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Cost Accounting Standards (CAS) Compliance

We can help you with everything from evaluating your CAS compliance status to settling audit issues.

Fiscal year 2021 spending topped $637 billion on federal contract awards.  Government contract spending, however, is in many instances attached to various cost accounting regulatory requirements designed around the proper accumulation and allocation ofcontractors’ costs.  Wrapped into these regulatory requirements are the Cost Accounting Standards (CAS).  The CAS address how costs are measured (amount), assigned (which cost accounting period) and allocated (distributed) to specific contracts.  The CAS do not deal with which specific or types of costs are allowable or unallowable – cost allowability is generally governed by Part 31 of the Federal Acquisition Regulation (FAR).The CAS provide flexibility when making a choice on a variety of compliant cost accounting practices and, understanding these options obliges capabilities and expertise in government contract cost accounting and pricing regulations and compliance requirements.

Capital Edge understands the intricate nuances of the CAS and employs essential professionals with extensive years of experience who have assisted numerous clients from initial CAS compliance implementations and resolving CAS noncompliance allegations, to processing cost accounting practice changes. We evaluate the compliance and effectiveness of client cost accounting practices,  prepare or revise CAS Disclosure Statements, and assist with preparation of cost impact analyses, to monitoring compliance implementation, and everything in between.

Our government contract compliance team is comprised of and employs more U.S. Government contracting compliance capabilities and CAS thought leaders than any other consulting firm, dedicated solely to federal procurement compliance, in the marketplace. Capital Edge provides a valued-added and unique approach to all of our client engagements, including CAS-related matters as our solution offers a diverse mix of leadership, consisting of former U.S. Government Officials, industry experts, Big-4 advisory and consulting directors and policy thought leaders who previously worked for contractors serving DoD and Civilian agencies.

Our Cost Accounting Standards Solutions Include:

  • Review and assessment of current Cost Accounting structure and Disclosure Statements
  • Provision of guidance on Cost Accounting Standards (CAS) compliance
  • Preparation of CASB Disclosure Statements
  • Review of proposed changes in practices
  • Assessment of the need for and/or performance of cost impacts
  • Resolution of Disclosure Statement Inadequacies
  • Review and response to CAS non-compliance allegations
  • Provide Cost allowability and allocability support


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Arm your business with the essential expertise needed to navigate Cost Accounting Standards (CAS).

The CAS establishes the compliance requirements promulgated by the CASB for U.S. Government contractors to properly estimate, account and report costs under applicable U.S. Government contracts. The applicability of the CAS to specific contracts may vary for different reasonsdue to, for example, the i) contract type, ii) contracting method, iii) contract value and related dollar thresholds (CAS Applicability Link), or iv) small or large business size determination at the time of award.

The 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. These policies and procedures, in conjunction with 48 CFR Chapter 99, address the applicability of the CAS, types of CAS coverage (modified or full), Disclosure Statement requirements and pertinent contract clauses. Further, FAR Subpart 30.6 CAS Administration provides requirements for contractors and Contracting Officers to follow when dealing with the processing and resolution of cost accounting practices changes or CAS non-compliances.

The CAS Rules and Standards

The CAS rules at 48 CFR Chapter 99, published under Public Law 100–679 (41 U.S.C. 422), require contractors and subcontractors performing under applicable CAS-covered contracts to comply with the CAS, disclose its cost accounting practices in writing, and consistently follow its disclosed cost accounting practices.  A contractor may elect to change its previously disclosed cost accounting practice(s), however, are required to follow the administrative procedures pursuant to FAR Subpart 30.6 noted above.

The individual standards set forth various cost accounting practice options that contractors may elect regarding the methods used pertaining to the measurement, assignment, and allocation of direct and indirect costs.Consistent use of compliant cost accounting practices mitigates the risk of misallocation and mischarging of costs under all contracts (CAS-covered and not), and provides the U.S. Government the ability to compare contractor cost representations on a more uniform and consistent basis amongst several contractors.

The CAS consist of 19 individualstandards listed below that will form the level of compliance requirements under specific contracts.  Modified CAS-coverage requires compliance with CAS 401, 402, 405 and 406 and full CAS-coverage requires compliance with all 19 standards.   

  • CAS 401 - Consistency in Estimating, Accumulating, and Reporting
  • CAS 402 - Consistency in Allocating Costs Incurred for the Same Purpose
  • CAS 403 - Allocation of Home Office Expenses to Segments
  • CAS 404 - Capitalization of Tangible Assets
  • CAS 405 - Accounting for Unallowable Costs
  • CAS 406 - Cost Accounting Period
  • CAS 407 - Use of Standard Costs for Direct Material and Direct Labor
  • CAS 408 - Accounting for Costs of Compensated Personal Absence
  • CAS 409 - Depreciation of Tangible Capital Assets
  • CAS 410 - Allocation of Business Unit General and Administrative Expenses to Final Cost Objectives
  • CAS 411 - Accounting for Acquisition Costs of Material
  • CAS 412 - Composition and Measurement of Pension Cost
  • CAS 413 - Adjustment and Allocation of Pension Cost
  • CAS 414 - Cost of Money as an Element of the Cost of Facilities
  • CAS 415 - Accounting for the Cost of Deferred Compensation
  • CAS 416 - Accounting for Insurance Costs
  • CAS 417 - Cost of Money as an Element of the Cost of Capital Assets under Construction
  • CAS 418 - Allocation of Direct and Indirect Costs
  • CAS 419 - Reserved - Not Used
  • CAS 420 - Accounting for Independent Research and Development and Bid and Proposal Costs

Frequently Asked Questions

Here are some of the more common questions being asked about CAS

What are the CAS exemptions?

The following Contracts are exempt from CAS coverage:

  • Sealed bid Contracts
  • Negotiated Contracts and subcontracts (including interdivisional work orders) less than $2,000,000
  • Contracts and subcontracts with small businesses
  • Contracts and subcontracts with foreign governments or their agents
  • Contracts and subcontracts in which the price is set by law or regulation
  • FFP contracts and subcontracts for the acquisition of commercial items
  • Contracts or subcontracts less than $7,500,000, if at award, the business unit of the contractor or subcontractor is not currently performing any CAS covered contracts or subcontracts valued at $7,500,000 or greater
  • Firm Fixed Price (FFP) contracts and subcontracts awarded on the basis of adequate price competition without submission of certified cost or pricing data
What is a CAS covered Contract?

CAS is applicable to Contracts. A contract is CAS covered if:

  • Unless otherwise exempt from CAS, a negotiated contract in excess of $2,000,000, awarded during performance of a “trigger contract”
  • “Trigger Contract” – single CAS covered contract greater than or equal to $7.5 million
  • Full CAS “Trigger Contract” – single CAS covered contract greater than or equal to $50 million or received $50 million or more in net CAS covered award in its preceding Cost Accounting Period
When is a Cost Accounting Standards Board Disclosure Statement required?
A CASB Disclosure Statement is required when a business unit is selected to receive a CAScovered Contract or subcontract of $50,000,000 or more orreceives CAS covered contracts and subcontracts totaling $50,000,000 or more in the most recent cost accounting period.

What are the types of CAS coverage?

There are three types of CAS coverage:

  • Full Coverage –The contractor (business unit) must comply with all existing CAS and any applicable new standards. Triggers based on contract amount thresholds.
  • Modified Coverage –The contractor (business unit) must comply with CAS 401, 402, 405, and 406. Triggers based on contract amount thresholds
  • The contractor (business unit) is exempt from CAS Coverage.
What is a cost accounting practice change?

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.


What are the types of cost accounting practice changes?

There are 3 classification of cost accounting practice changes:

  • Required Cost Accounting Practice Change arises when the contractor:
    • Needs to comply with a new or modified CAS
    • Changes from one compliant practice (disclosed or established) to another compliant practice to remain in compliance with CAS
  • Desirable Cost Accounting Practice Changes arises when the contractor:
    • Elects to make a change from one compliant practice to another, and the U.S Government determines that the change not detrimental to the Government
    • Note - Changes may be desirable even if costs increase on existing contracts/subcontracts
  • Unilateral Cost Accounting Practice Changes arises when the contractor:
    • Changes from one compliant practice to another compliant practice that a contractor elects to make, but where the U.S. Government has not determined the change to be desirable
What is CAS 401 and 402?
  • CAS 401 — Consistency in estimating, accumulating & reporting

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. 

  • CAS 402 — Consistency in allocating costs for same purpose

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. 

Arm your business with the essential expertise needed to navigate Cost Accounting Standards (CAS).


CAS Training


We have quite a few upcoming trainings that could benefit you and your team as you navigate the CAS. Check out our existing events or contact us about custom training for your business today!

About Capital Edge Consulting

Capital Edge government contract consultants support Government Contractors and Federal Grant Recipients. Our consultants specialize in the regulatory compliance matters you need.

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