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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Reimbursement to Educational Institutions and Nonprofit Organizations: Guidelines Needed for the Implementation of Financial Accounting Standards Board Statement Number 106," (A-01-93-04000)

June 23, 1993

Complete Text of Report is available in PDF format (839 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report presents the results of our review of the Implementation of Financial Accounting Standards Board Statement Number 106 by educational institutions (schools) and gateway.html institutions (gateway.htmls). The objective of our review was to determine the effect of FASB 106 on the Office of Management and Budget (OMB) Circular A-21 (A-21), Cost Principles for Educational Institutions and OMB Circular A-122 (A-122), Cost Principles for Nonprofit Organizations. Our review disclosed that the effect of FASB 106 on PRB costs could materially increase the amount claimed for reimbursement by schools and gateway.htmls conducting federally sponsored research. Prior to FASB 106, financial reporting under generally accepted accounting principles (GAAP) recognized PRB costs when they were paid. Under FASB 106 , the expected cost of providing PRBs to current employees and their beneficiaries and covered dependents are accrued. As such, institutions are now required under GAAP to report accrued PRB costs for current and retired employees as a liability on their financial statements.