The Office of Management and Budget's Cost Accounting Standards Board published a final rule on July 8 wholly rescinding Cost Accounting Standards (CAS) 408 and 411 and rescinding most provisions of CAS 404 and 409, conforming the standards to Generally Accepted Accounting Principles (GAAP). The rule is effective August 7, 2026, and carries regulation identifier number 0348-AB90.

The action follows issuance of a Notice of Proposed Rulemaking, according to the Board. Remaining content from CAS 404 and 409 is not eliminated outright but is being transferred to a different location within the Code of Federal Regulations, per the rule's abstract published in the Federal Register.

For government contractors, the four standards at issue govern significant elements of cost accounting on covered contracts. CAS 404 addresses capitalization of tangible assets, CAS 408 covers accounting for costs of compensated personal absence, CAS 409 governs depreciation of tangible capital assets, and CAS 411 addresses accounting for acquisition costs of material. By rescinding CAS 408 and 411 entirely and narrowing 404 and 409, the Board is aligning federal cost accounting requirements more closely with standard GAAP treatment of these cost elements, reducing divergence between commercial accounting practice and federal contract cost accounting.

The rule affects the Cost Accounting Standards codified at 48 CFR parts 9903 and 9904, and was issued jointly under the Office of Management and Budget and its Office of Federal Procurement Policy. The Federal Register notice does not specify additional implementation guidance beyond the CFR relocation of remaining CAS 404 and 409 content.

Contractors and cost accounting practitioners subject to CAS coverage should review the final rule text ahead of the August 7 effective date to determine how the rescissions and GAAP conformance affect existing disclosure statements and cost accounting practices.

Source: Federal Register