Redstone Government Consulting Blog | Cost Accounting Standards (CAS)

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.

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)

Every small business that receives a Federal Government cost reimbursable contract is expected, by the Defense Contract Audit Agency (DCAA), to have a “sound internal control environment, accounting framework, and organizational structure.”

Topics: Compliant Accounting Infrastructure, Small Business Compliance, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)

FAR 31.205-20 makes interest unallowable, however, cost of money is not interest based on the CAS Board and is allowable (see our article Interest is Unallowable – How is That Possible). Cost of money is an imputed cost that is provided to contractors to recover the time value of money invested in facilities and equipment that benefit government contracts. Contractors that do not have contracts subject to full CAS, follow FAR 31.205-10 Cost of money which incorporates CAS 414 (Cost of Money as an Element of the Cost of Facilities Capital) and CAS 417 (Cost of Money as an Element of the Cost of Capital Assets Under Construction) and allows cost of money as a cost as long as it is measured, assigned and allocated in accordance with the standard. Cost of money must be specifically identified and proposed in cost proposals to be claimed or billed. Let’s discuss the requirements of CAS 414 and 417.

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

CAS 416 provides criteria for the measurement of insurance costs, the assignment of such costs to cost accounting periods, and the allocation to final cost.

Topics: Proposal Cost Volume Development & Pricing, DFARS Business Systems, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)

In the June 27, 2024 Federal Register, the Cost Accounting Standards Board (CASB) put out a notification that it was looking for input on its efforts to conform Cost Accounting Standards (CAS) to Generally Accepted Accounting Principles (GAAP) related to operating revenue and lease accounting. Back on March 13, 2019, the CASB published a Discussion Paper to collect initial input on the conformance of CAS to GAAP. Then on November 5, 2020, the CASB published a notice of proposed rulemaking specifically addressing operating revenue and lease accounting.

Topics: Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, Government Regulations, Cost Accounting Standards (CAS)

In the June 27, 2024 Federal Register, the Cost Accounting Standards Board (CASB) put out a notification that it was looking for input on its efforts to conform Cost Accounting Standards (CAS) to Generally Accepted Accounting Principles (GAAP) for Compensated Personal Absence (CAS 408) and Depreciation of Tangible Capital Assets (CAS 409). Back in March of 2019, the CASB published a Discussion Paper to collect initial input on the need for CAS 408 and 409 based on the changes that had been made to GAAP since the 1970’s.

Topics: Compliant Accounting Infrastructure, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)

Cost Accounting Standard (CAS) 409 provides the criteria for assigning costs (i.e., depreciation) of tangible capital assets to cost accounting periods and allocating those costs to contracts in an objective and consistent manner.

Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, DFARS Business Systems, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)

In the June 18, 2024 Federal Register, the Cost Accounting Standards Board (CASB) put out a notification that it was looking for input on how Cost Accounting Standards (CAS) applicability should be handled when it comes to Indefinite Delivery Vehicles (IDVs) (i.e., Indefinite Delivery Indefinite Quantity (IDIQ) contracts). This goes back to an old CASB case from three years ago – CASB Case 2021-01, Application of Cost Accounting Standards (CAS) to Indefinite Delivery Vehicles (IDVs).

Topics: Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, Government Regulations, Cost Accounting Standards (CAS)

CAS 404 provides the criteria for determining whether to assign the cost of a capital asset as a period expense when acquired or capitalize the item as a tangible asset and spread the cost over two or more accounting periods.

Topics: Proposal Cost Volume Development & Pricing, DFARS Business Systems, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)

For cost accounting under Federal government contracts, including your contracts that are not CAS covered, deferred compensation must be measured based on the requirements of CAS 415. FAR 31.205-6(k) requires that the cost of all deferred compensation, other than pension costs, be measured, assigned, and allocated in accordance with CAS 415, Accounting for the Cost of Deferred Compensation.

Topics: Compliant Accounting Infrastructure, Employee & Contractor Compensation, Human Resources, Government Regulations, Cost Accounting Standards (CAS)