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Cost Accounting Standards (CAS)

The Federal Acquisition Regulation (FAR) Part 30 describes the policies and procedures for applying the Cost Accounting Standards Board (CASB) rules and regulations under 48 CFR Chapter 99 to negotiated contracts and subcontracts.  The Cost Accounting Standards (CAS) establishes the CAS compliance requirements for U.S. Government contractors to properly account for costs allocated to certain U.S. Government contracts.  The applicability CAS varies based on the contracting methods, trigger contract and dollar thresholds. 

Further, Federal Acquisition Regulation Subpart 30.6 CAS Administration provides requirements for contractors and Contracting Officers to follow if any cost accounting practice changes need to be processed or resolve any CAS non-compliances.

Cost Accounting Standards (CAS) Compliance

48 CFR Chapter 99, under Public Law 100–679 (41 U.S.C. 422), requires certain contractors and subcontractors to comply with CAS, disclose its cost accounting practices in writing, and consistently follow its disclosed cost accounting practices.

The individual standards set forth how direct and indirect costs should be accounted for related to measurement, assignment, and allocation of costs. This mitigates the risk of mischarging, misallocation, and provides the U.S. Government the ability to compare cost representations more consistently for all contractors.

CAS coverage for Government Contracts

Capital Edge Consulting specializes in helping companies achieve and maintain CAS compliance, a mandatory requirement for government contracts over a certain dollar amount. As experts in the field of government contracting regulations, Capital Edge provides comprehensive guidance on how to interpret and implement Cost Accounting Standards (CAS) to ensure full compliance. Our services are essential for companies looking to navigate the complex landscape of government contracts, ensuring that their accounting practices and cost allocation methods meet the stringent CAS requirements.

By assisting firms in the preparation of CAS-compliant disclosure statements and the implementation of appropriate accounting systems, we ensure that their clients can withstand rigorous government audits and maintain eligibility for federal contracts. Our expert consultancy effectively safeguards companies from potential penalties due to non-compliance and enhances their reputation as reliable government contractors.

The 19 Cost Accounting Standards

There are 19 standards listed below that provide requirements for contractors to promote consistency and accuracy regarding their cost accounting practices. 

  • CAS 401 - Consistency in Estimating, Accumulating, and Reporting Costs
  • CAS 402 - Consistency in Allocating Costs Incurred for the Same Purpose
  • CAS 403 - Allocation of Home Office Expenses to Segments
  • CAS 404 - Capitalization of Tangible Assets
  • CAS 405 - Accounting for Unallowable Costs
  • CAS 406 - Cost Accounting Period
  • 407 - Use of Standard Costs for Direct Material and Direct Labor
  • 408 - Accounting for Costs of Compensated Personal Absence
  • 409 - Depreciation of Tangible Capital Assets
  • 410 - Allocation of Business Unit General and Administrative Expenses to Final Cost Objectives
  • 411 - Accounting for Acquisition Costs of Material
  • 412 - Composition and Measurement of Pension Cost
  • 413 - Adjustment and Allocation of Pension Cost
  • 414 - Cost of Money as an Element of the Cost of Facilities Capital
  • 415 - Accounting for the Cost of Deferred Compensation
  • 416 - Accounting for Insurance Costs
  • 417 - Cost of Money as an Element of the Cost of Capital Assets under Construction
  • 418 - Allocation of Direct and Indirect Costs
  • 419 - Reserved - Not Used
  • 420 - Accounting for Independent Research and Development and Bid and Proposal Cost

CAS Noncompliance

CAS noncompliance is when a contractor fails to comply with the applicable standard or fail to follow disclosed practices consistently in estimating, accumulating and reporting costs on contracts. If that is the case, FAR Clause 52.230-2 invokes price adjustments, with interest, if there is increased cost to the U.S. Government resulting from a CAS noncompliance. This clause also states that price adjustments are acceptable when a change in practice is required to comply with a standard that becomes applicable or is necessary to remain compliant.  


Capital Edge employs more U.S. Government contracting compliance and CAS subject matter experts than any other consulting firm in the marketplace. These professionals are dedicated to assisting clients in navigating the U.S. Government contracting terrain and the intricacies of CAS compliance while remaining operationally efficient and customer focused.  We assist clients with everything from assessing the compliance and effectiveness of their cost accounting practices, evaluating CAS compliance, preparing or revising CAS Disclosure Statements,assisting with cost impact analysis and preparation, to monitoring compliance implementation, and everything in between.

Our ability to provide customer satisfaction in an everchanging regulatory environment and unstable landscape can largely be attributed to one single factor – our people.  Capital Edge is unique in that our solution includes former U.S. Government Officials, as well as experts from industry who previously worked for contractors serving DoD and Civilian agencies.

Navigating compliance requirements related Cost Accounting Standards can be challenging.  Capital Edge Consulting professionals have extensive years of experience in assisting clients with CAS related compliance matters.  Our professionals assisted numerous clients from the initial CAS compliance implementation, resolving CAS noncompliance allegations, to processing cost accounting practice changes.

  • Review and access current Cost Accounting structure and Disclosure Statements
  • Provide guidance on Cost Accounting Standards (CAS) compliance
  • Prepare CASB Disclosure Statements
  • Review proposed changes in practices
  • Assess need for and/or perform cost impacts
  • Resolve Disclosure Statement Inadequacies
  • Review and respond to allegations of CAS non-compliance
  • Provide Cost allowability and allocability support

CAS Solicitation Provisions and Contract Clauses

CAS related Solicitation Provisions and Contract Clauses are incorporated into Section I of the Request for Proposal (RFP) issued by the U.S. Government.  The following is a list of CAS related Provisions and Clauses all contractors should be aware of. 

  • FAR 52.230-1 (Solicitation Provision) Cost Accounting Standards Notices and Certification
  • FAR 52.230-2 Cost Accounting Standards
  • FAR 52.230-3 Disclosure and Consistency of CAS
  • FAR 52.230-4 Disclosure and Consistency of CAS - Foreign Entities
  • FAR 52.230-5 Cost Accounting Standards - Educational Institutions
  • FAR 52.230-6 Administration of CAS
  • FAR 52.230-7 (Solicitation Provision) Proposal Disclosure – Cost Accounting Practice Changes
cas compliance

Cost Accounting Standards Board (CASB) Disclosure Statement

Based on the level of CAS coverage and other factors, contractors may need to submit a Cost Accounting Standards Board Disclosure Statement (CASB DS-1).  Please find more information on Disclosure Statement requirements through the 10 essentials of CAS.

Capital Edge GovCon Experts are here to help organizations navigate CAS Compliance complexities.


Frequently Asked Questions About CAS Government Contracting

Here are some of the more common questions being asked about CAS

What are the CAS exemptions?

The following Contracts are exempt from CAS coverage:

  • Sealed bid Contracts
  • Negotiated Contracts and subcontracts (including interdivisional work orders) less than $2,000,000
  • Contracts and subcontracts with small businesses
  • Contracts and subcontracts with foreign governments or their agents
  • Contracts and subcontracts in which the price is set by law or regulation
  • FFP contracts and subcontracts for the acquisition of commercial items
  • Contracts or subcontracts less than $7,500,000, if at award, the business unit of the contractor or subcontractor is not currently performing any CAS covered contracts or subcontracts valued at $7,500,000 or greater
  • Firm Fixed Price (FFP) contracts and subcontracts awarded on the basis of adequate price competition without submission of certified cost or pricing data
What is a CAS covered Contract?

CAS is applicable to Contracts. A contract is CAS covered if:

  • Unless otherwise exempt from CAS, a negotiated contract in excess of $2,000,000, awarded during performance of a “trigger contract”
  • “Trigger Contract” – single CAS covered contract greater than or equal to $7.5 million
  • Full CAS “Trigger Contract” – single CAS covered contract greater than or equal to $50 million or received $50 million or more in net CAS covered award in its preceding Cost Accounting Period
When is a Cost Accounting Standards Board Disclosure Statement required?
A CASB Disclosure Statement is required when a business unit is selected to receive a CAScovered Contract or subcontract of $50,000,000 or more orreceives CAS covered contracts and subcontracts totaling $50,000,000 or more in the most recent cost accounting period.

What are the types of CAS coverage?

There are three types of CAS coverage:

  • Full Coverage –The contractor (business unit) must comply with all existing CAS and any applicable new standards. Triggers based on contract amount thresholds.
  • Modified Coverage –The contractor (business unit) must comply with CAS 401, 402, 405, and 406. Triggers based on contract amount thresholds
  • The contractor (business unit) is exempt from CAS Coverage.
What is a cost accounting practice change?

FAR 30.320-1 defines a cost accounting practice as any disclosed or established accounting method or technique which is used for allocation of cost to cost objectives, assignment of cost to cost accounting periods, or a measurement of cost.  Any changes in our organization that affect allocation, assignment, or measurement of cost could result in a cost accounting practice change.


What are the types of cost accounting practice changes?

There are 3 classification of cost accounting practice changes:

  • Required Cost Accounting Practice Change arises when the contractor:
    • Needs to comply with a new or modified CAS
    • Changes from one compliant practice (disclosed or established) to another compliant practice to remain in compliance with CAS
  • Desirable Cost Accounting Practice Changes arises when the contractor:
    • Elects to make a change from one compliant practice to another, and the U.S Government determines that the change not detrimental to the Government
    • Note - Changes may be desirable even if costs increase on existing contracts/subcontracts
  • Unilateral Cost Accounting Practice Changes arises when the contractor:
    • Changes from one compliant practice to another compliant practice that a contractor elects to make, but where the U.S. Government has not determined the change to be desirable
What is CAS 401 and 402?
  • CAS 401 — Consistency in estimating, accumulating & reporting

This standard requires contractors to use consistent practices between estimating cost and accumulating and report costs.  Inversely, the practices used in accumulating and reporting costs must be consistent with estimating cost. 

For example, if a contractor estimates (i.e., proposes) engineering labor cost by function (e.g., drafting, product engineering, etc.), engineering labor costs must also be accumulated and reported by function.  In this example, if engineering costs are estimated by function and accumulated and reported in total, this is a non-compliance with CAS 401. 

  • CAS 402 — Consistency in allocating costs for same purpose

This standard helps eliminate the risk of “double counting” costs to the U.S. Government and ensure that costs incurred for the same purpose in like circumstances are accounted for consistently. 

If a contractor is required to submit a CASB Disclosure Statement, these practices are defined within the Disclosure Statement. 

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