The National Defense Industrial Association (NDIA) is urging the Defense Contract Management Agency to withdraw a memo that could lead COs to discontinue the use of “roll forward” procedures that allow for later recognition of contract costs when their allowability cannot be settled by the current cost accounting period.  NDIA has called for withdrawal of DCMA Information Memorandum No. 05-240 which states use of roll forward should be discontinued because the procedure violates the Cost Accounting Standard 406 in as much as CAS 406 calls for a “correct” cost accounting period to which a cost must be assigned.  NDIA states the memo would be a “detriment” to the timely establishment of final billing rates and contract close outs.  NDIA states it would be inconsistent with FAR provisions that permit quick closeout procedures, pay forwards and roll forwards to enable timely settlement of contract costs.  NDIA also challenges the assertion that the roll forward procedures violate CAS 406 stating the purpose of the standard is to provide criteria for the selection of time periods to be used as cost accounting periods not for determining the proper cost accounting period for assigning a cost.  The group states both CAS and Generally Accepted Accounting Principles provide numerous examples of costs that are incurred in one period but assigned to another such as restructuring expenses assigned as amortization expenses in another period, internally developed software costs and deferred independent research and development costs.

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