Benefits

Build a defensible disclosure statement

Get a disclosure statement that is accurate and streamlined — whether we write it from scratch or validate your existing one — disclosing exactly what’s required.

  • Disclosure statement
  • Cost proposal analysis
  • Accounting system analysis

Enable your strategy through accounting practice changes

Adapt as your business grows with support implementing required changes and modeling cost impacts, so compliance drives growth, not restrictions.

  • Cost accounting practice changes
  • Disclosure statement revisions
  • Cost impact modeling

Confidently close compliance blind spots

Protect your revenue, recover costs, and reduce risk across all 19 CAS standards — whether facing an audit or addressing compliance gaps.

  • Cost magnitude study
  • Cost impact study
  • Negotiation support

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success stories

Take a deeper dive and discover how we’ve helped clients with CAS Compliance.

FAQs

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What are Cost Accounting Standards, and why do they matter for contract growth?

Cost Accounting Standards are a set of 19 standards established by the Cost Accounting Standards Board (CASB) under 48 CFR Chapter 99 that govern how contractors measure, assign, and allocate costs to negotiated government contracts. Unlike FAR Part 31, which addresses cost allowability, CAS governs cost allocability, ensuring that costs are consistently and accurately assigned to the contracts and cost objectives they benefit. For contractors pursuing larger awards, CAS compliance is not optional. It is the accounting infrastructure that makes higher-value contract performance defensible to auditors, contracting officers, and the government’s oversight community.

How do we know whether CAS applies to our contracts, and at what level?

CAS applicability is determined by contract type, dollar thresholds, and award history. A contract is CAS-covered when it is a negotiated contract exceeding $2.5 million awarded during performance of a trigger contract. A trigger contract is a single CAS-covered award of $7.5 million or more. Modified coverage requires compliance with CAS 401, 402, 405, and 406 and applies at lower thresholds, while full coverage requires compliance with all 19 standards and is triggered when a single award reaches $50 million or net CAS-covered awards in the preceding cost accounting period reach $50 million. Contractors exempt from CAS include small businesses, sealed bid awardees, and contractors on firm-fixed-price contracts for commercial items awarded without certified cost or pricing data. Understanding where your organization sits within these thresholds is the first step in structuring a compliant and recoverable cost accounting posture.

What are the 19 standards, and which ones most commonly affect contractors?

The 19 standards govern specific dimensions of cost accounting practice across the full contract lifecycle. While all 19 apply under full coverage, the standards that most frequently drive compliance activity, audit findings, and cost impact negotiations are CAS 401 (consistency in estimating, accumulating, and reporting), CAS 402 (consistency in allocating costs for the same purpose), CAS 403 (home office expense allocation), CAS 410 (G&A expense allocation), CAS 412 and 413 (pension cost), and CAS 418 (allocation of direct and indirect costs). The remaining standards address: CAS 404 (tangible asset capitalization), CAS 405 (unallowable costs), CAS 406 (cost accounting period), CAS 407 (standard costs), CAS 408 (compensated absence), CAS 409 (depreciation), CAS 411 (material acquisition costs), CAS 414 and 417 (cost of money), CAS 415 (deferred compensation), CAS 416 (insurance costs), and CAS 420 (IR&D and B&P costs). CAS 419 is reserved and not in use.

What is a CAS disclosure statement, and when is one required?

A CAS disclosure statement (CASB DS-1) is a written description of a contractor’s cost accounting practices, submitted to the government to establish the baseline against which future compliance is measured. Disclosure is required when a business unit receives a CAS-covered contract or subcontract of $50 million or more, or when cumulative CAS-covered awards in the most recent cost accounting period reach $50 million. The disclosure statement must accurately reflect actual practice, not aspirational policy. Inaccurate or incomplete disclosure creates CAS noncompliance exposure independent of whether the underlying cost accounting practices are themselves sound. A well-constructed disclosure statement is precise, internally consistent, and discloses exactly what is required under 48 CFR 9903.202, nothing more and nothing less.

What is a cost accounting practice change, and what are the financial consequences?

Under FAR 30.101 and CFR 9903.302-2, a cost accounting practice change occurs when a contractor modifies how it measures, assigns, or allocates costs to contracts. Three categories apply: a required change mandates compliance with a new or modified standard; a desirable change is contractor-initiated and government-approved; and a unilateral change is contractor-initiated without government concurrence. Each category carries different obligations for cost impact proposals and potential price adjustments. Under FAR Clause 52.230-2, any change that increases costs to the government triggers a price adjustment with interest. Contractors who model the cost impact of proposed practice changes before implementation are in a materially stronger negotiating position than those who react to government-identified discrepancies after the fact.

What is CAS noncompliance, and how does it differ from a FAR cost allowability issue?

CAS noncompliance occurs when a contractor fails to follow an applicable standard or deviates from its disclosed cost accounting practices in estimating, accumulating, or reporting costs. This is distinct from a FAR Part 31 allowability issue, which addresses whether a specific cost is permissible. CAS noncompliance addresses whether costs are being accounted for consistently and in accordance with disclosed practice, regardless of their allowability. The financial exposure is significant: under FAR 52.230-2, noncompliance that results in increased cost to the government triggers price adjustments with interest. Contractors facing a noncompliance determination benefit most from a structured cost magnitude study that quantifies exposure before the government does, preserving negotiating leverage and protecting contract relationships.

How is CAS compliance audited, and what should contractors expect from the process?

CAS compliance is audited primarily by the DCAA, which reviews contractors’ cost accounting practices to verify consistency with applicable standards and disclosed practices. Audit activity typically includes review of the disclosure statement for accuracy, testing of cost transactions against disclosed methods, and evaluation of any cost accounting practice changes for proper notification and cost impact quantification. The DCMA plays a parallel role in monitoring contractor business system compliance, including cost accounting system adequacy. Contractors with upcoming audits benefit from a proactive internal review that identifies and resolves inconsistencies between disclosed practices and actual cost accumulation before DCAA fieldwork begins, converting a reactive defense posture into a managed process.

How should a growing contractor prepare for CAS coverage before it triggers?

The most costly CAS mistakes are made before coverage is fully understood. Contractors approaching the $7.5 million trigger threshold should begin mapping their current cost accounting practices against CAS 401, 402, 405, and 406 modified coverage requirements, assessing whether their accounting system can support compliant accumulation and reporting at scale. Pre-coverage preparation should also include a preliminary disclosure statement draft, an evaluation of indirect rate structure adequacy, and a review of whether any recent organizational changes constitute undisclosed cost accounting practice changes. Contractors who treat CAS readiness as a growth planning exercise rather than a compliance reaction are better positioned to pursue larger awards, defend their cost representations, and avoid the retroactive exposure that comes with unanticipated coverage.

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Confidently pursue CAS-covered contracts to unlock your highest dollar returns.

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