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) 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 (for example: 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. 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.
On December 26, 2013, OMB issued new guidelines for federal grants management through one super circular, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. This "Uniform Guidance" was made effective December 26th, 2014 and was designed to reduce the administrative burden on recipients of federal funds as well as the risk of waste, fraud, and abuse.
Under Title 2 of the Code of Federal Regulations (CFR), this new "Uniform Guidance" combines and replaces eight federal circulars, three of which previously governed the cost principles (A-21), administrative requirements (A-110), and audit obligations (A-133) governing the university’s federal contract and grant activities.
Since that time, UC Berkeley has complied with 2 CFR Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.