CAS Compliance Specialists — DC, Maryland & Northern Virginia

    Cost Accounting Standards (CAS) Compliance Audit — DC, Maryland & Virginia Contractors

    Quick Answer: What are Cost Accounting Standards and when do they apply?

    Cost Accounting Standards (CAS) are 19 standards (CAS 401–421) administered by the CAS Board that govern how government contractors measure, assign, and allocate costs. CAS full coverage applies to contracts over $2M; modified coverage to contracts $750,000–$2M. Contractors must submit a CAS Disclosure Statement (Form CASB DS-1) describing their cost accounting practices.

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    CAS Compliance Risks Facing DC-Area Government Contractors

    CAS noncompliance can result in government contract termination and retroactive cost disallowances on existing awards

    Disclosure Statement (CASB DS-1) changes require advance notice to the Contracting Officer — unauthorized changes are themselves noncompliances

    Accounting practice changes require cost impact proposals under CAS 820 within 60 days — missed deadlines compound the noncompliance

    Many contractors don't know which of the 19 CAS standards apply to their specific contracts and subcontracts

    CAS 401 (Consistency) and CAS 402 (Consistency in Allocating Costs) are the most frequently cited standards in DCAA findings

    CAS Compliance Audit Services

    From DS-1 preparation to cost impact proposals and pre-award readiness, we provide the CAS compliance expertise Northern Virginia and DC-area contractors need to avoid DCAA findings.

    CAS Coverage Determination (Full vs. Modified)

    Analysis of your contract portfolio to determine whether full or modified CAS coverage applies — including multi-year contract awards, option periods, and IDIQ ceiling analysis. Written coverage opinion to support Contracting Officer discussions.

    Disclosure Statement (CASB DS-1) Preparation and Review

    Preparation of a complete and accurate CASB DS-1 Disclosure Statement describing your cost accounting practices across all nine sections. Review of existing DS-1s for accuracy relative to current accounting practices — a common source of CAS 401 noncompliance.

    CAS Compliance Testing for All 19 Standards

    Structured compliance testing of your accounting system and practices against each applicable CAS standard. Produces a findings matrix with noncompliance items prioritized by DCAA audit risk and associated cost impact.

    Cost Impact Proposal for Practice Changes (CAS 820)

    Preparation of cost impact proposals required when changing CAS-covered accounting practices. Quantifies the dollar impact of the change on existing government contracts and supports submission to the Contracting Officer within the 60-day deadline.

    Advance Agreement Negotiation Support

    Support for negotiating advance agreements with the Administrative Contracting Officer on specific cost treatment issues — indirect cost pool structures, cost allocation bases, and treatment of unique cost categories — before they become CAS findings.

    Pre-Award CAS Readiness Assessment

    Pre-bid assessment of your accounting system's CAS readiness before submitting proposals for large government contracts. Identifies gaps in accounting system, DS-1, and cost tracking practices that DCAA would flag upon award.

    CAS Full vs. Modified Coverage

    FeatureCAS Full CoverageCAS Modified Coverage
    ThresholdSingle contract award $2M+Single contract $750K–$2M
    StandardsAll 19 CAS standards (401–421)CAS 401, 402, 405, 406 only
    DS-1 requiredYesRecommended but may be waived
    Cost impact for changesRequiredRequired for applicable standards
    Pre-award disclosureYesYes for applicable standards

    Our CAS Compliance Audit Process

    A 4-step process from CAS coverage determination to compliance testing and DS-1 update.

    1

    CAS Coverage & Applicability Analysis

    Review your contract portfolio to determine which contracts trigger CAS coverage, whether full or modified coverage applies, and which of the 19 CAS standards are applicable. Identify any contracts that are incorrectly treated as CAS-exempt.

    2

    DS-1 Review and Gap Analysis

    Review your existing CASB DS-1 Disclosure Statement against your actual accounting practices in the general ledger, cost allocation methodology, and indirect rate structure. Identify all discrepancies that constitute CAS 401 noncompliance.

    3

    CAS Standards Compliance Testing

    Test compliance with each applicable CAS standard — consistency of estimating and accumulating (CAS 401), cost allocation consistency (CAS 402), treatment of unallowable costs (CAS 405), accounting period (CAS 406), and additional standards for full coverage contractors.

    4

    Findings Report & Corrective Action Plan

    Issue a CAS compliance findings report with each noncompliance item, dollar impact on government contracts, and recommended corrective actions — including DS-1 amendments, cost impact proposals, and accounting system changes.

    CAS Compliance Audit FAQs

    Common questions from DC, Maryland & Northern Virginia government contractors about Cost Accounting Standards compliance.

    The 19 Cost Accounting Standards (CAS 401–421, excluding CAS 419 which was withdrawn) are rules governing how government contractors measure, assign, and allocate costs. Under full CAS coverage, all 19 standards apply. Under modified CAS coverage, only CAS 401 (consistency in estimating, accumulating, and reporting costs), CAS 402 (consistency in allocating costs), CAS 405 (accounting for unallowable costs), and CAS 406 (cost accounting period) apply. The standards most frequently cited in DCAA audits are CAS 401 and 402 (consistency requirements) and CAS 403 (home office expense allocation).

    The CASB DS-1 is a formal disclosure document — submitted to the government on Form CASB DS-1 — that describes a contractor's cost accounting practices in detail. It covers how the contractor measures direct and indirect costs, how it allocates costs to cost objectives, what constitutes its accounting periods, and how it treats specific cost categories. The DS-1 is required for contractors subject to full CAS coverage. Any inconsistency between the DS-1 and the contractor's actual practices constitutes a CAS 401 noncompliance.

    CAS full coverage applies when a contractor receives a single CAS-covered contract award of $2 million or more in a cost accounting period. Full coverage requires compliance with all 19 CAS standards and submission of a CASB DS-1 Disclosure Statement. CAS modified coverage applies when a contractor receives a single CAS-covered contract of $750,000 or more but less than $2 million. Modified coverage requires compliance with only CAS 401, 402, 405, and 406. Contracts below $750,000 are generally exempt from CAS.

    When a CAS-covered contractor changes its cost accounting practices, FAR 52.230-6 (CAS 820) requires the contractor to submit a cost impact proposal to the Contracting Officer within 60 days of the change. The proposal must quantify the impact of the change on existing government contracts — showing whether the change increases or decreases costs. If costs increase, the contractor absorbs the increase. If costs decrease, the government receives a downward price adjustment. Failure to submit a timely cost impact proposal is itself a CAS noncompliance.

    CAS 401 requires that a contractor's practices used in estimating costs for proposals be consistent with its practices used in accumulating and reporting costs under contracts. In practice, this means the cost categories, rates, and allocation bases used in cost proposals must match how costs are actually tracked in the general ledger and billed to contracts. CAS 401 noncompliance is most commonly found when contractors use different overhead rates or cost pool structures in proposals versus actuals, or when estimating assumptions are not supported by the accounting system.

    DCAA conducts CAS compliance audits in several circumstances: (1) upon initial award of a CAS-covered contract, when DCAA reviews the contractor's accounting system and DS-1 for compliance, (2) during annual incurred cost audits when DCAA tests whether actual practices match the DS-1, (3) upon notification of an accounting practice change requiring a cost impact proposal, and (4) following a contracting officer's request triggered by alleged noncompliance. DCAA reports CAS noncompliance findings to the Administrative Contracting Officer, who may then pursue cost disallowances or contract price adjustments.

    Changing cost accounting practices without required advance notification to the Contracting Officer is itself a CAS noncompliance. Under FAR 52.230-2, contractors must submit written notice of any change in cost accounting practice that affects the cost of existing CAS-covered contracts at least 60 days before implementation. Unauthorized changes can result in the government requiring the contractor to revert to prior practices, retroactive cost adjustments on existing contracts, and civil penalties. For intentional unauthorized changes, False Claims Act exposure is possible if the change resulted in overbilling.

    Small businesses meeting the SBA size standard for their NAICS code are exempt from CAS under 48 CFR 9903.201-1(b). Additionally, contracts below $750,000 are exempt, as are firm-fixed-price contracts awarded on the basis of adequate price competition without submission of cost or pricing data, and contracts for commercial items. If your business has grown beyond the applicable SBA size standard or if you receive your first contract exceeding $750,000, CAS applicability must be reassessed before the contract is awarded. Our firm assists contractors in determining their CAS status at each proposal stage.

    CAS Noncompliance Found Late Is Expensive. Find It First.

    With contract termination and retroactive disallowances on the line, proactive CAS compliance testing is the smartest investment any DC-area government contractor can make before a DCAA audit.

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    Serving government contractors in Washington DC, Maryland, Northern Virginia, and the greater DMV area.

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