OMB announces plan to eliminate 60 accounting rules for federal contractors

The White House Office of Management and Budget’s (OMB’s) Cost Accounting Standards (CAS) Board last week announced one final rule and one proposed rule that would eliminate more than 60 requirements that the board considers “unnecessary and redundant.”

The current rules, according to a news release, force contractors that support the government’s most important missions to unnecessarily keep two sets of overlapping books.

The new rules are “part of the administration’s ongoing efforts to drastically reduce regulatory burdens,” according to the release.

The final rule, which followed a June 2024 notice of proposed rulemaking, will update measuring and assigning costs for compensated personal leave, capitalization and depreciation of capital assets, and acquisition costs of material.

The proposed rule, which has a comment deadline of Oct. 14, deals with changes to cost accounting standards to conform CAS 404, 408, 409, and 411 to GAAP.

The government will rely on GAAP, according to the release, to protect the government’s interests and ensure taxpayers receive the contractor’s best value in these areas.

“Holding contractors responsible for properly and transparently accounting for their costs is good stewardship, but forcing contractors to maintain overlapping books and records is wasteful and creates barriers that discourage talented companies from working with the government to meet the needs of our taxpayers,” Kevin Rhodes, senior adviser to OMB Director Russell Vought, said in the news release.

Deregulatory actions addressed in the rules are intended to result in fewer unique records and processes that contractors must maintain, fewer government oversight activities required by CAS requirements, and opportunities for reliance on financial audits being performed by firms for GAAP compliance, according to the White House.

The CAS Board expects to finalize rulemaking on the proposed elimination of standards by early next year.

It also intends to “significantly accelerate work on additional conformance of CAS to GAAP,” the release said.

— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.