November 8, 1994, in the Federal
Register (59 FR 55758), to such sponsored agreements. This proposed
revision is reflected as Section C.10.a-e of Circular A-21.
By applying these CASB Standards and the CASB Disclosure Statement
to sponsored agreements, OMB will: promote uniformity and consistency
in the cost accounting practices followed by educational institutions
when they estimate, accumulate, and report costs under sponsored
agreements; facilitate the award and administration process; and,
reduce the potential for disagreements concerning the cost accounting
practices used to estimate, accumulate and report the costs of
sponsored agreements.
On October 8, 1991, the CASB published a staff discussion paper (56
FR 50737). After consideration of the public comments received in
response to the discussion paper, the CASB published an Advanced Notice
of Proposed Rulemaking on June 2, 1992 (57 FR 23189). On December 21,
1992, after consideration of the public comments received in response
to the advanced notice, the CASB published a Notice of Proposed
Rulemaking (57 FR 60503). Seventy sets of public comments were received
in response to the proposed rule and were fully considered. On November
8, 1994, the CASB published a Final Rule (59 FR 55746).
On July 26, 1993, OMB, in the preamble to a proposal making certain
final revisions to Circular A-21 (58 FR 39997), stated that
``Consistent with the Board's stated expectations, OMB plans to extend
the CASB's regulations and Standards applicable to educational
institutions to all awards (contracts and grants) made to institutions
that are major recipients of Federal research funds.'' At this time,
public comments are invited on applying to sponsored agreements the
CASB's Disclosure Statement Form, CASB DS-2, and the cost accounting
standards (CAS) pertaining to educational institutions, contained in
Chapter 99 of Title 48 of the Code of Federal Regulations (48 CFR
Chapter 99), as amended, published on November 8, 1994 (59 FR 55746),
effective January 9, 1995.
This proposed revision also amends the definition of equipment in
Section J.16. by increasing the monetary threshold from $500 to $5000.
This proposed revision conforms Circular A-21 to Circular A-110,
``Uniform Administrative Requirements for Grants with Institutions of
Higher Education, Hospitals, and Non-Profit Organizations,'' published
in the Federal Register (58 FR 62992) on November 29, 1993, and lessens
the administrative burden associated with accounting for property.
In today's edition of the Federal Register, OMB is also proposing
for 60 days of public comment a set of proposed revisions to Circular
A-21 on which separate public comment is especially invited.
John B. Arthur,
Associate Director for Administration.
Circular A-21 is proposed to be revised as follows:
Amend Section ``C, Basic Considerations,'' by adding a new
paragraph 10 as follows:
10. Cost Accounting Standards and Disclosure.
a. Applicability of Cost Accounting Standards Board's Disclosure
Statement and Standards. The Cost Accounting Standards Board's (CASB)
Disclosure Statement Form, CASB DS-2, and the cost accounting standards
(CAS) pertaining to educational institutions contained in Chapter 99 of
Title 48 of the Code of Federal Regulations (48 CFR Chapter 99), as
amended, are incorporated herein by reference and are to be applied to
sponsored agreements as specified below.
(1) Disclosure Statement.
(i) Educational institutions subject to this Circular shall
disclose their cost accounting practices by filing a Disclosure
Statement Form, CASB DS-2, which is reproduced in Appendix A, whenever
the total awards received under sponsored agreements during the prior
fiscal year equals or exceeds $25 million. An educational institution
may meet the Disclosure Statement submission requirement by submitting
the statement for each component unit that receives awards that in the
aggregate equal or exceed $25 million under sponsored agreements, with
the approval of the cognizant Federal agency responsible for indirect
cost rate negotiations. [[Page 7105]]
(ii) Required Disclosure Statements shall be filed with the
cognizant Federal agency responsible for indirect cost rate
negotiations within three months after the end of the fiscal year in
which the educational institution meets the criteria in (i), except for
educational institutions that establish a specific due date in
accordance with paragraph (iii), or that are required to file a
Disclosure Statement earlier under the terms and conditions of a CAS-
covered contract.
(iii) Prior to December 31, 1995, those educational institutions
meeting the criteria of (i) for the most recently completed fiscal year
occurring during 1994, the cognizant Federal agency and the educational
institution should establish, in writing, a specific due date for the
first time submission of the required Disclosure Statement, as follows:
(a) Educational institutions listed as number 1-20 in Exhibit A of
this Circular, or unlisted educational institutions that received more
than $50 million under sponsored agreements during a fiscal year ending
in calendar year 1994, shall file the required Disclosure Statement no
later than June 30, 1996.
(b) Educational institutions listed as numbers 21-50 in Exhibit A
of this Circular, or unlisted educational institutions that receive
more than $25 but less than $50 million under sponsored agreements
during a fiscal year ending in calendar year 1994, shall file the
required Disclosure Statement no later than December 31, 1996.
(c) Educational institutions listed as numbers 51-99 in Exhibit A
of this Circular shall file the required Disclosure Statement no later
than June 30, 1997.
(iv) Amendments and revisions. Educational institutions are
responsible for maintaining accurate Disclosure Statements and
complying with disclosed practices. Educational institutions must amend
required Disclosure Statements when disclosed practices are changed to
comply with a new or modified Standard, or when practices are changed
with or without agreement of the cognizant Federal agency. Amendments
and revisions to Disclosure Statements may be submitted at any time and
may be proposed by either the institution or the cognizant Federal
agency. Resubmission of complete, updated Disclosure Statements is
discouraged except when extensive changes require it to assist the
review process.
(2) Cost Accounting Standards (CAS). An educational institution's
cost accounting practices used to estimate, accumulate and report costs
for sponsored agreements shall conform with the CAS specified in Part
9905 (48 CFR Part 9905), except for contracts incorporating the full
CAS coverage specified in Part 9904 (48 CFR Part 9904). Those CAS in
Part 9904 are not incorporated in this Circular. The applicability of
the CAS under Circular A-21 will not be effective on the effective date
specified in 9905.506-63 (January 9, 1995).
b. Cost and Funding Adjustments. Cost, price, and funding
adjustments shall be made by the cognizant Federal agency if an
institution fails to comply with an applicable CAS or fails to
consistently follow its established or disclosed cost accounting
practices when:
(1) Estimating costs in contract proposals and the resultant
contract provides funds materially in excess of the amounts that would
have been provided had the estimated costs been based on compliant cost
accounting practices. In such cases, the contract prices or cost
allowances shall be appropriately adjusted.
(2) Accumulating and reporting costs under a sponsored agreement.
In such cases, the institution shall correct the noncompliance by
changing to a compliant cost accounting practice and by adjusting the
accumulated and reported costs to reflect a compliant practice.
c. Overpayments. Excess amounts paid in the aggregate by the
Federal Government under sponsored agreements due to a noncompliant
cost accounting practice used to estimate, accumulate, or report costs
shall be credited or refunded, as deemed appropriate by the cognizant
Federal agency. Interest applicable to the excess amounts paid in the
aggregate during the period of noncompliance shall also be determined
and collected in accordance with applicable Federal agency regulations.
d. Compliant cost accounting practice changes. Changes from one
compliant cost accounting practice to another compliant practice that
are approved by the cognizant Federal agency may require cost or
funding adjustments if deemed appropriate by the cognizant Federal
agency.
e. Responsibilities. The cognizant Federal agency shall:
(1) Determine cost or funding adjustments for all sponsored
agreements in the aggregate on behalf of the Federal Government.
Actions of the cognizant Federal agency official in making cost or
funding adjustment determinations shall be coordinated with all
affected Federal agencies to the extent necessary.
(2) Prescribe regulations and establish internal procedures to
promptly determine on behalf of the Federal Government that a
Disclosure Statement adequately discloses the educational institution's
cost accounting practices and that the disclosed practices are
compliant with applicable Cost Accounting Standards and the
requirements of this Circular. The determination of adequacy and
compliance shall be distributed to all affected agencies.
Amend Section J, paragraph 16.a.(1), ``General Provisions for
Selected Items of Cost,'' to read as follows:
``Equipment'' means an article of nonexpendable, tangible personal
property having a useful life of more than one year and an acquisition
cost which exceeds the lesser of (a) the capitalization level
established by the organization for financial statement purposes, or
(b) $5000.
[FR Doc. 95-2872 Filed 2-3-95; 8:45 am]
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