(Editor’s Note.  Since many of the affected cost accounting standards discussed below are considered applicable to both CAS covered and  non-CAS covered contractors these changes should be significant to all contractors who must justify costs.)

In response to the Cost Accounting Standards Board’s request for input to streamline CAS in order to encourage commercial contractors to enter the government marketplace, the Department of Defense through the procurement office of cost, pricing and finance has put forth its list of high priority recommendations it intends to push for implementation.  They include:

1.  Identifying unallowable costs.  CAS 405 should clearly permit the use of sampling in lieu of specific identification to demonstrate it is properly screening unallowable costs.  The sampling plan would need approval from DOD representatives (e.g. DCAA).

2.  Capitalizing tangible assets.  Revise CAS 404 to permit minimum capitalization thresholds reflected in its books of accounts.

3.  Depreciation. Replace CAS 409 to allow contractors to use the depreciation practices reflected in its financial statements provided they are the same as the practices used for commercial segments.

4.  Pension costs.  Study the feasibility of amending CAS 412 to permit accrual of costs without funding when the six requirements of CAS 415 are met – most notably a future payment is required which the contractor cannot unilaterally avoid.

5.  Accounting changes due to external restructuring.  Contract price and cost adjustments should not be required when a contractor takes actions that include changes to cost accounting practices (e.g. pool combinations, pool spinouts and functional transfers) when costs on CAS-covered contracts are not increased.

6.  Disclosure statements.  Limit disclosure requirements to only home offices and segments subject to full CAS coverage and eliminate items from the disclosure statement that do not relate to cost accounting practices.

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