RGCI - Cost Accounting Standard (CAS) 411 – Accounting for Acquisition of Material Cost

CAS 411 provides criteria for accounting for the measurement and assignment of material costs to cost objectives and follows generally accepted accounting principles (GAAP).

What is the Purpose of CAS 411?

If you don’t have contracts subject to full CAS, then FAR 31.205-26 Material costs requires contractors to implement GAAP when accounting for material. Material costs can either be charged direct to a contract or assigned to contracts through inventory accounts. Material that is charged direct should be identified on the purchase order and material assigned through an inventory account should be consistently applied by category of material. While CAS 411 requires written policies for accounting for material, it is a best practice to establish written policies whether CAS 411 is applicable or not.

Recent CAS Board Developments

The CAS board has issued proposed rulemaking on CAS 408 and 409 and may eliminate the two standards because there are comparable requirements in GAAP and FAR. While CAS 411 was not discussed in the proposed rulemaking, we consider CAS 411 and the requirements in FAR and GAAP to be duplicated and only hope the CAS Board will consider deleting this CAS standard as well.

Intercompany Transactions

FAR 31.205-26 also addresses a unique area related to the requirements for intercompany transfers between divisions which is not covered in CAS 411. Redstone GCI addressed intercompany transactions in its article, “Intercompany Transaction Cost Restrictions and Allowability for Government Contractors”.

Takeaway

Redstone GCI is looking forward to the CAS Board reviewing the CAS standards and eliminating unnecessary standards that are duplicative with the current requirements in GAAP. We are hopeful that any standards that are removed, the applicable disclosure statement sections are updated accordingly.

Our team offers comprehensive support for government contractors, including assistance with drafting detailed written policies and procedures, as well as providing Cost Accounting Standards training sessions tailored to your team's needs.

Learn More About Our Cost Accounting Standards (CAS) Services

Written by Lynne Nalley, CPA

Lynne Nalley, CPA Lynne is a Director with Redstone Government Consulting, Inc. providing government contract consulting services to our clients primarily related to Commercial Item Determinations and support, Cost Accounting Standards, DFARS Business System Audits, Proposals, and Incurred Cost. Prior to joining Redstone Government Consulting, Lynne served in several capacities with DCAA and DCMA for over 35 years. Professional Experience Lynne began her career working with DCAA in the Honeywell Resident Office, Clearwater, FL in 1984. Lynne’s experience included various positions which involved conducting or reviewing forward proposals or rate audits, financial capability audits, progress payments, accounting and estimating systems, cost accounting standards, claims and disclosure statement reviews. She is an expert in FAR, DFARS, CAS and testified as an expert witness. Lynne assisted in drafting the commercial item guidance for DCAA Headquarters. Lynne was assigned as a Regional Technical Specialist where she provided guidance to 20 field offices on highly complex or technical issues relative to forward pricing, financial capability or progress payment issues. As an Assistant for Quality, she was involved in reviewing and ensuring audit reports were in compliance with policy and GAGAS as well as made NASBA certified presentations to the staff including but not limited to billing reviews, CAS, unallowable cost and progress payments. To enhance her experience in government contracting, Lynne accepted a position with DCMA in 2015 as part of the newly organized DCMA Cadre of Experts in the Commercial Item Group. This included performing reviews of prime contractor’s assertions and/or commercial item determinations as well as performing price analyses. Lynne was a project lead and later became a lead analyst where she engaged with the buying commands on requests and reviewed price analysis reviews performed by a team of 5 analysts. She also assisted the DCMA CPSR team relative to commercial items and co-instructed the Commercial Item Training presented to DCMA. Education Lynne earned a Bachelor of Science Degree in Accounting from the University of Central Florida. Certifications State of Florida Certified Public Accountant State of Alabama Certified Public Accountant Defense Acquisition Workforce Improvement Act (DAWIA) Level III- Auditing DAWIA Level III – Contracting

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: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR), Material Management and Accounting System (MMAS)