The Federal Acquisition Regulation Part 31 establishes cost principles that determine whether a cost is allowable, allocable, and reasonable for government contract purposes.
Cost Accounting Standards prescribe accounting methods for measuring, assigning, and allocating costs to government contracts. CAS ensures consistent treatment across all cost objectives.
FAR and CAS are complementary, not redundant. A cost can be allowable under FAR but improperly allocated under CAS (or vice versa). Compliance with both frameworks simultaneously is required. FAR tells you the boundaries; CAS tells you the mechanics.
Determining Allowability — the five-part test: reasonable, allocable, CAS-conformant, limited/excluded per 31.205, and consistent with contract terms.
Indirect Costs — governs how indirect costs are pooled, how allocation bases are selected, and when intermediate pools or service centers are warranted.
Selected Costs — 50+ cost categories with specific allowability rules. The heart of “what can I charge?” from compensation to travel to depreciation.
Allowable Cost and Payment — the contract clause that triggers the ICP requirement. Requires submission within 6 months of fiscal year end.
Reasonableness — would a prudent person incur this cost in a competitive environment? Considers the nature, amount, and the contractor’s responsibilities.
Accounting for Unallowable Costs — requires identification and segregation. Unallowable costs must be excluded from indirect cost pools but remain in allocation bases.
CAS 401 — Estimating, accumulating, and reporting costs must be consistent (Bid = Book = Bill).
CAS 402 — Costs incurred for the same purpose must be treated consistently as either direct or indirect.
CAS 405 — Accounting for unallowable costs (segregation).
CAS 406 — Cost accounting period definition.
CAS 407 — Use of standard costs for direct material and labor.
CAS 403 — Home office to segments.
CAS 410 — G&A to final cost objectives.
CAS 418 — Direct and indirect cost allocation.
CAS 420 — IR&D and B&P costs.
CAS 411 — Acquisition costs of material.
CAS 404 — Capitalization of tangible assets (capitalization thresholds and service life).
CAS 409 — Depreciation of tangible capital assets (methods, useful life, residual value).
CAS 408 — Compensated personal absences.
CAS 412/413 — Pension cost (composition and allocation).
CAS 415 — Deferred compensation.
CAS 416 — Insurance costs.
CAS 414 — Facilities capital cost of money (semi-annual Treasury rates, net book value).
CAS 417 — Cost of money for capital assets under construction.
| Category | CAS | Standard Title | FAR Reference | Coverage | ICE Schedule |
|---|---|---|---|---|---|
| Consistency | 401 | Consistency in Estimating, Accumulating & Reporting | 31.201-1, 31.201-2 | Full + Modified | All Schedules |
| 402 | Consistency in Allocating Costs for the Same Purpose | 31.202, 31.203 | Full + Modified | B, C, H | |
| General | 405 | Accounting for Unallowable Costs | 31.201-2, 31.201-6 | Full + Modified | B, C |
| 406 | Cost Accounting Period | 31.203 | Full + Modified | Setup | |
| 407 | Use of Standard Costs for Direct Material & Labor | 31.201-1 | Full Only | H, I, J | |
| Cost Allocation | 403 | Home Office Expenses to Segments | 31.203, 31.201-4 | Full Only | B, C, D |
| 410 | G&A Expenses to Final Cost Objectives | 31.203, 31.201-4 | Full Only | A, B, E | |
| 418 | Allocation of Direct and Indirect Costs | 31.203, 31.201-4 | Full Only | A, E, H | |
| 420 | IR&D and B&P Costs | 31.205-18 | Full Only | B, H | |
| 411 | Acquisition Costs of Material | 31.205-26 | Full Only | H, I | |
| Property | 404 | Capitalization of Tangible Assets | 31.205-11 | Full Only | F-1 |
| 409 | Depreciation of Tangible Capital Assets | 31.205-11 | Full Only | B, C, F-1 | |
| Compensation | 408 | Compensated Personal Absences (PTO, Holiday) | 31.205-6 | Full Only | B, C, Fringe |
| 412 | Composition & Measurement of Pension Cost | 31.205-6(j) | Full Only | B, C, Fringe | |
| 413 | Adjustment & Allocation of Pension Cost | 31.205-6(j) | Full Only | B, C | |
| 415 | Cost of Deferred Compensation | 31.205-6 | Full Only | B, C | |
| 416 | Insurance Costs | 31.205-19 | Full Only | B, C | |
| Cost of Money | 414 | Facilities Capital Cost of Money | 31.205-10 | Full Only | A, F, F-1 |
| 417 | Cost of Money — Capital Assets Under Construction | 31.205-10 | Full Only | F, F-1 |
Full + Modified means the standard applies to both Full CAS and Modified CAS contractors (CAS 401, 402, 405, 406). Full Only means only contractors with Full CAS coverage must comply. ICE Schedule shows which schedule in the incurred cost proposal is directly affected by that standard. The FAR Reference column maps each CAS standard to the specific FAR cost principle it supports.
Salaries, wages, bonuses, PTO, pensions, deferred comp. Must be reasonable and comply with CAS measurement and allocation rules. Top DCAA audit target.
Depreciation on tangible assets. CAS 404 governs capitalization thresholds; CAS 409 governs depreciation method, useful life, and residual value.
Always unallowable. CAS 405 requires these costs to be identified and segregated in the accounting system. Must be excluded from indirect cost pools.
Allowable if reasonable. CAS 420 dictates how IR&D and B&P costs are accumulated and allocated to final cost objectives through the G&A pool.
Most insurance types allowable. CAS 416 governs the accounting treatment, including self-insurance reserves and timing of cost recognition.
Facilities capital COM allowable if computed per CAS 414 using semi-annual Treasury rates and net book values. CAS 417 covers assets under construction.
Acquisition costs of material. CAS 411 governs valuation methods (FIFO, weighted average). Must be consistently applied per CAS 401.
Always unallowable. Like entertainment, CAS 405 requires identification and segregation. The dashboard’s Smart Validation flags these automatically.
Record the cost in the general ledger
Allowable? Reasonable? Allocable? Consistently classified?
Direct or indirect? Which pool? What base?
Accumulate in pool, compute rate
Generate all required ICE schedules, submit
Scans for 21 FAR 31.205 unallowable cost categories with adjustment awareness. Flags partially adjusted accounts and cross-references Schedule B/C adjustments.
Models CAS 410 base changes (TCI, Value Added, Single Element) with G&A formula breakdowns, statistical regression justification, and rate impact analysis.
Cross-checks schedules to $1 tolerance, enforcing CAS 401 consistency between accumulated and reported costs. Validates completeness and auto-populates adequacy items.
Maps all 47 DCAA adequacy checklist questions to the regulatory framework with risk scoring, auto-verification from generated schedules, and per-schedule assessment tracking.
The ICP Dashboard embeds the complete FAR/CAS compliance framework into every schedule, validation check, and scenario analysis — so you can focus on optimization, not regulation hunting.
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