Government Scraps Two Cost Accounting Rules
Published Date: 7/8/2026
Rule
Summary
Starting August 7, 2026, some old cost accounting rules (CAS 408 and 411) are being completely removed, and most parts of CAS 404 and 409 are changing to match regular accounting rules (GAAP). This affects companies that work with government contracts, making their accounting simpler and more consistent. No big cost changes are expected, but everyone should update their systems to stay on track.
Analyzed Economic Effects
6 provisions identified: 5 benefits, 1 costs, 0 mixed.
Major CAS Standards Rescinded
If you are a federal government contractor, CAS 408 and CAS 411 are fully rescinded and most provisions of CAS 404 and CAS 409 are rescinded effective August 7, 2026. The Board is moving a small set of retained requirements into 48 CFR 9904.405-40(g).
Small Businesses Remain Exempt
Contracts and subcontracts with small business concerns are exempt from all Cost Accounting Standards (CAS). This rule confirms CAS changes do not apply to small businesses under the Regulatory Flexibility Act section cited.
Retained Asset Accounting Rules Moved
A small set of asset and depreciation rules from CAS 404 and CAS 409 are retained and relocated to 48 CFR 9904.405-40(g). These include rules limiting gains recognized for contract costing to the difference between original acquisition cost and undepreciated balance, assignment of gains from transfers disposed within 12 months to the transferor, capitalization of acquired assets at seller net book value in business combinations, and allowing parties to agree on shorter service lives for specific assets.
Lower Compliance Burden and More Competition
The Board estimates this deregulatory action eliminates most overlapping CAS text and reduces duplicative compliance, which should simplify CAS administration and lower barriers to entry for non-traditional and mid-size contractors. The Board expects this to increase competition in federal contracting.
Limited Relief for CAS 408 Changes
For changes directly tied to conforming CAS 408 to GAAP, the contract price and cost adjustment requirements of CAS part 9903 do not apply. Those changes must be disclosed and made during your fiscal year directly following the effective date of August 7, 2026.
No New Paperwork Burden Declared
The rule states the Paperwork Reduction Act does not apply because the final rule imposes no new paperwork burden requiring OMB approval. There is no additional OMB-approved information collection created by this action.
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Key Dates
Department and Agencies
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