FAR Cost Accounting Standards (CAS) 1 — Questions and Answers
Question 1: Which federal agency is responsible for promulgating Cost Accounting Standards (CAS)?
- Department of Defense (DoD)
- Cost Accounting Standards Board (CASB) (Correct answer)
- General Accountability Office (GAO)
- Office of Management and Budget (OMB)
Correct answer: Cost Accounting Standards Board (CASB)
The Cost Accounting Standards Board (CASB) is the federal agency that promulgates CAS to achieve uniformity and consistency in cost accounting practices used by defense contractors.
Question 2: Under what condition does a contractor become subject to MODIFIED CAS coverage?
- Receipt of a single CAS-covered contract of $500,000 or more
- Receipt of a single CAS-covered contract of $2 million or more (Correct answer)
- Receipt of a single CAS-covered contract of $50 million or more
- Receipt of total CAS-covered contracts exceeding $25 million in the prior year
Correct answer: Receipt of a single CAS-covered contract of $2 million or more
Modified CAS coverage is triggered when a contractor receives a single negotiated CAS-covered contract of $2 million or more (48 CFR 9903.201-1).
Question 3: Which CAS standard addresses 'Consistency in Estimating, Accumulating, and Reporting Costs'?
- CAS 401 (Correct answer)
- CAS 402
- CAS 403
- CAS 404
Correct answer: CAS 401
CAS 401 requires contractors to use consistent accounting practices in estimating, accumulating, and reporting costs to ensure comparability and integrity of cost data.
Question 4: What is the primary purpose of the Disclosure Statement (Form CASB DS-1)?
- To describe the contractor's cost accounting policies and practices (Correct answer)
- To report actual costs incurred on government contracts
- To estimate future contract costs for negotiation
- To document the contractor's historical profit margins
Correct answer: To describe the contractor's cost accounting policies and practices
The Disclosure Statement (CASB DS-1) requires contractors to describe their cost accounting practices so the government can verify consistency and compliance.
Question 5: Before making a voluntary change in an established cost accounting practice, what must a contractor do?
- Notify the contracting officer within 30 days after implementing the change
- Submit a revised Disclosure Statement and obtain CFAO approval (Correct answer)
- Report the change directly to the CASB within 60 days
- Obtain DCAA audit clearance before proceeding
Correct answer: Submit a revised Disclosure Statement and obtain CFAO approval
For a voluntary accounting change, the contractor must submit a revised Disclosure Statement and receive written approval from the Cognizant Federal Agency Official (CFAO) before implementing the change.
Question 6: Which type of CAS coverage requires compliance with ALL applicable Cost Accounting Standards?
- Modified CAS coverage
- Limited CAS coverage
- Full CAS coverage (Correct answer)
- Standard CAS coverage
Correct answer: Full CAS coverage
Full CAS coverage requires compliance with all applicable CAS, while modified CAS coverage requires compliance with only CAS 401, 402, 405, and 406.
Question 7: CAS 402 specifically requires which cost accounting consistency principle?
- Consistency in estimating versus accumulating costs
- Consistency in allocating costs incurred for the same purpose (Correct answer)
- Consistency in home office expense allocation methods
- Consistency in capitalization thresholds across fiscal years
Correct answer: Consistency in allocating costs incurred for the same purpose
CAS 402 requires that costs incurred for the same purpose be allocated to cost objectives consistently as either direct or indirect costs, preventing double-charging.
FAR Cost Accounting Standards (CAS) 1
Which federal agency is responsible for promulgating Cost Accounting Standards (CAS)?