CAS Board Publishes Final Rule Rescinding CAS 404, 408, 409, and 4117

As part of its ongoing effort to conform the Cost Accounting Standards (“CAS”) to generally accepted accounting principles (“GAAP”), the CAS Board published a final rule rescinding CAS 408 (Accounting for costs of compensated personal absence) and CAS 411 (Accounting for acquisition costs of material).  The CAS Board also rescinded CAS 404 (Capitalization of tangible assets) and CAS 409 (Depreciation of tangible capital assets) but retained certain requirements of CAS 404 and 409, which will be located in new paragraphs of CAS 405 (Accounting for unallowable costs).  Specifically, the CAS Board retained the requirements currently located at CAS 404-50(d)(1), CAS 409-50(e)(5), CAS 409-50(j)(1), and CAS 409-50(j)(4), which the CAS Board explained are necessary to protect the Government’s interests.  Otherwise, the CAS Board determined that the requirements of CAS 404, 408, 409, and 411 overlapped with GAAP such that GAAP “may be applied reasonably as a substitute for CAS to support contract cost and pricing.”

To the extent that contractors must change their cost accounting practices in order to comply with the new rules, cost accounting practice changes that are directly associated with the rescission of CAS 408 (Accounting for costs of compensated personal absence) are expressly exempt from contract price and cost adjustments, through a new exemption at 48 C.F.R. 9903.201-9(b).  The CAS Board explained that otherwise, it does not expect contractors will need to make changes to their cost accounting practices to remain in compliance.

The final rule is available here and will be effective August 7, 2026.