--- title: Cost Accounting Standard (CAS) 401 - Consistency in Estimating, Accumulating, and Reporting Costs description: Explains what it means to have consistency in estimating, accumulating, and reporting costs to be in compliance with CAS 401. image: https://info.redstonegci.com/hubfs/RGCI%20-%20Cost%20Accounting%20Standard%20%28CAS%29%20401%20-%20Consistency%20in%20Estimating%2c%20Accumulating%2c%20and%20Reporting%20Costs.png --- [ PAY INVOICE](https://redstonegci.com/invoice-payment/) [Call Us Today 256-704-9800](tel:2567049800) [info@redstonegci.com](Mailto:info@redstonegci.com) [![Redstone_Logo](https://info.redstonegci.com/hubfs/redstone%20logo%20version%201%20-%20rgb-1.png)](https://www.redstonegci.com/) # Cost Accounting Standard (CAS) 401 - Consistency in Estimating, Accumulating, and Reporting Costs [Posted by Redstone Team on Thu, Mar 23, 2023 @ 11:03 AM](https://info.redstonegci.com/blog/author/redstone-team) - [Tweet](https://twitter.com/share) ![RGCI - Cost Accounting Standard (CAS) 401 - Consistency in Estimating, Accumulating, and Reporting Costs](https://info.redstonegci.com/hs-fs/hubfs/RGCI%20-%20Cost%20Accounting%20Standard%20(CAS)%20401%20-%20Consistency%20in%20Estimating%2c%20Accumulating%2c%20and%20Reporting%20Costs.png?width=1000&name=RGCI%20-%20Cost%20Accounting%20Standard%20(CAS)%20401%20-%20Consistency%20in%20Estimating%2c%20Accumulating%2c%20and%20Reporting%20Costs.png) Many new government contractors are frustrated by being told they [have a CAS 401 noncompliance, especially if they are not CAS covered](https://redstonegci.com/consulting/government-compliance/cas-services/). This is, of course, wrong terminology for non-CAS covered contractors, but is shorthand for saying the company is not estimating, accumulating, and reporting costs the same way. This is most frequently a difference between how a company estimates cost and then how the company accumulates and reports costs. This is not only important to the government, but to the company itself. A contractor cannot determine whether it is losing money on a contract if there is no way to compare what was bid to what was incurred. This is likely [one of the first CAS standards a company encounters because even modified coverage calls this standard into play](https://info.redstonegci.com/blog/cost-accounting-standards-cas). What many companies don’t understand is that [Federal Acquisition Regulation (FAR) 31.201-1(a)](https://www.acquisition.gov/far/31.201-1) requires something similar to CAS 401 (and would be the correct regulation cited for non-CAS covered companies, if found to be in violation of this concept). It says: “*The total cost, …of a contract is the sum of the direct and indirect costs allocable to the contract, incurred or to be incurred.*” Incurred or to be incurred“ means actual cost or estimated cost. FAR goes on to say that in “*ascertaining what constitutes a cost, any generally accepted method of determining or estimating cost that is equitable and is consistently applied may be used.*” Note that this sentence addresses determining (accumulating) and estimating and mentions that it should be consistently applied. In essence, CAS 401 just expands on this FAR principle and gives examples. ## CAS 401 Fundamental Requirements The fundamental requirements boil down to two items: - Cost accounting practices used in accumulating and reporting actual costs **=** practices used in estimating costs in pricing the related proposal - Grouping homogenous (of a same or similar kind or nature) costs in estimates is acceptable when costs are accumulated and reported in greater detail on an actual cost basis during contract performance. ## How Does a CAS 401 Noncompliance Occur? Let’s look at [how a CAS 401 noncompliance occurs](https://redstonegci.com/consulting/government-compliance/cas-services/) under each of these scenarios. **Scenario 1:** A contractor proposes cost for material scrap using a factor based on “industry standards,” however, actual accounting practices at that contractor do not segregate scrap from basic material costs. This is an inconsistency between the way cost were estimated and accumulated. Not only is this a CAS 401 noncompliance, but also there is no way to determine how accurate the scrap factor is if scrap is not separately accounted for. **Scenario 2:** A company estimates total engineering labor by pay grade (Engineer I, Engineer II, and Engineer III.) However, it accounts for engineering labor by function (Electrical Engineer, Mechanical Engineer, and Structural Engineer). This is a CAS 401 noncompliance unless the company provides data that reconciles the pay grade estimate to the cost functions that are accounted for in books. Since it is acceptable to accumulate and report costs in greater detail on an actual cost basis than costs were estimated, the amount of detail required in accumulating and reporting may vary significantly from company to company based on specific circumstances. However, costs estimated must be presented so that any significant cost can be compared with the actual cost reported with respect to classification of costs as direct vs. indirect, the indirect pool to which cost is charged and the method of allocating indirect costs to the contract. For example, if fringe is estimated based on direct labor hours, then it cannot be accumulated based on direct labor dollars. ***The real emphasis of CAS 401 is consistency***. The company cannot change its accounting methodology between the time of the estimate and the recording of costs. If for some reason it is necessary for your company to change your accounting methodology, give us a call to see what needs to be done. Even if you have questions on whether your proposal estimate is consistent with your accumulation and recording, we can help! Watch for our next blog on another common CAS standard, [402, *Consistency in Allocating Costs Incurred for the Same Purpose*.](https://info.redstonegci.com/blog/cost-accounting-standard-cas-402-consistency-in-allocating-costs-incurred-for-the-same-purpose) [![Learn More About Our Cost Accounting Standards (CAS) Services](https://no-cache.hubspot.com/cta/default/203971/interactive-168706666552.png) ](https://info.redstonegci.com/hs/cta/wi/redirect?encryptedPayload=AVxigLIOOznuCDokjMsW2FGPJId0hxPmcDPrTZfDlswhD7iXG13MOvV7n2qARMHVPvsFNFLgyzntTywqn3ehrhO6y1fAXIaeAAFCv97GioNwg0a3Effht2Y9a4Ih5i5PsT0BRK8UlFO7imdyViDX3Yb767%2BdyYJRkw80wKtrlGQiD8wLYyFQRfwgI5k3JkgdSYjfzOwL3%2FNbIEeyy7MFhChsHpOha8eiQ76i%2FFI%3D&webInteractiveContentId=168706666552&portalId=203971) ### Written by [Redstone Team](https://info.redstonegci.com/blog/author/redstone-team) ## About Redstone GCI Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals. Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs. One thing our clients can be certain of is that with the Redstone GCI Team in your corner, there is no problem too big and no issue too technical for our team to tackle. Topics: [Contracts & Subcontracts Administration](https://info.redstonegci.com/blog/topic/contracts-subcontracts-administration), [DCAA Audit Support](https://info.redstonegci.com/blog/topic/dcaa-audit-support), [Government Regulations](https://info.redstonegci.com/blog/topic/government-regulations), [Cost Accounting Standards (CAS)](https://info.redstonegci.com/blog/topic/cost-accounting-standards-cas), [Federal Acquisition Regulation (FAR)](https://info.redstonegci.com/blog/topic/federal-acquisition-regulation-far) ### Search Posts This is a search field with an auto-suggest feature attached. - There are no suggestions because the search field is empty. ### Subscribe via E-mail ### Latest Posts ### Posts by category - [Accounting System Compliance (282)](https://info.redstonegci.com/blog/topic/accounting-system-compliance) - [Commercial Determination (34)](https://info.redstonegci.com/blog/topic/commercial-determination) - [Contractor Purchasing System Review (CPSR) (85)](https://info.redstonegci.com/blog/topic/contractor-purchasing-system-review-cpsr) - [Contracts & Subcontracts Administration (300)](https://info.redstonegci.com/blog/topic/contracts-subcontracts-administration) - [Cost Accounting Standards (CAS) (60)](https://info.redstonegci.com/blog/topic/cost-accounting-standards-cas) - [COVID-19 (23)](https://info.redstonegci.com/blog/topic/covid-19) - [Customer Success Story (2)](https://info.redstonegci.com/blog/topic/customer-success-story) - [Cybersecurity (28)](https://info.redstonegci.com/blog/topic/cybersecurity) - [DCAA Audit Support (249)](https://info.redstonegci.com/blog/topic/dcaa-audit-support) - [Defense Procurement & Acquisition Policy (DPAP) (7)](https://info.redstonegci.com/blog/topic/defense-procurement-acquisition-policy-dpap) - [Deltek Costpoint (54)](https://info.redstonegci.com/blog/topic/deltek-costpoint) - [DFARS Business Systems (179)](https://info.redstonegci.com/blog/topic/dfars-business-systems) - [DOD IG (10)](https://info.redstonegci.com/blog/topic/dod-ig) - [Employee & Contractor Compensation (22)](https://info.redstonegci.com/blog/topic/employee-contractor-compensation) - [Employers & Unions (8)](https://info.redstonegci.com/blog/topic/employers-unions) - [Estimating System Compliance (18)](https://info.redstonegci.com/blog/topic/estimating-system-compliance) - [Export & Import (19)](https://info.redstonegci.com/blog/topic/export-import) - [Federal Acquisition Regulation (FAR) (187)](https://info.redstonegci.com/blog/topic/federal-acquisition-regulation-far) - [Federal Construction Contracting (4)](https://info.redstonegci.com/blog/topic/federal-construction-contracting) - [Government Compliance Training (59)](https://info.redstonegci.com/blog/topic/government-compliance-training) - [Government Property Management (18)](https://info.redstonegci.com/blog/topic/government-property-management) - [Government Regulations (265)](https://info.redstonegci.com/blog/topic/government-regulations) - [Government Shutdown (9)](https://info.redstonegci.com/blog/topic/government-shutdown) - [Grants & Cooperative Agreements (2 CFR 200) (32)](https://info.redstonegci.com/blog/topic/grants-cooperative-agreements-2-cfr-200) - [Human Resources (118)](https://info.redstonegci.com/blog/topic/human-resources) - [Incurred Cost Proposal Submission (ICP/ICE) (83)](https://info.redstonegci.com/blog/topic/incurred-cost-proposal-submission-icp-ice) - [Litigation Consulting Support (17)](https://info.redstonegci.com/blog/topic/litigation-consulting-support) - [Manufacturing Operations Consulting (26)](https://info.redstonegci.com/blog/topic/manufacturing-operations-consulting) - [Material Management & Accounting System (MMAS) (23)](https://info.redstonegci.com/blog/topic/material-management-accounting-system-mmas) - [Non-US Government Contractor (3)](https://info.redstonegci.com/blog/topic/non-us-government-contractor) - [Office of Federal Contract Compliance Programs (31)](https://info.redstonegci.com/blog/topic/office-of-federal-contract-compliance-programs) - [Organizational Change Management Consulting (17)](https://info.redstonegci.com/blog/topic/organizational-change-management-consulting) - [Paycheck Protection Program (PPP) Loans (8)](https://info.redstonegci.com/blog/topic/paycheck-protection-program-ppp-loans) - [Program Management & Project Cost Control (2)](https://info.redstonegci.com/blog/topic/program-management-project-cost-control) - [Proposal Cost Volume Development & Pricing (79)](https://info.redstonegci.com/blog/topic/proposal-cost-volume-development-pricing) - [Quickbooks (21)](https://info.redstonegci.com/blog/topic/quickbooks) - [REAs, Claims & Terminations (10)](https://info.redstonegci.com/blog/topic/reas-claims-terminations) - [Redstone GCI (50)](https://info.redstonegci.com/blog/topic/redstone-gci) - [Sequestration (4)](https://info.redstonegci.com/blog/topic/sequestration) - [Service Contract Act (14)](https://info.redstonegci.com/blog/topic/service-contract-act) - [Small Business Compliance (121)](https://info.redstonegci.com/blog/topic/small-business-compliance) - [System Award Management (SAM) (9)](https://info.redstonegci.com/blog/topic/system-award-management-sam) - [UKG Ready HR Software Consulting (7)](https://info.redstonegci.com/blog/topic/ukg-ready-hr-software-consulting) - [Unanet (35)](https://info.redstonegci.com/blog/topic/unanet) - [Vlog (41)](https://info.redstonegci.com/blog/topic/vlog) ### Disclaimer ``` Data published on our website, such as our white papers, blogs and other government contracting commentary reflect our interpretations and opinions of current events and regulations, at the time such data is published, and the perspectives/opinions of other professionals in our industry may vary from our own.  Further, our commentary and perspectives do not reflect legal analyses, since we are not attorneys, but rather government contracts and accounting advisors.  We therefore make no representation that the use of our published information will insulate a company from government challenges, nor otherwise ensure a successful defense on any government procurement adverse action.  Readers agree that articles or blog commentary presented within our website shall not be replicated or re-published without requesting before publication in another medium, and our expressed written consent to do so. ``` **Redstone Government Consulting** 501 Madison Street SE, Suite 100 Huntsville, AL 35801 **Phone: ** [256.704.9800](tel:2567049800) **Email Us**[ info@redstonegci.com](mailto:info@redstonegci.com) **[PAY INVOICE](https://redstonegci.com/invoice-payment/)** [PCI DSS compliance documentation](https://redstonegci.com/wp-content/uploads/2016/10/pci_dss_self_assessment_certificate.pdf) © 2026 Redstone Government Consulting | All Rights Reserved | [Privacy Policy](https://redstonegci.com/privacy-policy/) | [Event Refund / Cancellation Policy](https://redstonegci.com/event-refund-cancellation-policy/)