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Cost Accounting Standards

Accounting Educational InstitutionsThe federal regulations for Cost Accounting Standards for Educational Institutions are established in 48 CFR Part 9905

The Cost Accounting Standards Board’s cost accounting standards located at 48 CFR § 9905.501, 9905.502, 9905.505, and 9905.506.are incorporated into the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200).

Briefly, these four cost accounting standards require:

  1. Consistency in estimating, accumulating, and reporting costs (.501);
  2. Consistency in allocating costs incurred in like circumstances for the same purposes (.502);
  3. Identification and exclusion of specifically identifiable unallowable costs (.505); and
  4. Consistency in the selection and use of a cost accounting period (.506).

Adherence to these cost accounting procedures has significant implications for the preparation and approval of budget materials for inclusion in proposals to federal sponsors. The University has to provide assurances: (1) that the pricing of the proposed effort has been undertaken in a manner consistent with the capacity of the University's accounting system to accumulate and report expenditures incurred; and (2) that costs incurred for the same purpose in like circumstances have been treated consistently as either direct or indirect costs. In short, the way that faculty member A in the Physics Department prepares the cost estimates reflected in his or her budget must be consistent with the way in which faculty member B in Mechanical Engineering prepares his or her budget materials.

It is important to note that the university could be required to make repayments to the federal government for noncompliance with the Cost Accounting Standards.

References and Resources


For questions, contact Magda KovalchickProfile, Cost Accounting Manager, Financial Operations, Email: