Pre-award Accounting System Survey: Contractors are subject to a pre-award survey (Standard Form 1408), which includes the following requirements:

• Proper segregation of direct costs from indirect costs.
• Identification and accumulation of direct costs by contract.
• A logical and consistent method for the allocation of indirect costs to intermediate and final cost objectives or contracts.
• Accumulations of costs under general ledger control.
• A labor distribution system that charges direct and indirect labor to the appropriate cost objectives (contracts).
• Interim (at least monthly) determination of costs charged to a contract through routine postings of books of account.
• Exclusion from costs charged to government contracts of amounts which are not allowable in terms of FAR 31, Contract Cost Principles and Procedures, or other contract provisions.
• Identification of costs by contract line item and by units (as if each unit or line item were a separate contract) if required by the proposed contract.
• Segregation of preproduction costs from production costs.
• The provision of specific financial information regarding limitation of cost, limiation of payments, and progress payments.

For more details, see Standard Form 1408.

Cost Accounting Standards: Contractors with contracts between between $7.5M and $50M (modified coverage) must meet the four requirements below. The threshold drops to $650K during the performance of a single "trigger" contract greater than $7.5M. Contracts over $50M (and others that add up to $50M during a preceding accounting period) must meet an additional 15 requirements:

• CAS 401 - Be consistent in methods of estimating, accumulating, and reporting costs.
• CAS 402 - Be consistent in allocating costs incurred for the same purpose.
• CAS 405 - Identify unallowable costs and those mutually agreed to be unallowable, and exclude from billings, claims, or proposals.
• CAS 406 - Follow consistent practices in selection of a cost accounting period and the way expenses and adjustments are accumulated and allocated.
• Follow 15 additional CAS standards as stipulated in the Cost Accounting Standards Board Regulations, Standards, and Rules book.

For more details, see 19 CAS Standards.