Government Contracts CASB Seeks Conformance of CAS to GAAP
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Thursday, December 10, 2020

CASB Seeks Conformance of CAS to GAAP

By Government Contracts Editorial Staff

The Office of Federal Procurement Policy, Cost Accounting Standards Board, has issued an advance notice of proposed rulemaking addressing the potential conformance of the Cost Accounting Standards to Generally Accepted Accounting Principles for operating revenue and lease accounting. On March 13, 2019, the Board published a Staff Discussion Paper (84 FR 9143) soliciting information and viewpoints on how to implement the Board’s statutory requirement to review and conform CAS to GAAP to the maximum extent practicable. Among other things, the SDP asked commenters what recommended actions, if any, the Board should take regarding the changes in GAAP for operating revenue and lease accounting rules that occurred after CAS was promulgated. Three respondents urged the Board to give these issues the highest priority in the CAS-GAAP conformance initiative. They were concerned that if recent changes in GAAP are inconsistent with CAS, there may be inadvertent CAS violations, confusion over CAS requirements, inconsistent treatment among contractors, and additional costs to maintain separate accounting practices for GAAP and CAS.

Comments Sought. Accordingly, the Board is requesting comments on proposed revisions that would align CAS with GAAP on the handling of operating revenue and amend CAS definitions to clarify that GAAP changes on lease accounting are not recognized for CAS purposes. The Board encourages respondents—especially CAS-covered entities—to discuss what, if any, burdens they believe would be added or reduced as a result of the proposed rulemaking, Specifically, the Board seeks to understand if any burden is created or reduced for contractors by relying solely on the GAAP definition of operating revenue and deleting the more detailed CAS definition. Similarly, the Board welcomes feedback regarding any burden that is expected to be created or reduced for contractors by making clear that property formerly classified as operating leases and reclassified as right-of-use assets should be excluded from treatment as intangible capital assets and tangible capital assets for CAS. Comments are due January 4, 2021. For the text of the ANPR, see 85 FR 70572.

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