Why FAR and CAS are Important Terms to Compliance
FAR and CAS… what do these two acronyms mean and what do they have to do with compliance? Well, for starters FAR stands for Federal Acquisition Regulations and CAS stands for Cost Accounting Standards.
The term Federal Acquisition Regulations refers to the primary set of rules used by agencies when purchasing goods and services, and rules for purchasing goods and services
The term Cost Accounting Standards refers to regulations applicable to select contractors to address the measurement, assignment, and allocation of costs to government contracts, and the consistence within and between contractors’ cost.
With FAR, it’s government procurement and deals with the terms in obtaining goods and services when it comes to your business.Think of it as a rule book for how to conduct your business legally, on what you can and cannot have when it comes to cost.
CAS, is specific and goes into detail on what to do with those costs when you can have it. These specific details are broken down into 3 major areas to ensure that you are compliant. They are:
1. Measurement of Cost:
Is the methods of defining, determining, and establishing cost criteria in historical, actual, and future cost goals.
2. Assignment of Cost to the Cost Accounting period:
Is the determination of the accrual-basis, cash basis, or other basis for individual accounting periods.
3. Allocation of Cost to the Cost Objective:
Is the determination of which pool to distribute a cost.
FAR and CAS are two important compliance issues that guide companies and organizations to be under the same rules and regulations across the board.
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