How are increases in compensation costs treated under Cost Accounting Standards?
The procedures for estimating increases in salaries and benefits in the out-years of a multi-year project is no different under cost accounting standards than under previous practices. If the cost-sharing commitment is a percentage of effort (e.g., 20% of the Principal Investigator’s academic year salary plus benefits), then it really should not matter to the sponsor if the Principal Investigator’s salary increases by 4% rather than by the 5% figure shown in the proposed budget. However, if the budget proposes a $20,000 cost-sharing commitment, and this commitment is predicated on a 5% salary increase across-the-board for certain project personnel (but this relationship is not made explicit), then the University is obligated to document $20,000 in cost-sharing regardless of what the actual percentage increases are for these individual’s salaries.
