Friday, August 26, 2011

CAS Board Abandons Proposed Revision to CAS 416

The Cost Accounting Standards (CAS) Board published a notification in the Federal Register this morning of its decision to discontinue the rule making on the development of an amendment to CAS 416, Accounting for Insurance Costs, regarding the use of the term "catastrophic losses".

This process began in the Clinton administration. Back in 2000, DoD requested that the CAS Board consider whether the word "catastrophic" should be replaced with a term such as "significant" or "very large" in order to more close align the Standard with was was intended by its original promulgators and eliminate confusion between CAS and FAR. Five years later, the CAS Board published an SDP (Staff Discussion Paper) addressing the issue.

Only two respondents bothered to comment of the SDP. One of those two recommended the Board drop the issue. Neither one provided data or other information describing disputes or other problems arising from the use of the term "catastrophic".

Ultimately, the CAS Board determined that since CAS 416 has been in effect for over 30 years and there has never been an issue regarding the use or definition of "catastrophic", there was no need to amend the Standard.


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