[Code of Federal Regulations]
[Title 48, Volume 7]
[Revised as of October 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR9905.502-50]

[Page 482]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
     CHAPTER 99--COST ACCOUNTING STANDARDS BOARD, OFFICE OF FEDERAL 
           PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET
 
PART 9905--COST ACCOUNTING STANDARDS FOR EDUCATIONAL INSTITUTIONS--Table of Contents
 
Sec. 9905.502-50  Techniques for application.

    (a) The Fundamental Requirement is stated in terms of cost incurred 
and is equally applicable to estimates of costs to be incurred as used 
in contract proposals.
    (b) The Disclosure Statement to be submitted by the educational 
institution will require that the institution set forth its cost 
accounting practices with regard to the distinction between direct and 
indirect costs. In addition, for those types of cost which are sometimes 
accounted for as direct and sometimes accounted for as indirect, the 
educational institution will set forth in its Disclosure Statement the 
specific criteria and circumstances for making such distinctions. In 
essence, the Disclosure Statement submitted by the educational 
institution, by distinguishing between direct and indirect costs, and by 
describing the criteria and circumstances for allocating those items 
which are sometimes direct and sometimes indirect, will be determinative 
as to whether or not costs are incurred for the same purpose. Disclosure 
Statement as used herein refers to the statement required to be 
submitted by educational institutions as a condition of contracting as 
set forth in subpart 9903.2.
    (c) In the event that an educational institution has not submitted a 
Disclosure Statement, the determination of whether specific costs are 
directly allocable to contracts shall be based upon the educational 
institution's cost accounting practices used at the time of contract 
proposal.
    (d) Whenever costs which serve the same purpose cannot equitably be 
indirectly allocated to one or more final cost objectives in accordance 
with the educational institution's disclosed accounting practices, the 
educational institution may either use a method for reassigning all such 
costs which would provide an equitable distribution to all final cost 
objectives, or directly assign all such costs to final cost objectives 
with which they are specifically identified. In the event the 
educational institution decides to make a change for either purpose, the 
Disclosure Statement shall be amended to reflect the revised accounting 
practices involved.
    (e) Any direct cost of minor dollar amount may be treated as an 
indirect cost for reasons of practicality where the accounting treatment 
for such cost is consistently applied to all final cost objectives, 
provided that such treatment produces results which are substantially 
the same as the results which would have been obtained if such cost had 
been treated as a direct cost.