At what dollar threshold does a government contractor’s accounting practices become a federal compliance document? The answer determines whether your cost accounting methodology is a private business decision or a binding disclosure subject to DCAA audit, contracting officer approval, and potential noncompliance penalties.
Most small government contractors never file a CAS Disclosure Statement. Most do not need to. But the threshold is lower than many expect, and crossing it without recognizing the obligation creates a compliance gap between what the contractor practices and what the government expects to see documented. DCAA discovers this gap during the first post-threshold audit.
The CAS Disclosure Statement (CASB DS-1) is a formal, standardized description of a contractor’s cost accounting practices filed with the cognizant federal agency. It covers how the contractor classifies costs as direct or indirect, how indirect cost pools are structured, what allocation bases are used, and how the contractor treats specific cost elements like compensation, depreciation, and pension costs. Once filed, the Disclosure Statement becomes a binding commitment: the contractor must follow the disclosed practices consistently or face noncompliance findings.
Before any of that, check whether CAS reaches you at all. Contracts and subcontracts with small businesses are exempt from every Cost Accounting Standards requirement, at any contract value [48 CFR 9903.201-1(b)(3)]. So is firm-fixed-price work won on adequate price competition where no certified cost or pricing data was submitted [48 CFR 9903.201-1(b)(15)]. Those two categories take most small government contractors outside CAS before a single dollar threshold applies. The thresholds below decide what happens to everyone else.
Who Must File a CAS Disclosure Statement
The filing threshold for a CAS Disclosure Statement is triggered by contract value. A contractor must file a CASB DS-1 when it receives a single CAS-covered contract or subcontract of $50 million or more, or when the contractor’s net CAS-covered awards in the prior cost accounting period total $50 million or more [FAR 30.202-1; 48 CFR 9903.202-1]. The net calculation counts only negotiated CAS-covered awards, so sealed-bid contracts never enter it [48 CFR 9903.201-1(b)(1); 48 CFR 9903.202-1(b)(2)].
A $100 million figure is circulating, and its two halves have different force. Congress addressed full coverage, not the Disclosure Statement. NDAA §1806(a)(1) told the Administrator for Federal Procurement Policy to raise the thresholds at 48 CFR 9903.201-2, the section deciding full versus modified coverage, to $100 million within 180 days; §1806(a)(2) gave the Secretary of Defense 120 days to do the same in the DFARS. Both deadlines passed in 2026 with no rule, and DFARS Part 230 still carries no CAS dollar threshold at all.
The Disclosure Statement threshold is separate, and Congress did not touch it. The CAS Board proposed moving that one itself, in its proposed rule of March 20, 2026, which would replace $50 million with $100 million at 48 CFR 9903.202-1. A regulator’s proposal is not a statute, and it is still only a proposal. Do not plan around the $100 million figure in either form. $50 million is what your cognizant agency administers today.
Not filing a DS-1 is one thing. Carrying no CAS obligation at all is another. Which one you are in is decided by exemption category, not by contract size. 48 CFR 9903.201-1(b) lists nine categories of contract that sit outside every CAS requirement. Do not rely on all nine as printed.
The $7.5 million trigger-contract exemption at (b)(7) rests on 41 U.S.C. 1502(b)(1)(C)(iv), which NDAA §1806(d)(1)(B)(iv) struck out. It survives in the regulation only because the rule is overdue. Alongside the two named above, the third that matters here is commercial products and commercial services bought under commercial procedures [48 CFR 9903.201-1(b)(6)]. A firm selling a commercial product has always sat there.
For a contractor that is neither small nor otherwise exempt, coverage runs in two tiers. A negotiated contract above the applicability floor is eligible for modified CAS coverage, which the offeror certifies and elects at proposal [FAR 30.201-4(b)(1)]. Modified coverage is four standards: CAS 401 (consistency in estimating), CAS 402 (consistency in allocating), CAS 405 (accounting for unallowable costs), and CAS 406 (cost accounting period) [FAR 30.201-4(b)(1); 48 CFR 9903.201-2]. A business unit that receives a single CAS-covered award of $50 million or more, or $50 million or more in net CAS-covered awards during its preceding cost accounting period, moves to full coverage and every applicable standard [48 CFR 9903.201-2(a)].
The applicability floor is where the statute and the regulation now disagree. The regulation exempts negotiated contracts not over the Truth in Negotiations Act threshold, which is $2.5 million as adjusted for inflation [48 CFR 9903.201-1(b)(2)]. Section 1806(d)(1) of the FY2026 NDAA amended the statute directly, and 41 U.S.C. 1502(b)(1)(B) has read $35,000,000 since December 2025. That same subsection ordered implementing regulations within 180 days, and none have issued.
So the regulation now points two ways in one sentence: its words say the TINA threshold, and its own citation points at a statute that no longer cross-references TINA. Which text governs a given award is a question for your counsel and the contracting officer, not for your accountant.
The band between the two figures is where that matters. A contractor holding $30 million in negotiated CAS-covered awards is under modified coverage today and owes no DS-1, because the agency administers a regulation with a $2.5 million floor and a $50 million filing trigger. If the $35 million floor takes effect through rulemaking, that same contractor falls outside CAS altogether. The bookkeeping response costs nothing either way: record which exemption category each contract falls into, and date the record.
Educational institutions file a separate form (CASB DS-2) with different instructions and thresholds. This article addresses only the standard CASB DS-1 applicable to commercial contractors.
What Does the CAS Disclosure Statement Cover?
The CASB DS-1 form contains eight major sections, each requiring detailed descriptions of the contractor’s cost accounting practices. DCAA reviews the completed form against the contractor’s actual books to verify consistency. A mismatch between the Disclosure Statement and actual practice triggers a noncompliance finding regardless of whether the actual practice is reasonable.
| DS-1 Section | What It Covers | Key Accounting Decisions Disclosed |
|---|---|---|
| Part I | Cover sheet and certification | Entity name, address, certifying official, effective date of disclosure |
| Part II | General information | Fiscal year, organizational structure, CAS-covered segments |
| Part III | Direct costs | Which costs are charged direct, labor distribution methods, material charging practices |
| Part IV | Direct vs. indirect | Criteria for classifying costs as direct or indirect, consistency rules |
| Part V | Indirect costs | Pool structure (fringe, overhead, G&A), allocation bases, home office allocations |
| Part VI | Depreciation and capitalization | Capitalization threshold, depreciation methods, asset lives |
| Part VII | Other costs | Pension, deferred compensation, insurance, IR&D/B&P |
| Part VIII | Consistency in practice | How changes in practice are identified and reported |
Each section forces the contractor to articulate decisions that otherwise stay unwritten. What is your capitalization threshold? Which costs go to overhead vs. G&A? How do you allocate home office costs to segments? The Disclosure Statement converts these informal practices into auditable commitments.
Filing, Review, and Approval Process
The contractor submits the completed CASB DS-1 to the cognizant federal agency (typically the contracting officer at the agency with the largest dollar volume of CAS-covered contracts). DCAA reviews the Disclosure Statement for adequacy and compliance with applicable CAS standards. In practice, the review typically takes 60 to 120 days from submission, though no regulation prescribes a specific timeline.
DCAA’s adequacy review checks whether the Disclosure Statement is complete (all sections filled), internally consistent (Part III does not contradict Part V), and compliant with CAS requirements. An inadequate Disclosure Statement is returned for revision. An adequate but noncompliant statement triggers corrective action: the contractor must either change its practices to match a compliant methodology or demonstrate why the current practice satisfies the standard.
Once accepted, the Disclosure Statement is effective for all CAS-covered contracts. The contractor must follow the disclosed practices. Changing a practice without amending the Disclosure Statement is a noncompliance event. The duty to adjust comes from FAR 52.230-2(a)(4) and (a)(5); FAR 52.230-6 is where it is computed and resolved.
When Is a CAS Disclosure Statement Amendment Required?
Before implementing a change in cost accounting practice, a contractor must submit a description of the change to the cognizant Federal agency official, the CFAO, including revisions to the Disclosure Statement if applicable [FAR 52.230-6(b)]. Those two words carry the distinction this article is built on. Every CAS-covered contractor owes the notice; only the ones with a Disclosure Statement owe the revision.
“Change” means any alteration in a methodology, allocation base, pool structure, or cost classification previously disclosed. Examples triggering amendments: switching the G&A allocation base from total cost input to value-added, adding a new indirect cost pool, changing the capitalization threshold, or reclassifying a cost from direct to indirect.
Submit the description of the change to the CFAO not less than 60 days before implementation [FAR 52.230-6(b)]. The Disclosure Statement revision itself is not on that clock: the regulation allows amendments at any time [48 CFR 9903.202-3]. DCAA reviews for adequacy and compliance, and the CFAO has sole authority to negotiate and resolve the cost impact [FAR 30.606(a)(1)].
The resolution is not a symmetric true-up. For a unilateral change the Government will not pay the increased cost, and as a rule it will not adjust fixed-price contracts upward to hand back a decrease [FAR 30.606(c)(3)]. Miss the notice and the CFAO is entitled to treat the change as a failure to follow a disclosed practice and withhold up to 10 percent of payments on affected contracts until you produce the data [FAR 52.230-6(j)(1)].
Contractors sometimes change practices without realizing an amendment is needed. A new CFO restructures the indirect rate pools for efficiency. The restructuring is sound accounting. But without a DS-1 amendment filed before the change, DCAA classifies it as a noncompliant cost accounting practice change, triggering cost adjustments on every CAS-covered contract.
Common CAS Disclosure Statement Mistakes
DCAA’s CAS compliance audits reveal patterns in how contractors fail the Disclosure Statement requirement. Four errors appear most frequently.
- Crossing the filing threshold without recognizing it. The contractor’s cumulative CAS-covered awards exceed the DS-1 trigger mid-year. Nobody tracks the cumulative total. DCAA discovers the gap during the next incurred cost submission review. The contractor must file retroactively and reconcile prior practices against the newly disclosed methodology.
- Disclosure Statement does not match actual practice. The DS-1 states G&A is allocated on total cost input. The actual books use a value-added base. The mismatch creates a noncompliance finding on every CAS-covered contract, regardless of which base is more appropriate.
- Practice changes without amendments. The contractor changes its capitalization threshold from $5,000 to $10,000 without amending the DS-1. Every asset between $5,000 and $10,000 purchased after the change is treated inconsistently with the Disclosure Statement. DCAA recalculates depreciation on every affected contract.
- Incomplete sections. The contractor leaves Part VII (pension and deferred compensation) blank because it has no pension plan. DCAA returns the form as inadequate. Even “not applicable” requires a response explaining why.
Preparing for the Disclosure Statement Threshold
Prepare the DS-1 before crossing the threshold, not after. Preparing it surfaces inconsistencies while they are still cheap to fix, rather than after they become binding disclosures.
Start with a self-assessment. Document every cost classification decision in place: what goes direct, what goes indirect, which pools exist, which allocation bases, the capitalization threshold, how compensation is set. Those decisions map directly onto the DS-1 sections.
In our experience reviewing contractor disclosures, the written accounting policies already maintained for DCAA cover 60 to 70% of DS-1 content. The remaining 30 to 40% typically involves pension and deferred compensation treatment (Part VII), home office allocation methods (Part V), and detailed depreciation methodology (Part VI). Work with a CPA experienced in CAS compliance to complete these sections accurately. An error in the DS-1 is more costly than an error in the books because it affects every CAS-covered contract simultaneously.
Frequently Asked Questions
What is a CAS Disclosure Statement?
The CASB DS-1 is a standardized form describing a contractor’s cost accounting practices: how costs are classified as direct or indirect, how indirect pools are structured, what allocation bases are used, and how specific cost elements (compensation, depreciation, pension) are treated. Once filed, it becomes a binding commitment audited by DCAA for consistency.
At what dollar amount must a contractor file a Disclosure Statement?
When a single CAS-covered contract or subcontract reaches $50 million, or when net CAS-covered awards in the prior period reach that same level [FAR 30.202-1; 48 CFR 9903.202-1]. Congress directed a move of the full coverage threshold at 48 CFR 9903.201-2 to $100 million, once to the Administrator for Federal Procurement Policy and once to the Secretary of Defense for the DFARS. Both deadlines passed in the first half of 2026 with no final rule.
The Disclosure Statement threshold is separate: the CAS Board proposed raising it in its own proposed rule of March 20, 2026, which is a proposal rather than a statutory directive. $50 million is what a cognizant agency administers today. Sealed-bid fixed-price contracts are excluded from the calculation. Most small businesses never reach this question, because contracts with small businesses are exempt from CAS entirely [48 CFR 9903.201-1(b)(3)].
What happens if a contractor changes practices without amending the DS-1?
DCAA classifies the change as a noncompliant cost accounting practice change. The contracting officer calculates the cost impact under FAR 52.230-6. If the change increased costs to the government, the contractor reimburses the difference on every affected CAS-covered contract. Filing the amendment at least 60 days before implementing the change prevents this exposure [FAR 52.230-6(b)].
Do CAS-exempt contractors need to worry about the Disclosure Statement?
It depends on why they are exempt. A small business is outside CAS at any contract value [48 CFR 9903.201-1(b)(3)], and so is firm-fixed-price work won on adequate price competition with no certified cost data submitted. A contractor that is merely below the $50 million filing trigger is in a different position: modified CAS coverage, four standards (CAS 401, 402, 405, 406), still applies to its negotiated contracts over the $2.5 million floor in the regulation [FAR 30.201-4(b)(1); 48 CFR 9903.201-2]. The statute behind that floor now reads $35 million and its implementing rule is overdue. Track cumulative CAS-covered awards annually either way, so the DS-1 trigger does not arrive unprepared.
How long does DCAA take to review a Disclosure Statement?
In practice, 60 to 120 days from submission is a common range, though no regulation prescribes a specific review timeline. DCAA checks for completeness, internal consistency, and compliance with applicable CAS standards. An incomplete or internally inconsistent submission is returned for revision, restarting the clock. Submit a complete, CPA-reviewed DS-1 to avoid revision cycles.
Key Takeaways
- The CAS Disclosure Statement (CASB DS-1) is required when a single CAS-covered contract or cumulative net CAS-covered awards cross the $50 million filing threshold [FAR 30.202-1; 48 CFR 9903.202-1]. Most small GovCon firms never reach this threshold, but those approaching it must prepare before crossing.
- Once filed, the DS-1 is a binding commitment. Every cost accounting practice disclosed must be followed consistently. Changing a practice without giving notice triggers noncompliance findings and a cost impact the CFAO recovers across some or all of your CAS-covered contracts [FAR 30.606(a)(2)]. As a rule the CFAO will not adjust a fixed-price contract upward to give back a decrease [FAR 30.606(c)(3)].
- Check the exemption category before the dollar amount. Contracts with small businesses are outside CAS at any value [48 CFR 9903.201-1(b)(3)], as is firm-fixed-price work won on adequate price competition. A non-exempt contractor over the $2.5 million floor in the regulation carries modified coverage, four standards (CAS 401, 402, 405, 406), and files no DS-1 [48 CFR 9903.201-2; FAR 30.201-4(b)(1)]. The statute behind that floor reads $35 million and its rule is overdue.
- In our experience, written accounting policies already maintained for DCAA cover 60 to 70% of DS-1 content. Prepare the DS-1 before crossing the threshold, not after. Work with a CPA experienced in CAS to complete the remaining sections accurately.
The Disclosure Statement formalizes what your books already do. The risk is not the filing itself but the gap between what the form says and what your system actually does. Run the Compliance Readiness Check to evaluate your current accounting practices against CAS requirements. Approaching the filing threshold or need help preparing a DS-1? Book a discovery call with our CPA-managed team.
