CAS 406 - Cost Accounting Period

Purpose

To provide criteria for the selection of the time periods to be used as cost accounting periods.
To reduce the effects of variations in the flow of costs within each cost accounting period.
To enhance objectivity, consistency, verifiability, uniformity, and comparability in contract cost measurements.

Contractor shall use its fiscal year as cost accounting period, except that:
Costs of an indirect function which exists for only a part of a cost accounting period may be allocated to cost objectives of that same part of the period.
An annual period other than the fiscal year can be used if mutually agreed upon and consistently followed by the contractor for managing and controlling its business, and appropriate accruals, deferrals, or other adjustments are made with respect to such annual period.
A transitional period other than a year not to exceed 15 months may be used when a change in fiscal year occurs.
The same cost accounting period shall be used for accumulating costs in an indirect cost pool as for establishing its allocation base.

Applies under modified and full coverage. 48 CFR 9904.406