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CGB Comments on CASB Advance Notice of Proposed Rulemaking Conformance of the Cost Accounting Standards to GAAP for Operating Revenue and Lease Accounting

A PDF of the below Comment Letter can be downloaded here »

Cost Accounting Standards Board
ATTN:  Mr. Mathew Blum
Office of Federal Procurement Policy
725 17th Street NW
Washington, DC 20503

Submitted via email to:

Subject:      Financial Executives International Committee on Government Business Comments on Cost Accounting Standards Board Advance Notice of Proposed Rulemaking Conformance of the Cost Accounting Standards to Generally Accepted Accounting Principles for Operating Revenue and Lease Accounting

Reference:  CASB Case Number 2020-02

Mr. Blum:

I am pleased to offer the following comments on the Advanced Notice of Proposed Rulemaking: Conformance of the Cost Accounting Standards to Generally Accepted Accounting Principles for Operating Revenue and Lease Accounting. (Federal Register notice dated November 05, 2020 - 85 FR 70572) on behalf of the Financial Executives International – Committee on Government Business (“FEI-CGB”).  FEI is a professional association representing the interests of more than 10,000 chief financial officers, treasurers, controllers, tax directors and other senior financial executives from major companies throughout the United States.  FEI represents both the providers and users of financial information.  CGB formulates policy opinions on government contracting issues for FEI in line with the views of the membership.

FEI-CGB reviewed the Advanced Notice of Proposed Rule-Making prepared in response to the National Defense Authorization Act of FY2017 (Pub. L. 114–328, 130 Stat. 2273) which amended 41 U.S.C. 1501(c)(2) to require the Board to review CAS and conform them, to the extent practicable, to GAAP.  CAS was designed to achieve uniformity and consistency in determining costs on US Government contracts.  CAS focuses on the measurement, assignment and allocation of cost at the contract level.  GAAP is a common set of accounting pronouncements that prescribe how financial statements are prepared, including recognition, measurement, presentation and disclosure.  The purpose of GAAP is to provide a conceptual framework and acceptable accounting methods and practices for financial reporting.

Given that there is some overlap in membership between the FEI-CGB and the Aerospace Industries Association (“AIA”) Cost Principles Committee (“CPC”) and many of the (31) survey responses came from members of both committees, the FEI-CGB endorses the technical content of AIA’s comments to the referenced Advanced Notice of Proposed Rule-Making related to CASB Case Number 2020-02. Specifically, FEI-CGB agrees with AIA’s comments presented in the enclosure to the AIA letter, and thus incorporates below that enclosure in this letter. 

On the surface, the initiative to streamline the US Government procurement process by shifting reliance for Government cost accounting from CAS to GAAP makes sense.  Specifically, all public companies and nonprofit organizations are already required to prepare financial statements based on GAAP.  Accordingly, using GAAP to govern Government contract cost accounting would eliminate the administrative effort needed to maintain an additional “set of CAS books” (i.e., the CAS specific entries) to meet CAS requirements.  However, the FEI-CGB strongly believes that any significant potential benefit from the conformance of CAS to GAAP will be achieved only if (i) compliance is based solely upon GAAP requirements and (ii) compliance determinations reflect the results of reviews performed by the individual company’s outside audit firms who have both the proficiency and practical experience to determine compliance with GAAP.

Leveraging existing GAAP regulations has the potential to eliminate time and expense for the US Government (i.e., the CASB, Government audit agencies, and Government contracting officers) and contractor support for CAS audits (e.g., Government requested briefings and data for reviews and testing).  GAAP coverage has increased significantly over the years to the point where the CAS and GAAP concepts are much the same in many respects. The alignment of CAS with GAAP, where appropriate, would provide standardization of costing for Government contractors and help minimize allowable administrative costs charged to Government contracts. There would be fewer adjustments required to match financial statements with CAS contract requirements. This would also provide a more understandable contracting environment for companies considering doing business with the Federal Government. 

If you wish to engage with the FEI-CGB on this matter, we would be amenable to meeting with you at your convenience.  Please contact Ms. Marisa Peacock at the FEI office in Morristown, NJ by phone at (973) 765-1007 or email at for arrangements.

Thank you for your consideration in this matter.


Mr. Mark A. Smith
Chairman, Financial Executives International – Committee on Government Business

Andrej Suskavcevic
President & CEO, Financial Executives International