- The rule, effective Aug. 7, rescinds CAS 408 and 411 in full and most of CAS 404 and 409
- It eliminates 68 of the 72 requirements in the four standards, cutting more than 10,000 words of regulatory text
- A few protections GAAP does not replicate survive, including a rule blocking duplicative depreciation costs when contractors merge
The Cost Accounting Standards, or CAS, Board has issued a final rule scrapping two cost accounting standards entirely and most provisions of two others, shifting government contractors toward commercial accounting practices. The rule appeared in the Federal Register on Wednesday and takes effect Aug. 7.
The Office of Management and Budget board is rescinding CAS 408, which covers compensated personal absence costs, and CAS 411, which addresses material acquisition costs, in full. Most provisions of CAS 404 on capitalization of tangible assets and CAS 409 on depreciation are also being eliminated. The board concluded that Generally Accepted Accounting Principles now contain requirements comparable to the four standards, some of which had gone unchanged for more than 50 years.
Which CAS Requirements Are Contractors Losing and Which Are They Keeping?
The rule wipes out 68 of the 72 individual requirements in the four standards and removes more than 10,000 words of regulatory text. The board retained a handful of protections it said GAAP does not replicate, including a provision that prevents the government from paying duplicative depreciation costs when contractors merge, and rules governing gains and losses on asset dispositions. That content moves to a new paragraph within CAS 405.
The board said it does not expect the rescissions of CAS 404, 409 and 411 to force changes in contractors’ disclosed accounting practices. For CAS 408, where GAAP timing rules differ slightly, the board exempted directly associated accounting changes from the contract price and cost adjustment process to ease the transition.
Why Is the CAS Board Conforming Standards to GAAP?
Federal law directs the board to rely on commercial accounting standards to the maximum extent practicable and to conform CAS to GAAP where feasible. The board framed the rule as deregulatory, saying it will cut duplicative compliance work for contractors, auditors and oversight offices. It also cited the goal of lowering barriers to entry for nontraditional and midsize contractors, pointing to Senate Armed Services Committee concerns that existing standards favor incumbents and limit competition.
The final rule follows a September 2025 notice of proposed rulemaking that elicited four rounds of public comment.
