Disclosure Statements

A "Disclosure Statement" is a written description of a contractor's cost accounting practices, and procedures." (48 CFR 9903.202.1(a). It is the starting point at which the government uses this document to measure the consitency adn compliance of a contractor's compliance with the Cost Accounting Standards.

Requirements

Disclosure Statements are required for all CAS contracts with full CAS coverage. If a contractor does not have full CAS coverage, but the award is over the full CAS coverage amount, the Contracting Officer (CO) cannot award a contract until the contractor submits an adequate Disclosure Statement. This is normally submitted with the proposal.

For the determination of whether or not under modified CAS coverage, you need to submit, see Modified CAS Coverage

Adequacy and Compliance

It is important to note that you can have an adequate Disclosure Statement that adequately describes non-compliant practices. In order to comply with CAS, a contractor must not only have an adequate Disclosure Statement, but the practices disclosed my comply with the standards.

Parts of a Disclosure Statement

There are 8 parts (not including the cover sheet). Depending on the disclosing party, all parts may not be required to be completed. For example a home office may only have 2 parts. The reporting of parts is shown below:

Home Office; Parts 1 and 8,

Segment; Parts 1 - 8.

The parts are:

Part 0 - Cover Sheet and Certification

This part contains the company name and address, and company contact. It also contains the certification, which is a statement of accuracy.

Part 1 - General Information

This section contains the following:

Sales and Industry data,

Description of the cost accounting system,

Fiscal year.

Part 2 - Direct Costs

This section contains the following:

Method of charging Direct Materials

Method of charging Direct Labor

Standard and Actual Costing

Treatment of Interorganizational Transfers - FAR 31; Material Cost Rule

Part 3 - Direct vs. Indirect

This section contains the criteria for determining how cost are charged and/or allocated to cost objectives. It also requires the specification for the treatment of transactions.

Part 4 - Indirect Costs

This section requires the contractor to disclose it's final indirect cost pools, the composition of the pools and the allocation base. It also requires the contractor to disclose it's intermediate pools to include cost pools, and service centers, and pools such as IR&D and B&P pools.

In this section a contractor will disclose its method of charging direct and indirect costs and the establishment of cost objectives.

Part 5 - Depreciation and Capitalization Practices

Part 5 is where the contractor discloses their method of capitalization and Depreciation

Important disclosures include the:

Method of determining useful lives of assets,

Residual value of assets,

Comparison of methods between tax and financial purposes for capitalization and depreciation

The criteria for capitalization, and

The treatment of costs incurred in the procurement process

Part 6 - Other Costs and Credits

This part captures the contractors disclosures regarding the charging and crediting of compensated personal absence, and the treatment of severance and unemployment costs.

Part 7 - Deferred Compensation and Insurance Costs

This part captures the contractors pension and deferred compensation plan, as well as purchased insurance or self-insurance plans.

Part 8 - Home Office Expenses

This section relates to home office pools and method of allocating those costs. Within this section, a description of Home Office expenses and sales information is necessary.