Activity Code 19407, Compliance Audit CAS 407, Version 5.6, dated November 2009

Master Document – Audit Program Activity Code 19407 Compliance Audit CAS 407 Version 5.6, dated November 2009 B-1 Planning Considerations Purpose and Scope 1. The purpose of CAS compliance auditing is to determine if the contractor's policies, procedures, and practices used to estimate, accumulate, and report costs on Government contracts and subcontracts comply with the requirements of CAS. CAS 407 establishes criteria under which standard costs may be used for estimating, accumulating, and reporting costs of direct material and direct labor. It also provides criteria relating to the establishment of standards, accumulation of standard costs, and the accumulation and disposition of variances from standard costs. The cost accounting standard is not intended to cover the use of pre-established measures solely for estimating. FAR 52.230-2, Cost Accounting Standards, requires the contractor to comply with the CAS 407 criteria. 2. The scope of this audit should be limited to the last completed contractor fiscal year. For efficiency, CAS compliance testing, if possible, should be performed concurrently with tests for compliance with FAR and contract terms. The auditor, the technical specialist and/or the supervisory auditor should agree upon the level of transaction testing in setting the scope of the audit. This understanding should be documented in the working papers. 3. This program is intended to provide for the proper planning, ...