CAS 402 is a regulation that helps organizations ensure they are consistently assigning costs to government contracts and cost objectives in a fair and predictable way. This standard applies to both direct and indirect costs with the aim to prevent inequitable distribution.

In simple terms, CAS 402 requires consistency when classifying costs as direct or indirect. It also means that if a cost is direct on a contract, then similar costs must also be direct on other contracts. Similarly, if a cost is indirect, it must always be indirect in similar circumstances.

In general, NNS must adhere to uniform cost accounting practices across all programs. Understanding and adhering to CAS 402 is crucial for NNS to ensure compliance with federal regulations.

A CAS noncompliance could result in downward contract price adjustments, cash withholds, and other detrimental financial impacts to the company. Adherence to these cost accounting standards is necessary to guard against the overcharging of some cost objectives and to prevent double counting. For this reason, it is important to be consistent in charging labor and material costs.

Government Finance Relations (O74) can provide assistance in determining the correct way to charge, should there be any questions.