Monday, August 19, 2013

CAS Working Group Guidance Papers - Part VI

We've been working our way through what is commonly referred to as the CAS Working Group Guidance. Between 1975 and 1981, DoD convened a group of CAS "experts" to come up with practical solutions to some issues that contracting officers were facing in trying to interpret and apply the rules and regulations being promulgated by the CAS board during that time. During that time, the Working Group published a total of 25 "interim" guidance papers. According to DoD, twenty of the 25 are still current. Today we will be discussing Working Group Guidance # 76-7, Significance of "Effective" and "Applicability" Dates included in CAS. To read previous installments in this series, go to the "Labels" section on this page and select "CAS Working Group".

WG 76-7 - Significance of "Effective" and "Applicability" Dates included in CAS

This particular Working Group Guidance Paper is rather moot until such time as the CAS Board begins to issue new Cost Accounting Standards. It deals with the difference between "effective" dates and "applicability" dates. However, since all existing CAS standards are "effective" and have been for several decades, there is really no reason to make such distinctions.

To facilitate the implementation process, each CAS standard carried its own statement regarding the date it becomes effective and generally, a statement describing the time and conditions under which the standard should be applied to the contractor's accounting system - the applicability date.

The effective date designates the point in time the Government can require compliance with the Standard's provisions. As a matter of policy, the CAS Board generally defers the application of the standard to the contractor's accounting system beyond the effective date. So, for example in CAS 406, Cost Accounting Period, the effective date is April 17, 1992 and the applicability date is the beginning of the contractors next fiscal year after receiving a contract to which the standard was applicable. This deferral is intended to provide affected contractors adequate time to make necessary preparation for compliance and to provide a more convenient time to initiate the required accounting changes.

The guidance given in this "paper" simply alerts procurement officials and auditors that they need to be cognizant of the effective and applicability dates of each CAS standard and ensure that contractors have considered the impact of these standards in proposals and cost impact studies.

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