Capital Edge Tip Line: CAS Board Final Rule on Conformance to GAAP

TIP LINE – EDITION 25 – CAS BOARD FINAL RULE ON CONFORMANCE TO GAAP

In this week’s Capital Edge Tip Line, CEO Chad Braley discusses the CAS Board’s final rule on conformance to Generally Accepted Accounting Principles (GAAP) and what the changes may mean for organizations managing federal contracts subject to CAS.

Key updates from this week’s Tip Line

What’s happening? The CAS Board issued a final rule conforming portions of CAS 404, 408, 409, and 411 to GAAP.

Here’s what changed:

1. CAS 404: Capitalization of Tangible Assets
   • Most requirements have been rescinded, with the retained provision moved to CAS 405.
2. CAS 408: Compensation for Personal Absences
   • Rescinded in full.
3. CAS 409: Depreciation of Tangible Capital Assets
   • Most requirements have been rescinded, with retained provisions moved to CAS 405.
4. CAS 411: Acquisition Costs of Material and Inventory Costing Methods 
   • Rescinded in full.

Retained provisions include:

1. CAS 404-50(d)(1) – Tangible capital assets acquired in a business combination.
2. CAS 409-50(e)(5) – Special circumstances involving estimated service lives of tangible capital assets.
3. CAS 409-50(j)(1) – Gains and losses on disposition of tangible capital assets.
4. CAS 409-50(j)(4) – Non-arm’s length transfers of gains and losses on disposition of tangible capital assets.
   

The CAS Board exempted changes directly associated with conforming CAS 408 to GAAP from the traditional CAS contract price and cost adjustment process to reduce transition burden. However, no exemptions were provided to CAS 404, 409, and 411 changes.

How contractors can stay ahead: Organizations may want to review disclosed practices, policies, and procedures that reference CAS 404, 408, 409, or 411 to determine whether updates are warranted following August 7^th, 2026.

Looking for government contracts & grants guidance?

Whether you’re getting started in the federal funding landscape, scaling your government contracts or grants business, or advancing into new strategic territory, our services are built for where you are, and where you’re headed.

Contact us today to discuss how you can position your organization to stay ahead.