The Office of Management and Budget’s Cost Accounting Standards, or CAS, Board has published two proposed rules that aim to streamline accounting requirements for federal contractors by eliminating over 60 requirements.
“Holding contractors responsible for properly and transparently accounting for their costs is good stewardship, but forcing contractors to maintain overlapping books and records is wasteful and creates barriers that discourage talented companies from working with the Government to meet the needs of our taxpayers,” Kevin Rhodes, senior adviser to OMB Director Russell Vought, said in a statement published Wednesday.
Relying on Generally Accepted Accounting Principles
Under the rules proposed by the CAS Board within the OMB Office of Federal Procurement Policy, the U.S. government will now rely on Generally Accepted Accounting Principles, or GAAP, to protect its interests.
The government expects the deregulatory actions in the CAS Board’s rulemaking to result in fewer processes and records that federal contractors must maintain and lead to reduced government oversight activities as required by CAS requirements.
According to a document posted for public inspection, the final rule requires the CAS Board to ensure that cost accounting standards used by federal contractors rely on commercial standards and accounting systems and practices and conform CAS requirements to GAAP.
The rule seeks to clarify CAS definitions to make clear that GAAP changes on lease accounting are not recognized for CAS purposes, preventing unnecessary friction, ambiguity and disputes between parties.
The proposed changes in the rule are expected to simplify CAS administration, reduce barriers to entry for nontraditional contractors and promote competition in federal contracting.
According to the White House, the CAS Board expects to finalize rulemaking on the proposed elimination of standards by early 2026 and plans to advance work on additional conformance of CAS to GAAP.
