Más contenido relacionado Cost Accounting Standards Don't Have to Be a Mystery!1. Cost Accounting Standards Don’t Have to
Be a Mystery!
http://blogs.aronsonllc.com/fedpoint/
Nicole Mitchell & Aisha Mian | June 2, 2016
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Agenda
• History
• Cost Accounting Standards Board (CASB)
• Cost Accounting Standard (CAS) Coverage
• CAS Requirements
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History
• 1968 – Admiral Rickover
– Uniformity and consistency
– After a year of study the Comptroller General recommended
uniform standards be developed
• 1970 – Congress created the CAS Board (CASB)
• 1980 – Congress did not renew funding
• 1981 – CAS Board ceases its operation
– DoD took responsibility
• 1980-1988
– Disputes emerged, highlighting the need to reestablish the CASB
• 1988 – Congress reestablishes the CASB
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Cost Accounting Standards Board
• Purpose
– The Board has exclusive authority to make, promulgate, and
amend cost accounting standards.
• Members:
– (Chair) – Office of Federal Procurement Policy Administrator
– Department of Defense (DoD) Representative
– General Services Administration Representative
– Accounting profession Representative
– Industry Representative
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Cost Accounting Standards Board
Activities of the Board:
– Harmonization of CAS 412 and 413 with the Pension Protection
Act of 2006
– Exemption from CAS for contracts and subcontracts for the
acquisition of commercial items
– Exemption from CAS for FFP contracts and subcontracts
awarded without certified cost or pricing data
– Change to the CAS applicability threshold for the inflation
adjustment to the Truth in Negotiations Act threshold
– Removed exemption from CAS for contracts executed and
performed entirely outside the United States, its territories, and
possessions
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CAS Coverage
• CAS is applicable to contracts, not contractors
– Distinction is important because of price adjustments
– System for identifying CAS covered contracts
• Applicable to all contracts and subcontracts in excess of the Truth in
Negations Act threshold (i.e. 750K) and not otherwise exempted.
• Subcontract Coverage
– Prime contractor must flow-down the CAS clause to its
subcontractors
– Intercompany transfers shall be treated as a subcontract
• Well documented transfer agreement
• System for determining CAS applicability
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CAS Coverage
• Applicability is based on the original contract award
– Requirements contracts
– Indefinite Delivery Indefinite Quantity contract (IDIQ)
– Option Years
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CAS Coverage
CAS Exemptions:
1. Sealed bid contracts
2. Negotiated contracts and subcontracts not in excess of
the Truth in Negotiations Act (TINA) threshold, as adjusted
for inflation (41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B)). For
purposes of this paragraph (b)(2), an order issued by one
segment to another segment shall be treated as a subcontract.
3. Contracts and subcontracts with small businesses.
4. Contracts and subcontracts with foreign governments or their
agents or instrumentalities or, insofar as the requirements of
CAS other than 9904.401 and 9904.402 are concerned, any
contract or subcontract awarded to a foreign concern.
5. Contracts and subcontracts in which the price is set by law or
regulation.
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CAS Coverage
6. Firm fixed-priced, fixed-priced with economic price adjustment
(provided that price adjustment is not based on actual costs
incurred), time-and-materials, and labor-hour contracts and
subcontracts for the acquisition of commercial items.
7. Contracts or subcontracts of less than $7.5 million, provided
that, at the time of award, the business unit of the contractor or
subcontractor is not currently performing any CAS-covered
contracts or subcontracts valued at $7.5 million or greater.
8-12. Reserved
13. Subcontractors under the NATO PHM Ship program to be
performed outside the United States by a foreign concern.
14. Reserved
15. Firm-fixed-price contracts or subcontracts awarded on the
basis of adequate price competition without submission of
cost or pricing data.
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CAS Coverage
Types of CAS coverage
– Full CAS Coverage (all 19 standards)
• Current award is $50M or more
• Segment received $50M or more in its preceding cost
accounting period
– Modified CAS Coverage (only 4 standards)
• CAS 401
• CAS 402
• CAS 405
• CAS 406
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CAS Coverage
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CAS Coverage
Link to CAS Coverage and Disclosure Statement Determination
Flowchart can be found at:
• www.dcaa.mil Guidance Contract Audit Manual (CAM)
Chapter 8 Cost Accounting Standards (P. 810)
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CAS Coverage
Cost Accounting Standards
• 401 Consistency in estimating, accumulating, and
reporting costs
• 402 Consistency in allocating costs incurred for the same
purpose
• 403 Allocation of home office expense
• 404 Capitalization of tangible assets
• 405 Accounting for unallowable costs
• 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
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CAS Coverage
• 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
• 420 Accounting for independent research and development
costs and bid and proposal costs
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CAS Coverage
• Contract Clauses
– 52.230-1 Cost Accounting Standards Notices and Certification
– 52.230-2 Cost Accounting Standards
– 52.230-3 Disclosure and Consistency of Accounting Practices
– 52.230-4 Disclosure and Consistency of Accounting Practices –
Foreign Concerns
– 52.230-5 Cost Accounting Standards – Educational Institution
– 52.230-6 Administration of Cost Accounting Standards
– 52.230-7 Proposal Disclosure – Cost Accounting Practice
Change
CAS clause(s) may be self-deleting/self-adding
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CAS Requirements
1. Must Consistently Follow Your Cost Accounting Practices!
• Cost Accounting Practice
– Measurement
– Assignment
– Allocation
• Unilateral change
– The government will not pay increased costs
– Desirable change - The government may pay increased costs
• Required change
– e.g. Pension Protection Act harmonization
• Notification to Contracting Officer
– 60 days before the change
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CAS Requirements
• When requested, what is included in a General Dollar Magnitude or
Detailed Cost Impact?
– Must include all “affected” CAS covered contracts and subcontracts
– Impact is calculated based on the Estimate to Complete (ETC)
– Separate calculations for flexibly priced and fixed priced contracts
• An increase/decrease on a flexibly priced contract is the
increase/decrease cost to the government
• An increase cost on fixed priced contracts is decreased cost to
the government
• An decrease cost on fixed priced contracts is increased cost to
the government
– Must show impact by Executive Agency
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CAS Requirements
2. Must comply with the Cost Accounting Standards!
• Failure to follow one of the CAS Standards results in a CAS noncompliance
(e.g. CAS 418 Noncompliance)
• Notification to Contracting Officer
– Must provide a description of the change necessary to correct the
noncompliance
– Within 60 days of agreement, or final determination
• When requested, submission of General Dollar Magnitude or Detailed Cost
Impact
– Similar to the Unilateral change process with a few exceptions:
• Estimate to Complete is not used
• For fixed priced contracts, the negotiated contract price is
recalculated under the compliant method to determine
increase/decreased cost to the government.
• For flexibly priced contracts, the cost accumulated during the period
of noncompliance is recalculated under the compliant method to
determine increase/decrease cost to the government.
• Statute of Limitations (6 years)
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CAS Requirements
3. Submission of Disclosure Statement!
• Single award
– Segment is awarded a $50M or more CAS covered contract
– Must be submitted prior to award
• Based on awards in prior cost accounting period
– Entire company (i.e. all segments) received $50M or more CAS
covered contracts
– Must be submitted in the next cost accounting period
• Grace period for contracts awarded in the first 90 days
– Exemption
• Segments CAS covered sales are less than 30% of total
segments sales, and less than $10M
• Home Office
• When a Disclosure Statement is required as defined above, the
Home Office must complete a Disclosure Statement
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CAS Requirements
Disclosure Statement Sections
• Part 1 General Information
• Part II Direct Costs
• Part III Direct vs. Indirect Costs
• Part IV Indirect Costs
• Part V Depreciation and Capitalization Practices
• Part VI Other Costs and Credits
• Part VII Deferred Compensation and Insurance Costs
• Part VIII Home Office Expenses
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Conclusion
• Determine if you have any contracts in excess of the TINA threshold
• Does this contract fall under any of the CAS exemptions?
• If not, is the contract fully CAS covered or modified CAS covered
based on the award value?
• Does a disclosure statement need to be prepared?
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About Aronson LLC
Aronson LLC provides a comprehensive platform of assurance, tax,
and consulting solutions to today’s most active industry sectors and
successful individuals. For more than 50 years, we have purposefully
expanded our service offerings and deepened our industry specialties
to better serve the needs of our clients, people, and community. From
startup to exit, we help our clients maximize opportunity, minimize risk,
and unlock their full potential.
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About Aronson LLC
• Thinking ahead for clients for more than 50 years
• 225+ professionals located in Rockville, MD
• 80+ professionals dedicated to supporting government contractors
• Aronson helps clients rethink the way they approach their business
through innovative, industry-specific services and advice:
– Audit, Assurance and Tax
– Deltek Systems and Outsourcing
– Financial and Contract Compliance
– GSA Schedules
• www.aronsonllc.com/blogs/fedpoint/ – News and trends and insight
for today’s savvy government contractor
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Awards / Accolades / Affiliations
The Gazette of Politics & Business Exceptional 53 Business Award
In 2012, Aronson received the PB53 award for the third year in a row. The program
acknowledges the top businesses and organizations in Maryland based on criteria that
includes the company’s annual revenue, employee growth, noteworthy product or service
innovations, community service efforts and more.
Accounting Today Top Firm
In 2013, Aronson was once again named to Accounting Today’s list of the top 100 firms in
the country. Accounting Today is a leading provider of online business news for the tax and
accounting community.
Washington Business Journal Top 25
Aronson is ranked #12 on the Washington Business Journal’s Top 25 Accounting Firms in
the DC Metropolitan area.
INSIDE Public Accounting Top 100
Once again, Aronson has earned a spot in the top 100 of this prestigious list, released by
INSIDE Public Accounting. This is the longest running, most comprehensive and accurate
independent analysis focusing on management and operations of America’s large local,
regional and national firms.
Washington Business Journal Best Places to Work
Aronson has been recognized five times as one of the Metro area’s “Best Places to Work.”
The award recognizes a company’s achievements in creating a positive work environment
that attracts and retains employees through a combination of employee satisfaction, working
conditions and company culture.
Montgomery County Chamber Corporate Social Responsibility Award
In 2010, Aronson was honored to receive the MCCC’s Corporate Social Responsibility Award
based on the depth and breadth of the company’s energetic commitment to support young people,
in the areas of education, housing and health.
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Aisha N. Mian is a managing consultant in Aronson LLC’s
Government Contract Services Group. She has more than eight
years of experience in the government contracting industry, with
expertise in both project control and financial compliance. Her
professional skills include contract/project financial analysis and
various areas of financial compliance, including preparation of
incurred cost submissions; support in evaluating, preparing and
advising appropriate indirect rate structures; preparation of disclosure
statements; and analysis and impact of cost accounting standards
(CAS). She has also worked alongside in-house DCAA auditors
supporting audits for incurred cost submissions during her time in the
industry.
Aisha has been a guest speaker on financial and government
contracting topics at the GWSCPA Government Contracting
Conference and has hosted Aronson LLC webinars related to
government contracting topics. She earned her bachelor’s degree in
finance from George Mason University and her MBA from the Robert
H. Smith School at the University of Maryland College Park.
Managing Consultant, Government Contract Services Group
240..364.2614
amian@aronsonllc.com
Aisha N. Mian
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Nicole Mitchell joined Aronson LLC in 1998 and serves as a Partner in
Aronson’s Government Contract Services Group. She received a Bachelor of
Science in Accounting from Frostburg State University and a Masters in
Business Administration from Mount Saint Mary’s College.
Nicole specializes in accounting and financial issues impacting government
contractors. She has a broad-based background in generally accepted
accounting principles and cost principles related to government contractors
including the Federal Acquisition Regulations (FAR) and Cost Accounting
Standards (CAS). Nicole provides consulting and accounting services to
government contractors in the areas of financial regulatory compliance,
contract pricing, and complex cost accounting structures. She has in-depth
knowledge of the key financial business systems and compliance risk unique to
government contractors.
Nicole has been a guest speaker on various financial and government
contracting topics for such organizations as the AICPA, MACPA, Deltek Insight
Conference, and the Howard County Chamber of Commerce. She co-authored
a Thompson RIA reference manual for controllers “Doing Business with the
Federal Government” and is a regular contributor to Aronson’s Fed Point blog.
Partner, Government Contract Services Group
301.222.8231
nmitchell@aronsonllc.com
Nicole M. Mitchell, CPA
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301.222.8231
Contact Nicole Mitchell / Aronson LLC
nmitchell@aronsonllc.com
https://www.linkedin.com/in/nicole
mitchellcpa
https://twitter.com/Aronsonllc
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240.364.2614
Contact Aisha Mian / Aronson LLC
amian@aronsonllc.com
https://www.linkedin.com/in/aishamian
https://twitter.com/Aronsonllc
Notas del editor During congressional hearings, Admiral Rickover testified that it was nearly impossible to ascertain the profit on a particular contract because of the lack of control over the definitions and the shifting treatment of contract costs.
Witnesses testified that without such standards, it was difficult for the government to compare competing companies contract price estimates because various contractors might use different accounting methods to measure and allocate costs. Further…it was difficult to conduct audits because contractors sometimes presented costs in their proposals different from the way they charged the government during performance.
By the end of the decade, the CASB issued 19 standards.
Five members
Adminstrator of OFPP
A rep from DoD
An officer or employee from GSA
Rep from industry
An individual knowledgeable about cost accounting problems and systems
Appt for 4 years 3 to point out (those italicized)
Requirements contracts – the government is not committing to purchase anything. So how can you determine a realistic award value? Under a requirements contract the government must provide a realistic estimate of the quantities it will purchase. Therefore, this value is what should be used to determine CAS applicability
IDIQ contracts – The government is not committing to purchase anything. Further, there is no requirement for the government to provide realistic estimates. Use the minimum value.
Priced options are inlcuded
Modifications do not change the CAS status. Small business - NAICS code for the specific opportunity a) Measurement of cost, as used in this part, encompasses accounting methods and techniques used in defining the components of cost, determining the basis for cost measurement, and establishing criteria for use of alternative cost measurement techniques. The determination of the amount paid or a change in the amount paid for a unit of goods and services is not a cost accounting practice. Examples of cost accounting practices which involve measurement of costs are—
(1) The use of either historical cost, market value, or present value;
(2) The use of standard cost or actual cost; or
(3) The designation of those items of cost which must be included or excluded from tangible capital assets or pension cost.
(b) Assignment of cost to cost accounting periods, as used in this part, refers to a method or technique used in determining the amount of cost to be assigned to individual cost accounting periods. Examples of cost accounting practices which involve the assignment of cost to cost accounting periods are requirements for the use of specified accrual basis accounting or cash basis accounting for a cost element.
(c) Allocation of cost to cost objectives, as used in this part, includes both direct and indirect allocation of cost. Examples of cost accounting practices involving allocation of cost to cost objectives are the accounting methods or techniques used to accumulate cost, to determine whether a cost is to be directly or indirectly allocated to determine the composition of cost pools, and to determine the selection and composition of the appropriate allocation base.
2013 Boeing case pertaining to the netting of multiple unilateral accounting practice changes occurring on the same day.
Unfortunately, the decision was not based on the FAR part 30 change which occurred in 2005. Therefore, there are still some open questions which we will discuss in a subsequent webinar. Key questions: When the government "knew or should have known" that it had a claim against the contractor