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as part of the Board's regulations.

The Board's April 3 proposal also included a provision enabling procurement agencies to issue regulations prescribing criteria under which a contractor may be required to submit a complete, updated Disclosure Statement. A number of commentators expressed concern over this provision. They felt that procuring agencies perhaps would issue regulations that were not consistent with the Board's intention and for this reason they urged that the Board prescribe criteria under which procurement agencies could make such a request.

The Board appreciates the concern expressed by the commentators. It would appear, however, that agencies would have a need for a complete, updated Disclosure Statement only where the number of amended pages submitted is so great that review of a Disclosure Statement would obviously be an excessively cumbersome process. The Board urges agencies to consider these views when adopting their criteria for submittal of a complete, updated Disclosure Statement. The Board has concluded that it should not itself set criteria for this particular requirement.

8. Computation of Dollar Amount of Contract Awards. A number of commentators asked that the Board clarify its intent as to which contracts should be included in the computation of the dollar amounts. The Board feels that covered contracts awarded in any fiscal year in which the computation is being made should be included. This would mean that for all of fiscal year 1974, negotiated defense prime contracts in excess of $100,000 would be included by a company in determining if it met the requirement to file a Disclosure Statement.

Fiscal period

Fiscal year 1971.

Fiscal year 1972, 1973.. Fiscal year 1974, 1975.. Fiscal year 1976.. Following years.

For the first six months of fiscal year 1975 all covered contracts in excess of $100,000 would be included in the figure for that fiscal year. For the balance of fiscal year 1975 only those awards which are subject to Standards would be included. This means that if a company was not performing under a covered contract exceeding $500,000 at January 1, 1975, and did not receive an award exceeding that amount in the last six months of the fiscal year, then only the covered contracts received in the first six months would be included. Only those companies which received an award of $500,000 or more in the last six months of the year would add up their covered contracts, including those subsequently awarded in amounts of $100,000 or more. to arrive at the total amount awarded in that period, to be added to the total for the first six months.

Beginning with Federal fiscal year 1976 only companies which receive at least one award exceeding $500,000 either as a prime contract or subcontract subject to Standards will be required to include the value of awards received to determine if they must file a Disclosure Statement. In essence, it is the Board's intention that contracts subject to Cost Accounting Standards shall be included in the computation to determine if the filing requirement has been met by a company for fiscal year 1974 and all subsequent fiscal years.

9. Summary of Disclosure Statement Filing Requirements. The Board has amended the requirement for filing Disclosure Statements a number of times. As a convenience to those affected by CAS, there follows a tabulation showing these requirements.

Government contracts to be included in computation Amount (million)

Net negotiated prime defense contracts.

Defense prime contracts of the type subject to CAS.
Defense prime contracts subject to CAS.....

Defense prime contracts and subcontracts subject to
CAS.

Defense prime contracts and subcontracts subject to
CAS.

10. Modification. The modifications being adopted today are limited to those areas in which the Board considers clarification or changes warranted at the present time. From time to time the Board may announce further changes in

Effective date

$30 Oct. 1, 1972. 10 Jan. 1, 1974.

10 Jan. 1, 1976.

10 Mar. 31, 1977.

10 Mar. 31 following fiscal year.

the criteria for applicability of the disclosure requirement.

The following modifications to Part 351 of the Board's regulations are being made, effective August 1, 1975, in view of the foregoing.

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G. PREAMBLE

Amendment published 9-12-77. The amendment to 4 CFR Part 351, 42 FR 45625, September 12, 1977 was published as a part of the publication which set forth the original 4 CFR Part 332 and amendments to Parts 331 and 403. The complete preamble appears in the supplement to Part 332.

DISCLOSURE STATEMENT REQUIREMENTS

Many commentators suggested that preparation of a Disclosure Statement was burdensome. They also contended that in the situation where a large commercial contractor receives only a few small contracts containing a Cost Accounting Standards clause the need for a Disclosure Statement appears to be minimal. Some asserted that adoption of the proposal to require a Disclosure Statement for all covered contracts would reduce the number of companies that would accept contracts subject to the Board's Standards, rules and regulations. The Board is persuaded that for the time being Disclosure Statements should not be required for all covered contracts. Accordingly it is not adopting the February 16 proposal. The Board is retaining the existing Disclosure Statement requirement provided in Part 351 except that a business unit will be required to submit a Disclosure Statement if it is a company or a segment of a company which received awards of national defense contracts subject to Cost Accounting Standards in excess of $10 million during its preceding cost accounting period rather than the preceding Federal fiscal year.

REVISIONS TO PART 351

Part 332 and the amendments to Part 331 generally will result in annual determinations being made of a contractor's obligation to follow Standards and to submit Disclosure Statements. The determination will be made on the basis of sales and awards data from the immediately preceding cost accounting period. The requirement to continue to submit a Disclosure Statement so long as the contractor has a contract subject to Cost Accounting Standards will no longer apply. Disclosure Statements must be maintained for and applied to only those contracts which were awarded during a cost accounting period in which the contractor met the filing requirements of § 351.40. Sections 351.40 and 351.50 have been revised to reflect this change.

EFFECTIVE DATE

The effective date of the regulations being published today is March 10, 1978. Pub. L. 91-379 provides that regulations shall take effect not earlier than the expiration of the first period of sixty calendar days of continuous session of the Congress following the date on which a copy of the regulations is transmitted to the Congress. The calendars of the Congress indicate that the required sixty days will not pass until some time in February 1978. Accordingly, March 10, 1978, has been selected to assure sufficient time for the regulation to lie before the Congress.

109A

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109B

Bec. 400.1

400.2

COST ACCOUNTING STANDARDS 1

PART 400-DEFINITIONS

Definitions.

Effective date.

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(a) This part defines various terms used in standards promulgated by the Cost Accounting Standards Board. Unless the text of a particular standard demands a different definition or the definition is expressly modified for a particular standard, terms defined herein whenever used in any standard shall have the meanings ascribed to them in this part. For convenience, the definitions of terms which are prominent in an individual standard are reprinted in that standard. The selection or non-selection of a particular definition to be reprinted in an individual standard, however, does not affect the applicability of all deflnitions in this part to that standard.

Accrued Benefit Cost Method. An actuarial cost method under which units of benefit are assigned to each cost accounting period and are valued as they accrue—that is, based on the services performed by each employee in the period involved. The measure of normal cost under this method for each cost accounting period is the present value of the units of benefit deemed to be credited to employees for service in that period. The measure of the actuarial liability at a plan's inception date is the present value of the units of benefit credited to employees for service prior to that date. (This method is also known as the Unit Credit cost method.)

[This definition first appeared in § 412.30; for the preamble see preamble A of the supplement to Part 412]

Accumulating Costs. The collecting of cost data in an organized manner, such as through a system of accounts.

[See 401.30; for preamble, see preamble A of supplement to Part 401]

Actual cost. An amount determined on the basis of cost incurred as distinguished from forecasted cost. Includes standard cost properly adjusted for applicable variance.

[See §§ 401.30 and 407.30; for preamble, see preamble B of supplement to Part 401 and preamble A of supplement to Part 407]

Actuarial Assumption. A prediction of future conditions affecting pension cost; for example, mortality rate, employee turnover, compensation levels, pension fund earnings, changes in values of pension fund assets.

[See § 412.30; for preamble, see preamble A of supplement to Part 412]

Actuarial Cost Method. A technique which uses actuarial assumptions to measure the present value of future pension benefits and pension fund administrative expenses, and which assigns the cost of such benefits and expenses to cost accounting periods.

[See § 412.30; for preamble, see preamble A of supplement to Part 412]

Actuarial Gain and Loss. The effect on pension cost resulting from differences between actuarial assumptions and actual experience.

[See § 412.30; for preamble, see preamble A of supplement to Part 412]

Actuarial Liability. Pension cost attributable, under the actuarial cost method in use, to years prior to the date of a particular actuarial valuation. As of such date, the actuarial liability represents the excess of the present value of the future benefits and administrative expenses over the present value of future contributions for the normal cost for all plan participants and beneficiaries. The excess of the actuarial liability over the value of the assets of a pension plan is the Unfunded Actuarial Liability.

[See § 412.30; for preamble, see preamble A of supplement to Part 412]

Actuarial valuation. The determination, as of a specified date, of the normal cost, actuarial liability, value of the assets of a pension fund, and other relevant values for the pension plan.

[See § 413.30; for preamble, see preamble A of supplement to Part 413]

187 F.R. 4171, Feb. 29, 1972.

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Allocate. To assign an item of cost, or a group of items of cost, to one or more cost objectives. This term includes both direct assignment of cost and the reassignment of a share from an indirect cost pool.

[See § 402.30; for preamble, see preamble A of supplement to Part 402]

Asset accountability unit. A tangible capital asset which is a component of plant and equipment that is capitalized when acquired or whose replacement is capitalized when the unit is removed, transferred, sold, abandoned, demolished, or otherwise disposed of.

[See § 402.30; for preamble, see preamble A of supplement to Part 402]

Deferred Compensation. An award made by an employer to compensate an employee in a future cost accounting period or periods for services rendered in one or more cost accounting periods prior to the date of the receipt of compensation by the employee. This definition shall not include the amount of year end accruals for salaries wages, or bonuses that are to be paid within a reasonable period of time after the end of a cost accounting period.

(See $415.30; for preamble see preamble A

[See § 402.30; for preamble, see preamble A of Supplement to Part 415). of supplement to Part 404]

Business Unit. Any segment of an organization, or an entire business organization which is not divided into segments. [See § 411.30; for preamble, see preamble A of supplement to Part 411]

Category of Material. A particular kind of goods, comprised of identical or interchangeable units, acquired or produced by a contractor, which are intended to be sold, or consumed or used in the performance of either direct or indirect functions.

[See § 411.30; for preamble, see preamble A of supplement to Part 411]

Compensated personal absence. Any absence from work for reasons such as illness, vacation, holidays, jury duty or military training, or personal activities, for which an employer pays compensation directly to an employee in accordance with a plan or custom of the employer.

[See § 408.30; for preamble, see preamble A of supplement to Part 408]

Cost of Capital Committed to Facilities. An imputed cost determined by applying a cost of money rate to facilities capital.

Cost input. The cost, except G&A expenses, which for contract costing purposes is allocable to the production of goods and services during a cost accounting period.

[See $410.30; for preamble, see amble A of supplement to Part 410]

pre

Cost objective. A function, organizational subdivision, contract or other work unit for which cost data are desired and for which provision is made to acInulate and measure the cost of processes. products, jobs, capitalized projects. etc.

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Defined-Benefit Pension Plan. A pension plan in which the benefits to be paid or the basis for determining such benefits are established in advance and the contributions are intended to provide the stated benefits.

[See § 412.30; for preamble, see preamble A of supplement to Part 412]

Defined-Contribution Pension Plan. A pension plan in which the contributions to be made are established in advance and the benefits are determined thereby. [See § 412.30; for preamble, see preamble A of supplement to Part 412]

Direct Cost. Any cost which is identified specifically with a particular final cost objective. Direct costs are not limited to items which are incorporated in the end product as material or labor. Costs identified specifically with a contract are direct costs of that contract. All costs identified specifically with other final cost objectives of the contractor are direct costs of those cost objectives. [See § 402.30; for preamble, see preamble A of supplement to Part 402]

Directly associated cost. Any cost which is generated solely as a result of the incurrence of another cost, and which would not have been incurred had the other cost not been incurred. [See § 405.30; for preamble, see preamble A of supplement to Part 405]

Entitlement. An employee's right, whether conditional or unconditional, to receive a determinable amount of compensated personal absence, or pay in lieu thereof.

[See § 408.30; for preamble, see preamble A of supplement to Part 408]

Estimating Costs. The process of forecasting a future result in terms of cost, based upon information available at the

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