Cost Accounting Standards(CAS)

Overview

Cost Accounting Standards (CAS) are a set of 19 standards issued by the CAS Board that govern how contractors measure, assign, and allocate costs to government contracts. CAS ensures consistency in cost accounting practices across covered contracts and prevents contractors from shifting costs between government and commercial work in ways that disadvantage the government.

Why It Matters in GovCon

CAS compliance is a major undertaking that affects a contractor's accounting system design, indirect rate structures, and disclosure practices. Contractors with CAS-covered contracts must submit a Disclosure Statement (DS-1 or DS-2) detailing their cost accounting practices, and changes to those practices can trigger cost adjustments. Non-compliance can result in contract price adjustments, withholding of payments, or termination.

Key Details

• Thresholds: Full CAS coverage applies to contractors receiving $50 million or more in CAS-covered awards; modified coverage applies to individual contracts over $7.5 million.
• 19 Standards: Cover topics including consistency of cost estimation and accumulation, allocation of home office expenses, pension costs, and depreciation.
• Disclosure Statement: CAS-covered contractors must file and maintain a Disclosure Statement describing their accounting practices.
• DCAA Audits: DCAA audits contractor CAS compliance and may recommend cost adjustments for non-compliance.
• Exemptions: Small businesses, sealed bid contracts, and contracts under the threshold are exempt from CAS.

Related Terms

• Defense Contract Audit Agency (DCAA)
• Indirect Rates
• Disclosure Statement
• Allowable Cost