Contracts and Grants Accounting

OVERVIEW OF OMB CIRCULAR A-21

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On April 26, 1996, the federal Office of Management and Budget (OMB) revised its Circular A-21 (Cost Principles for Educational Institutions for Grants, Contracts and Other Agreements(link is external)) incorporating the Cost Accounting Standards Board's (CASB) cost accounting standards for educational institutions effective July 1, 1996. Circular A-21 sets forth the principles for determining what costs are allowable charges to federally sponsored projects. These principles apply not only to direct charges to contracts and grants, but also to all charges included in the calculation of the indirect cost rate, e.g. - cost of facilities, departmental and central administrative units, operations and maintenance, libraries, etc.

The cost accounting standards require that each campus file and maintain a Cost Accounting Standards Disclosure Statement (DS-2) which outlines the accounting policies, procedures and practices for assigning costs to federally sponsored agreements and attests to the consistent treatment of those practices. The DS-2 is currently under review by our cognizant agency, the Department of Health and Human Services (DHHS). Departments or units which manage sponsored agreements or whose accounts are included in the campus' indirect cost calculations must be in compliance with these University cost accounting policies. It is important that any differences be identified and corrected to ensure compliance and reduce audit exposure and the consequent penalties.

UC Berkeley CASB Disclosure Statement (PDF)