SUBJECT:

Federal Cost Accounting Standards (CAS) Implementation

The Federal Government has imposed four Cost Accounting Standards
(CAS) on universities. THIS WILL HAVE A MAJOR IMPACT ON OUR COST
REIMBURSEMENT PRACTICES. Briefly, these Standards require that:

1. Practices used in estimating costs for Federal contract and grant
proposals are consistent with cost accounting practices used in
accumulating and reporting costs on awards,

2. All costs incurred on Federal contracts and grants for the same
purpose, in like circumstances, are direct costs only or indirect
costs only,

3. Unallowable costs shall be excluded from any Federal billing,
claim, application, or proposal, and

4. The same cost accounting period shall be used for Federal
sponsored agreement cost estimating, accumulating, and reporting.

These standards apply for all Federal awards, and apply to all
universities which have an annual Federal volume of $25 million or
more. Because of its large Federal volume, UCSD is required to comply
with these standards, and was required to submit a cost accounting
disclosure statement (DS-2) to the Federal Government by June 30,
1996. In order to comply with these CAS requirements, UCSD retained
Coopers and Lybrand, an accounting firm with experience and expertise
on cost accounting standards.

In addition, two campus workgroups were established: the CAS
Implementation Team, composed of staff representatives from each of
the academic areas, certain administrative areas, and the members of
the campus Recharge Review Committee; and the Steering Committee,
composed of three vice chancellors and four faculty. As a result of
their efforts, the campus DS-2 has been completed, reviewed by the
Office of the President, and submitted to the Federal Government. The
campus DS-2 has been installed on the Business and Financial Services
Website; the URL is:
http://www-bfs.ucsd.edu/emf/cas/casbds2\dsindex.htm.

However, the CAS compliance process is not finished. The campus now
needs to develop and clarify policies and procedures, and to provide
orientation and training for all affected personnel. In order to
accomplish this and to enable input from the campus on these
developments, the CAS Implementation Team and Steering Committee are
being reactivated. We will continue to seek input on CAS compliance
and policy/procedure revisions from all affected campus personnel,
through their representatives on the CAS Implementation Team, the CAS
Steering Committee, and through three campus CAS Orientation Forums,
scheduled as follows:

October 1, 1996   noon-2  pm   SIO Sumner Auditorium
October 1, 1996   4-6  pm     SOM Garren Auditorium
October 9, 1996   10  am-noon   Price Center Ballroom A

A more detailed recapitulation of this information has been sent to
all campus MSO's/DBO's. The more detailed version includes a listing
of the members of the CAS workgroups. This document is also available
on the CAS Website listed above.

It is clear that the Federal imposition of Cost Accounting Standards
on universities is resulting in major changes for us, and will require
a large amount of effort to ensure compliance. We hope that all at
UCSD will take the time to learn and understand the changes, and will
cooperate to ensure that costing practices at UCSD comply with the CAS
requirements.

Please feel free to contact Bill Brophy, CAS Project Director, at
x46517, or by email at bbrophy@ucsd.edu if you have any questions or
comments on these efforts, or if you need guidance on costing
practices pending policy development/revision and campus orientation.

Sincerely, David D. Sworder Acting Vice Chancellor for Research Steven W. Relyea Vice Chancellor Business Affairs John A. Woods Vice Chancellor Resource Management and Planning