Cost Accounting Standards Board (CASB): What it is, How it Works

What Is the Cost Accounting Standards Board (CASB)?

The Cost Accounting Standards Board (CASB) is a U.S. federal government body that mandates consistency and uniformity in cost accounting activities for government grants and contracts. Established by Congress in 1970, the CASB was dissolved in 1980 but was permanently re-established in 1988. The CASB is a function of the Office of Federal Procurement Policy (OFPP), and the board's regulations are codified at 48 CFR, Chapter 99.

Understanding the Cost Accounting Standards Board (CASB)

The Cost Accounting Standards (CAS) are a set of 19 standards and rules promulgated by the U.S. government to be used in establishing costs on negotiated procurements. CAS differs from Federal Acquisition Regulation (FAR) because FAR applies to mostly to executive agencies while CAS also applies to contractors and subcontractors.

The CASB is a function located within the White House's Office of Federal Procurement Policy (OFPP). The OFPP is a component of the U.S. Office of Management and Budget (OMB), which, in turn, is one of the largest office within the Executive Office of the U.S. President. OFPP provides overall direction for government-wide procurement procedures and promotes economy, efficiency, and effectiveness in the procurement process.

According to the Office of Federal Procurement Policy, "the Cost Accounting Standards Board (CAS Board) has the exclusive authority to make, promulgate, and amend standards and interpretations designed to achieve uniformity and consistency in the cost accounting practices governing the measurement, assignment, and allocation of costs to contracts with the United States Government."

The CASB has five members, a chair and four members with tenure and experience in government contract cost accounting. The other four members are two members from the government, one industry representative, and one person from the accounting profession.

A New Cost Accounting Standards Board

In 2017, Section 820 of the National Defense Authorization Act for Fiscal Year 2017 established a new Defense Cost Accounting Standards Board (D-CASB) to oversee the Cost Accounting Standards' application to defense contracts. The amendments made by Section 820 went into effect on Oct. 1, 2018.

The new regulations also create new responsibilities for the existing CASB. The CASB must ensure that CAS relies on commercial standards and accounting practices and systems; regularly reviews the CAS to ensure conforming standards where appropriate to Generally Accepted Accounting Principles (GAAP); and annually review CAS disputes brought to the Boards of Contract Appeals considering whether greater clarity in the CAS could avoid such disputes.