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The Federal Acquisition Regulation (FAR) Part 30 describes the policies and procedures for applying the Cost Accounting Standards Board (CASB) rules and regulations under 48 CFR Chapter 99 to negotiated contracts and subcontracts. The Cost Accounting Standards (CAS) establishes the CAS compliance requirements for U.S. Government contractors to properly account for costs allocated to certain U.S. Government contracts. The applicability CAS varies based on the contracting methods, trigger contract and dollar thresholds.
Further, Federal Acquisition Regulation Subpart 30.6 CAS Administration provides requirements for contractors and Contracting Officers to follow if any cost accounting practice changes need to be processed or resolve any CAS non-compliances. Additionally, understanding and meeting COA requirements can be essential for ensuring compliance with cost-related contractual obligations.
48 CFR Chapter 99, under Public Law 100–679 (41 U.S.C. 422), requires certain contractors and subcontractors to comply with CAS, disclose its cost accounting practices in writing, and consistently follow its disclosed cost accounting practices.
The individual standards set forth how direct and indirect costs should be accounted for related to measurement, assignment, and allocation of costs. This mitigates the risk of mischarging, misallocation, and provides the U.S. Government the ability to compare cost representations more consistently for all contractors.
Capital Edge Consulting specializes in helping companies achieve and maintain CAS compliance, a mandatory requirement for government contracts over a certain dollar amount. As experts in the field of CAS government contracting regulations, Capital Edge provides comprehensive guidance on how to interpret and implement Cost Accounting Standards (CAS) to ensure full compliance. Our services are essential for companies looking to navigate the complex landscape of government contracts, ensuring that their accounting practices and cost allocation methods meet the stringent CAS requirements.
By assisting firms in the preparation of CAS-compliant disclosure statements and the implementation of appropriate accounting systems, we ensure that their clients can withstand rigorous government audits and maintain eligibility for federal contracts. Our expert consultancy effectively safeguards companies from potential penalties due to non-compliance and enhances their reputation as reliable government contractors.
CAS noncompliance is when a contractor fails to comply with the applicable standard or fail to follow disclosed practices consistently in estimating, accumulating and reporting costs on contracts. If that is the case, FAR Clause 52.230-2 invokes price adjustments, with interest, if there is increased cost to the U.S. Government resulting from a CAS noncompliance. This clause also states that price adjustments are acceptable when a change in practice is required to comply with a standard that becomes applicable or is necessary to remain compliant.
CAS-related Solicitation Provisions and Contract Clauses are key elements incorporated into Section I of the U.S. Government’s Request for Proposal (RFP). Below is an essential list of CAS-related Provisions and Clauses that all contractors should know to ensure compliance:
These provisions and clauses are critical for contractors navigating government contracts under CAS requirements.
Based on the level of CAS coverage and other factors, contractors may need to submit a Cost Accounting Standards Board Disclosure Statement (CASB DS-1). Please find more information on Disclosure Statement requirements through the 10 essentials of CAS.
Here are some of the more common questions being asked about CAS
The following Contracts are exempt from CAS coverage:
CAS is applicable to Contracts. A contract is CAS covered if:
There are three types of CAS coverage:
FAR 30.320-1 defines a cost accounting practice as any disclosed or established accounting method or technique which is used for allocation of cost to cost objectives, assignment of cost to cost accounting periods, or a measurement of cost. Any changes in our organization that affect allocation, assignment, or measurement of cost could result in a cost accounting practice change.
There are 3 classification of cost accounting practice changes:
This standard requires contractors to use consistent practices between estimating cost and accumulating and report costs. Inversely, the practices used in accumulating and reporting costs must be consistent with estimating cost.
For example, if a contractor estimates (i.e., proposes) engineering labor cost by function (e.g., drafting, product engineering, etc.), engineering labor costs must also be accumulated and reported by function. In this example, if engineering costs are estimated by function and accumulated and reported in total, this is a non-compliance with CAS 401.
This standard helps eliminate the risk of “double counting” costs to the U.S. Government and ensure that costs incurred for the same purpose in like circumstances are accounted for consistently.
If a contractor is required to submit a CASB Disclosure Statement, these practices are defined within the Disclosure Statement.