DoD seeks GAAP-aligned accounting to lower contractor barriers
The CAS Board already scrapped most individual standards. DoD is now asking whether its own business-system audits should follow GAAP and SOX instead.
TL;DR
Acquisition chief Michael Duffey and acting comptroller Michael Powers issued an open letter asking industry for "common sense contract accounting changes" that would align DoD's data and audit requirements with GAAP and Sarbanes-Oxley internal controls companies already maintain. Stakeholders have until Aug. 15 to submit ideas. The request is the latest in a year-long CAS-to-GAAP conformance push (OMB and the Cost Accounting Standards Board eliminated 68 of 72 individual CAS requirements in a July final rule) but DoD's separate DFARS business-system audit framework hasn't yet been touched.
The letter from Duffey and Powers lands in the middle of a broader CAS-to-GAAP conformance effort that's been accelerating through 2026. In March, the CAS Board raised monetary thresholds for CAS applicability. In July, OFPP and the board finalized a rule that eliminated 68 of the 72 individual requirements across four cost accounting standards, stripping over 10,000 words from the regulatory text. A fifth standard is under review now.
What's notable is what the DoD letter doesn't address: the separate DFARS framework for contractor business systems under 252.242-7005, which ties business-system adequacy determinations directly to CAS coverage. DCMA and DCAA conduct those reviews, and as GAO noted in 2019, DoD still lacks a mechanism to monitor whether they're being completed in a timely fashion. If DoD aligns its audit requirements with GAAP and SOX, the open question is whether the DFARS business-system clauses get rewritten or whether the alignment happens only at the margins.
For the practitioner, Monday doesn't change. The Aug. 15 deadline is a request for ideas, not a rulemaking. But the direction of travel is clear: after decades of running a parallel cost-accounting regime, the government is signaling it's ready to accept commercial standards. The gap between that signal and what a DCAA auditor actually demands is the story to watch.
Published ·Deep Fathom