[Federal Register Volume 85, Number 215 (Thursday, November 5, 2020)]
[Proposed Rules]
[Pages 70572-70573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22904]



48 CFR Part 9904

Conformance of the Cost Accounting Standards to Generally 
Accepted Accounting Principles for Operating Revenue and Lease 

AGENCY: Cost Accounting Standards Board, Office Federal Procurement 
Policy, Office of Management and Budget.

ACTION: Advance notice of proposed rulemaking.


SUMMARY: The Office of Federal Procurement Policy (OFPP), Cost 
Accounting Standards Board (Board), is publishing this document to 
announce the availability of an advance notice of proposed rulemaking 
to address the potential conformance of the Cost Accounting Standards 
(CAS) to Generally Accepted Accounting Principles (GAAP) for operating 
revenue and lease accounting. This ANPRM follows the issuance of a 
Staff Discussion Paper (SDP) published on March 13, 2019.

DATES: Comments must be in writing and must be received by January 4, 

ADDRESSES: Due to delays in OMB's receipt and processing of mail, 
respondents are strongly encouraged to submit comments electronically 
to ensure timely receipt. Electronic comments should be submitted to 
[email protected]. Be sure to include your name, title, organization, 
and reference case CASB2020-02. If you must submit by regular mail, 
please do so at Office of Federal Procurement Policy, 725 17th Street 
NW, Washington, DC 20503, ATTN: Mathew Blum.
    Please note that all public comments received are subject to the 
Freedom of Information Act and will be posted in their entirety, 
including any personal and/or business confidential information 
provided. Do not include any information you would not like to be made 
publically available.

FOR FURTHER INFORMATION CONTACT: Mathew Blum, Cost Accounting Standards 
Board (Telephone 202-680-9579; email [email protected]).
    Availability: The full text of the ANPRM, including the Board's 
response to public comments on the SDP and the draft proposed 
amendments to the Cost Accounting Standards, is available on the Office 
of Management and Budget homepage at: https://www.whitehouse.gov/omb/management/office-federal-procurement-policy/#_Office_of_Federal_5.


I. Regulatory Process

    Rules, regulations and standards issued by the Board are codified 
at 48 CFR Chapter 99. Pursuant to 41 U.S.C. 1502(c), the Board, prior 
to the establishment of any new or revised CAS, is required to complete 
a prescribed rulemaking process. The process generally consists of the 
following four steps:
    1. Consult with interested persons concerning the advantages, 
disadvantages and improvements anticipated in the pricing and 
administration of Government contracts as a result of the adoption of a 
proposed standard.
    2. Promulgate an Advance Notice of Proposed Rulemaking (ANPRM).
    3. Promulgate a Notice of Proposed Rulemaking (NPRM).
    4. Promulgate a Final Rule.

II. Background and Summary

    The Board is releasing an ANPRM addressing how CAS might be 
modified to conform to the changes to GAAP that occurred after a 
related CAS was promulgated. In accordance with 41 U.S.C. 1502(c), the 
Board is required to consult with interested persons

[[Page 70573]]

concerning the advantages, disadvantages, and improvements anticipated 
in the pricing and administration of government contracts as a result 
of the adoption of a proposed standard prior to the promulgation of any 
new or revised CAS.
    On March 13, 2019 (84 FR 9143), the Board published a SDP to 
solicit information and viewpoints on how to implement the Board's 
statutory requirement to review and conform CAS to GAAP to the maximum 
extent practicable. Among other things, the SDP asked commenters what 
recommended actions, if any, the Board should take regarding the 
changes in GAAP for operating revenue and lease accounting rules that 
occurred after CAS was promulgated. Three respondents urged the Board 
to give these issues the highest priority in the CAS-GAAP conformance 
initiative. They were concerned that if recent changes in GAAP are 
inconsistent with CAS, there may be inadvertent CAS violations, 
confusion over CAS requirements, inconsistent treatment among 
contractors, and additional costs to maintain separate accounting 
practices for GAAP and CAS.
    The Board appreciates these comments and recognizes the need to 
take timely action to resolve the potential confusion on the 
interpretation of CAS as a result of changes in GAAP addressing 
operating revenue and lease accounting rules. Accordingly, this ANPRM 
requests public comment on proposed revisions that are being considered 
to (i) align CAS with GAAP on the handling of operating revenue and 
(ii) clarify CAS definitions to make clear that GAAP changes on lease 
accounting are not recognized for CAS purposes.

III. Public Comments

    Interested persons are invited to provide input on the ANPRM. All 
comments must be in writing and submitted as instructed in the 
Addresses section.
    In commenting on the ANPRM, the Board encourages respondents, and 
especially entities that are covered by CAS, to discuss what, if any, 
burdens they believe would be added or reduced if the ANPRM was 
finalized as described below. Specifically, the Board seeks to 
understand what, if any, burden is created or reduced for contractors 
by relying solely on the GAAP definition of operating revenue and 
deleting the more detailed CAS definition. Similarly, the Board 
welcomes feedback regarding any burden that is expected to be created 
or reduced for contractors by making clear that property formerly 
classified as operating leases and reclassified as right-of-use assets 
should be excluded from treatment as intangible capital assets and 
tangible capital assets for CAS.

IV. Paperwork Reduction Act

    The Paperwork Reduction Act, Public Law 96-511, does not apply to 
this draft proposed rule, because this rule imposes no paperwork burden 
on offerors, affected contractors and subcontractors, or members of the 
public which requires the approval of OMB under 44 U.S.C. 3501, et seq.

V. Executive Orders 12866 and 13563 and the Regulatory Flexibility Act

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
Because the affected contractors and subcontractors are those who are 
already subject to CAS and the draft proposed rule would seek to rely 
more heavily on GAAP, which these contractors are using in their 
commercial transactions, the economic impact of this draft proposed 
rule on contractors and subcontractors is expected to be minor. 
Accordingly, this is not a significant regulatory action and, 
therefore, is not subject to review under section 6(b) of E.O. 12866, 
Regulatory Planning and Review, dated September 30, 1993.

Michael E. Wooten,
Administrator for Federal Procurement Policy, and Chair, Cost 
Accounting Standards Board.
[FR Doc. 2020-22904 Filed 11-4-20; 8:45 am]