In the early 1970's, the Cost Accounting Standards Board (CASB) was created
by Congress to address allegations of inconsistent costing practices by recipients
of federal awards, e.g. Defense Department contractors, and to develop costing
standards. In 1996 OMB formally incorporated CASB cost accounting standards
into OMB A-21, which requires universities to confirm their compliance with
the standards and to complete a formal Disclosure Statement (DS-2) if the university
receives over $25 million in federal funding. The DS-2 must be on file with
the U.S. Department of Health and Human Services in Washington D.C. Because
Harvard has three F&A rates due to differences in costing policies, the University
is considered to be three segments under CASB: University Area (Cambridge-based
schools and Harvard Business School), HMS, and SPH. Each area must submit its
own DS-2.
The University Area's DS-2 seen here, DS-2
(Disclosure Statement), January 9, 2002, was submitted in advance of the
University Area's F&A proposal also submitted in January, 2002. Subsequent
changes to Harvard's financial accounting systems and indirect cost accounting
methods had occurred since 1997. Disclosing the current practices and submitting
a new F&A proposal required a revised DS-2. The revised document reflects
accounting practices and indirect costing methods in effect from FY2001 onward
for the University Area schools and departments. The DS-2 was reviewed and approved
by DHHS on November 6, 2002.
