Conformance of Cost Accounting Standards to Generally Accepted Accounting Principles for CAS 407 Use of Standard Costs for Direct Material and Direct Labor
Key claim: Federal contractors no longer have to follow a separate Cost Accounting Standard (CAS 407) for using standard costs on materials and labor and can use ordinary GAAP instead, with one leftover definition moved elsewhere in the rules.
Abstract
(Rule · Management and Budget Office, Federal Procurement Policy Office) The Office of Management and Budget (OMB), Cost Accounting Standards Board (the Board), is publishing a final rule rescinding Cost Accounting Standard (CAS) 407 to conform it with Generally Accepted Accounting Principles (GAAP). One definition is transferred to a different location within chapter 99 of title 48, Code of Federal Regulations. This final rule follows issuance of a Notice of Proposed Rulemaking (NPRM) (91 FR 13562).
Why this matters
Rescinding CAS 407 is a narrow but concrete step in the CAS Board’s multi-year effort to shrink contractor-specific cost accounting rules where GAAP already provides comparable treatment, reducing compliance overhead for CAS-covered defense and civilian contractors. Fiscal impact is modest but the pattern signals a continued deregulatory conformance trajectory across the CAS framework.