(1) The statutory basis originally used to justify the (b)(14) overseas exemption no longer exists. (1) Projects which can be identified with a specific segment(s) shall have their costs allocated to such segment(s). Contractors with prior CAS-covered contracts with full coverage shall continue this Standard’s applicability upon receipt of a contract to which this Standard is applicable. For contractors with no previous contracts subject to this Standard, this Standard shall be applied beginning with the contractor’s second full fiscal year beginning after the receipt of a contract to which this Standard is applicable. (B) The functions performed are materially disparate but the employees involved either all work in a single production unit yielding homogeneous outputs, or perform their respective functions as an integral team. (1) The cost of money rate used shall be based on interest rates determined by the Secretary of the Treasury pursuant to Public Law 92–41 (85 stat. 97).

(3) Projected average loss means the estimated long-term average loss per period for periods of comparable exposure to risk of loss. (5) If the terms of the award require that certain events must occur before an employee is entitled to receive the benefits, there is a reasonable probability that such events will occur. (2) For an ESOP, the deferred compensation cost shall be the amount contributed to the ESOP by the contractor. (ii) Any other deferred compensation plan designed to invest primarily in the stock of the contractor’s corporation including, but not limited to, plans covered by ERISA. A supporting work sheet of this allocation should be prepared if there is more than one service center or other similar “intermediate” cost objective involved in the reallocation process.

and fall with volume of work. Over time, these “fixed costs” have become more important to

(b) This Standard does not cover the reallocation of a segment’s share of home office expenses to contracts and other cost objectives. (2) Directly assign all such costs to final cost objectives with which they are specifically identified. (5) Indirect cost means any cost not directly identified with a single final cost objective, but identified with two or more final cost objectives or with at least one intermediate cost objective. (4) Final cost objective means a cost objective which has allocated to it both direct and indirect costs, and in the contractor’s accumulation system, is one of the final accumulation points.

The total measured and assigned deferred compensation cost for FY 2007 is $840,000—the contractor’s total contribution required to satisfy the deferred compensation obligation totaling 10,000 shares. Distribution per paragraph (a) or (b) of this table of balances to overhead pools that result in charges direct to final cost objectives. ABC Corporation has a home office that controls three operating divisions (Business Units A, B & C). The home office includes an administrative computer center whose costs are allocated separately to the business units. The separate allocation conforms to the requirements specified in the Cost Accounting Standard No. 403. (c) The cost of capital committed to facilities shall be separately computed for each contract using facilities capital cost of money factors computed for each cost accounting period.

(3) Company Z estimates service life for tangible capital assets by grouping assets according to use without regard to service lives. In accordance with the provisions of the Standard, Company Z shall use an estimated service life of ten years for the acquisition unless it can support a different estimate for the entire group. (h) Estimated residual values shall be determined for all tangible capital assets (or groups of assets).

existing process or product shall be included in the cost of production.

Adherence to these cost accounting concepts is necessary to guard against the overcharging of some cost objectives and to prevent double counting. Double counting occurs most commonly when cost items are allocated directly to a cost objective without eliminating like cost items from indirect cost pools which are allocated to that cost objective. The amount of a special allocation to any such cost objective made pursuant to such an agreement shall be excluded from the indirect cost pool and the particular cost objective’s allocation base data shall be excluded from the base used to allocate the pool.

(3) The records required in subparagraphs (e) (1) and (2) of this subsection, if not available on the date when the requirements of this Standard must first be followed by a contractor, shall be developed from current and historical fixed asset records and be available following the second fiscal year after that date. They shall be used as a basis for estimates of service lives of tangible capital assets acquired thereafter. (2) Service life means the period of usefulness of a tangible asset (or group of assets) to its current owner. The estimated service life of a tangible capital asset (or group of assets) is a current forecast of its service life and is the period over which depreciation cost is to be assigned. (2) Variances which are immaterial may be included in appropriate indirect cost pools for allocation to applicable cost objectives. (b) Tangible capital assets constructed or fabricated by a contractor for its own use shall be capitalized at amounts which include all indirect costs properly allocable to such assets.

Overtime premium shall be assigned directly to the cost object or treated as overheads

(2) No segment shall have allocated to it as an indirect cost, either through a homogeneous expense pool, or the residual expense pool, any cost, if other costs incurred for the same purpose have been allocated directly to that or any cost accounting standards in india other segment. (1) Allocate means to assign an item of cost, or a group of items of cost, to one or more cost objectives. This term includes both direct assignments of cost and the reassignment of a share from an indirect cost pool.

(b) In estimating the cost of direct material requirements for a contract, it is a common practice to first estimate the cost of the actual quantities to be incorporated in end items. Provisions are then made for additional direct material costs to cover expected material losses such as those which occur, for example, when items are scrapped, fail to meet specifications, are lost, consumed in the manufacturing process, or destroyed in testing and qualification processes. The cost of some or all of such additional direct material requirements is often estimated by the application of one or more percentage factors to the total cost of basic direct material requirements or to some other base.

Cost Accounting Standard Board (CASB)

(ii) Any included segment did receive significant benefits from or contribute significantly to the cause of the expense in question. (b) The following subparagraphs provide criteria for allocation of groups of home office expenses. In the event the contractor decides to make a change for either purpose, the Disclosure Statement shall be amended to reflect the revised accounting practices involved. (a) The Fundamental Requirement is stated in terms of cost incurred and is equally applicable to estimates of costs to be incurred as used in contract proposals.

(7) Curtailment of benefits means an event; e.g., a plan amendment, in which the pension plan is frozen and no further material benefits accrue. Future service may be the basis for vesting of nonvested benefits existing at the time of the curtailment. The plan may hold assets, pay benefits already accrued, and receive additional contributions for unfunded benefits. (ii) The level annual installment required to amortize over 15 years any amounts paid to irrevocably settle an obligation for periodic benefits due in current or future cost accounting periods. However, all other defined-benefit pension plans administered wholly or in part through insurance company contracts shall be subject to the provisions of this Standard relative to defined-benefit pension plans. (iii) Each increase or decrease in unfunded actuarial liability resulting from the institution of new pension plans, from the adoption of improvements, or other changes to pension plans subsequent to the date this Standard first becomes applicable to a contractor shall be amortized over no more than 30 years nor less than 10 years.

Central payments or accruals are those which but for the existence of a number of segments would be accrued or paid by the individual segments. Common examples include centrally paid or accrued pension costs, group insurance costs, State and local income taxes and franchise taxes, and payrolls paid by a home office on behalf of its segments. Any such types of payments or accruals which cannot be identified specifically with individual segments shall be allocated to benefitted segments using an allocation base representative of the factors on which the total payment is based. All costs incurred for the same purpose, in like circumstances, are either direct costs only or indirect costs only with respect to final cost objectives. No final cost objective shall have allocated to it as an indirect cost any cost, if other costs incurred for the same purpose, in like circumstances, have been included as a direct cost of that or any other final cost objective.

Any member wanting to engage in public practice has to first apply for and obtain a Certificate of Practice (COP) from the Council of ICMAI. Only members holding a Practicing Certificate may act as cost auditors of Indian companies. Becoming a member requires passing the prescribed examinations, 36 months of practical training and meeting other requirements under the Act and Regulations. It has since been continuously contributing to the growth of the industrial and economic climate of the country. The Institute of Cost Accountants of India is the only recognized statutory professional organization and licensing body in India specializing exclusively in Cost and Management Accountancy. The head office is situated in Kolkata and operates through four regional councils are Kolkata, Chennai, Delhi and Mumbai as well as through a number of important chapters situated elsewhere in India and abroad.

In the event no obligation is incurred prior to payment, the cost of deferred compensation shall be the amount paid and shall be assigned to the cost accounting period in which the payment is made. (6) If, prior to the time a contractor is required to use this Standard, it has been calculating pension cost separately for individual segments, the amount of assets previously allocated to those segments need not be changed. (B) the accumulated value of the prepayment credits not already allocated to segments, the contractor shall use a base that considers the otherwise assignable pension costs or the funding levels of the individual segments.

• The burden shall be on the contractor to justify estimated service lives which are shorter than such experienced lives.
• (2) Actuarial accrued liability means pension cost attributable, under the actuarial cost method in use, to years prior to the current period considered by a particular actuarial valuation.
• Typical residual expenses are those for the chief executive, the chief financial officer, and any staff which are not identifiable with specific activities of segments.

The costs accumulated in the occupancy pool are allocated among manufacturing overhead, engineering overhead, and the technical computer center on the basis of floor space occupied. The costs accumulated in the technical computer center cost pool are allocated to users on the basis of a CPU hourly rate. Some of these allocations are made to engineering or manufacturing overhead while others are allocated direct to final cost objectives.

(ii) If amortization of an unfunded actuarial liability has not begun prior to the date this Standard first becomes applicable to a contractor, the amortization period shall begin with the period in which the Standard becomes applicable and shall be no more than 30 years nor less than 10 years. However, if the plan was in existence as of January 1, 1974, the amortization period shall be no more than 40 years nor less than 10 years. (i) If amortization of an unfunded actuarial liability has begun prior to the date this Standard first becomes applicable to a contractor, no change in the amortization period is required by this Standard.

The cost input base selected shall be the one which best represents the total activity of a typical cost accounting period. (4) General and administrative (G&A) expense means any management, financial, and other expenses which is incurred by or allocated to a business unit and which is for the general management and administration of the business unit as a whole. G&A expense does not include those management expenses whose beneficial or causal relationship to cost objectives can be more directly measured by a base other than a cost input base representing the total activity of a business unit during a cost accounting period. The net book value of facilities capital items in this column shall represent the average balances outstanding during the cost accounting period.

(ii) An amortization installment, including an interest equivalent on the unamortized settlement amount, attributable to amounts paid to irrevocably settle an obligation for periodic benefits due in current and future cost accounting periods. (9) Assignable cost limitation means the excess, if any, of the actuarial accrued liability and the normal cost for the current period over the actuarial value of the assets of the pension plan. (5) The calculations set forth in subparagraphs (1)–(4) of this appendix shall be performed for each cost accounting period during which final cost objectives described in (2) are being performed. (2) Where tangible capital assets are part of, or function as, an organizational unit whose costs are charged to other cost objectives based on measurement of the services provided by the organizational unit, the depreciation cost of such assets shall be included as part of the cost of the organizational unit. (a) Company A’s vacation plan provides that on the anniversary of each employee’s hiring date, that employee shall become eligible to receive a 2-week vacation with pay.

The Institute of Chartered Accountants of India (ICAI) issues accounting standards in India. (c) When the costs of individual IR&D or B&P efforts are not material in amount, these costs may be accumulated in one or more project(s) within each of these two types of effort. (3) Business unit means any segment of an organization, or an entire business organization which is not divided into segments. (2) Bid and proposal (B&P) cost means the cost incurred in preparing, submitting, or supporting any bid or proposal which effort is neither sponsored by a grant, nor required in the performance of a contract. Where the amount of a loss which is represented by a liability to a third party is uncertain, the estimate of the loss shall be the amount which would be includable as an accrued liability in financial statements prepared in accordance with generally accepted accounting principles. (4) Self-insurance means the assumption or retention of the risk or loss by the contractor, whether voluntarily or involuntarily.