21-04-2025
CASB seeks public comments on elimination of certain standards
The Cost Accounting Standards Board (CASB) has issued an advanced notice of proposed rulemaking, inviting public comments on the proposed elimination of two cost accounting standards, CAS 404 and CAS 411.
This move is part of the CASB's efforts to harmonise government cost accounting standards with generally accepted accounting principles (GAAP), as mandated by the National Defense Authorization Act for Fiscal Year 2017.
The CASB has noted that since the introduction of CAS 404 and CAS 411, GAAP has undergone revisions, leaving minimal differences between these standards and GAAP.
The board proposes to eliminate both standards, except for certain provisions in CAS 404-50(d)(1) related to business combinations, which are suggested to be moved to CAS 418-50.
For contractors with CAS-covered contracts, the proposed changes would mean that tangible capital assets from an acquired company must still be capitalised at the seller's net book value if they incurred costs on government contracts in the last accounting period before the business combination.
The minimum acquisition cost threshold, previously set at $5,000 under CAS 404, would be removed.
CAS 411 outlines two acceptable average costing methods for inventory valuation - 'weighted average cost' and 'moving average.'
Although GAAP broadly refers to average costing methods, the CASB expects contractors to continue using one of the two specified methods, as no widely established third method was identified.
GAAP does not require written statements of accounting policies and practices, unlike CAS 404 and CAS 411.
However, the CASB anticipates that contractors will still develop and maintain written accounting policies to satisfy other requirements, such as those for CAS disclosure statements.
The current notice follows several actions taken by the CASB in June 2024.
These actions, along with public comments, are said to have shed light on the priorities for CAS reform and improvement
Proposed revisions to CAS 403, CAS 414, and CAS 417 aim to resolve conflicts between CAS and GAAP concerning operating revenue and lease accounting.
Additionally, the CASB has proposed removing the requirements of CAS 408 and CAS 409 that are redundant with GAAP.
This follows industry feedback that supported the elimination of CAS 408, while opinions varied on the fate of CAS 409.
Lastly, the CASB has requested public feedback on the applicability of CAS to indefinite delivery vehicles, offering six potential options for determining when and how CAS should apply to IDV contracts, seeking to clarify current ambiguities.
"CASB seeks public comments on elimination of certain standards" was originally created and published by The Accountant, a GlobalData owned brand.
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