WG 77-10 - Retroactive Implementation of Cost Accounting Standards When Timely Compliance is Not Feasible
There are two significant dates in the implementation of cost accounting standards, the “effective” date and the “applicability” date. The effective date “Designates the point in time when the pricing of all future CAS-covered procurement must reflect the requirements of the newly promulgated standard . . .”; and the applicability date “. . . marks the beginning of the period when the contractor must actually change the accounting and reporting systems to conform to the standard.” The applicability date of most standards is the beginning of the contractor's next accounting period after receipt of a CAS-covered contract following the effective date of the standard.
There have been unusual situations when it is virtually impossible for a contractor to comply with a particular standard at its applicability date because the standard requires a major revision to a segment of the contractor's cost accounting system. In this instance, attempting to forecast the impact of the standard on a negotiated contract to be entered into after the effective date of the standard could be inequitable to either party.
In these situations, a contractor may request a deferral from the ACO. If the contractor can demonstrate to the satisfaction of the ACO, that it is virtually impossible for it to comply with the effective or applicability dates of a standard the ACO is authorized, by this guidance, to establish a specific date for for the contractor to make the necessary changes to its estimating, accounting and reporting systems to be in compliance with the standard.
The Working Group guidance contains some additional specific requirements that contractors and contracting officers must follow when a deferral is granted. Bottom line however, if the ACO grants an extension, contractors won't have to worry about any noncompliances being reported.