What is the primary reason for a disclosure statement? Appendix B of the Far is 143 pages and I just want a simple answer. Why is it so important in negotiated contracts? I would just like CAS explained to me. What are they looking for? I know to ensure that the contractor is not wasting the government monies, and the types of coverage Full coverage, modified coverage. If someone would just explain the purpose of CAS maybe I will get a better understanding.
I am starting a new career.

By Anonymous on Friday, May 18, 2001 - 04:31 pm:

The primary reason for a disclosure statement is to describe how the contractor accounts for costs. The purpose for CAS is to establish uniform procedures for accounting for costs, which, in theory, facilitates the negotiation of contracts and modifications.

By John Ford on Saturday, May 19, 2001 - 05:27 pm:

WJ, in the early 1970's congress asked GAO to do a study to determine if it was feasible to establish a uniform system for accounting for costs on negotiated government contracts. The concern was that because of the wide latitude afforded contractors for accounting for costs under generally accepted accountimg principles that it was difficult to evaluate comparative costs on negotiated contracts. What congress was aiming for was a system where all contractors accounted for major cost elements in a fairly uniform fashion so that there would be a level playing field and the government would be able to get a better fix on just what it was costing to acquire supplies and services. Not surprisingly, GAO said it was feasible to do so and the CAS Board was created to set up the standards congress was seeking.
The various levels of CAS coverage is the result of the CASB's cost/benefit tradeoff as to the cost to the contractors and benefits to the government. Also, these various levels reflect the CASB's perceived risks to the government under various contracting scenarios. The Disclosure Statement is also related to the CASB's sense of risk to the government. You have to remember that most accountants are risk adverse and like to minimize risk to the maximum extent possible.

By Anonymous on Sunday, May 20, 2001 - 08:01 pm:

To add to John's background--

One of the key players in the enactment of the Cost Accounting Standards statute was Admiral Hyman Rickover, father of the Navy's nuclear fleet, who complained bitterly to Congress about the ways in which he claimed that contractors used their accounting systems to confuse the Government employees who negotiated shipbuilding claims.

To add to Anon's brief explanation: the CAS allow contractors discretion in the ways that they can keep their books. A disclosure statement is a contractor's description of its system. The Government uses that description (a) to ensure that the system conforms with CAS and (b) to determine whether it is accounting for costs consistently.

By Casius Farquarht on Monday, May 21, 2001 - 01:15 pm:

Let's be honest folks! We all know that this law was mis-titled, it should have been the Accountants, Attorneys, and Consultant's Retirement Act