warranted in its proposal. If major changes in the proposal are made, the Board may publish a revised version in the Federal Register for comments. Follow-up visits to Government agencies and contractors may be arranged in connection with particular comments received. Representatives of various interested groups may be invited to meet with the Board. During one fiscal year, the Board published exposure drafts in the Federal Register on the subjects of (a) depreciation of tangible capital assets, a second Federal Register exposure draft; (b) allocation of business unit G&A to cost objectives; (c) accounting for acquisition costs of material; and (d) composition and measurement of pension cost. 6. Evaluation of benefits and costs - An important aspect of the entire development process is the constant consideration of the likely benefits and the likely costs of implementation of Standards, both onetime and recurring. Each change in a proposed Standard during its development may change the expectations both of benefits and of implementation costs. This important analysis is not a step in a sequential process; rather it is a continuing part of the entire development process. In some instances, special studies may be undertaken to acquire additional information about likely costs of implementation.

7. Promulgation After careful consideration of all comments and further discussions held with interested parties, the Board makes appropriate revisions to the proposed Cost Accounting Standard, and the promulgated version is published in the Federal Register along with the Board's

8.

9.

analysis of the major issues identified in the comments received.
The Board's prefatory comments, published with the promulgated
Standard, explain the reasons for any significant changes made and
also the reasons for not making changes which were suggested.
Congressional consideration - Standards promulgated by the Board are
sent to the Congress at the time of final publication in the Federal
Register. The Standards become effective unless the Congress, within
60 days of continuous session, passes a concurrent resolution stating
in substance that it does not favor the proposed Standard. The
Board's promulgations thereafter have the full force and effect of
law.

Continuing review

The Board remains interested in its promulgated Standards. It has provided for annual reports from Government agencies and has held Evaluation Conferences to obtain the views of industry and others on issued Standards and regulations. The Board also tries to keep informed on the manner in which these materials are implemented in actual contract situations. The Board remains ready to publish authoritative interpretations where there are widespread and serious questions of the Board's intent in any of its promulgations. The Board will also modify any of its promulgations if experience shows that modification is desirable.

One Standard in particular has been in process for an extended period

of time. The Standard on Accounting for Independent Research and

:

Development and Bid and Proposal Costs is one which has been on the Board's "In Process" list since 1972. This subject has long been a controversial area. As such it was given high priority as being considered for a Standard and was included on the Board's list in 1972. In 1973 Defense Procurement Circular No. 90 was issued in response to Public Law 91-441. This Public Law dealt specifically with the subject of research and development and bid and proposal. The Board at that time took notice of Defense Procurement Circular No. 90 and directed the staff to cease active work on the Standard until some time should pass and the effectiveness of DPC No. 90 could be evaluated. Subsequent to that time it became

apparent that a Standard would be required in this area and active work on the project was re-instituted in 1975, and continues as an area of research today.

The following projects will also be given attention during the balance

of 1979, 1980 and beyond. Other projects may be added as circumstances warrant. Although these projects are not likely to result in Cost Accounting Standards, they may result in revisions to current Board publications.

1. Revision of the Disclosure Statement - This project considers
the feasibility of revising the Disclosure Statement to (1)
incorporate changes recommended by agencies and contractors,
(2) restate questions so information on continuation sheets

2.

3.

4.

can be more simply prepared, (3) clarify definitions, and

(4) add, delete, and/or revise questions in parts now covered
by Standards.

Review of Part 331 of Board Regulations - The Board initiated
a comprehensive review of its regulations set forth in Title 4
of the Code of Federal Regulations, Part 331. This review
covers all aspects of the Board's administrative and contract
coverage regulations for the implementation of Cost Accounting
Standards.

Standards in Operation - The primary purpose of this review is
to determine whether each Standard functions as it is supposed
to. A related objective is to determine which, if any, Standards
should be amended or revised to improve their effectiveness,
what additional Standards may be needed, and what other actions
can be taken by the Board to enhance the effectiveness of its
promulgations.

Costs and Benefits--The Board has always recognized various
practical difficulties involved when considering the benefits
which can be expected from Standards and the likely costs of
implementation. During 1978 the Board engaged a panel of
four distinguished independent accountants and economists to
consider procedures which might be helpful to the Board in
evaluating costs and benefits of proposed Standards.

Each research project undertaken which is identified as a potential Standard does not always result in a Standard. The Board has always indicated its flexibility in reacting to discoveries made in its research process. We were asked for the identification of projects which were initiated but not completed. This section will list the projects

which were initiated, but subsequently cancelled for reasons stated:
1. Accounting for Credits It was decided that a separate
Standard on credits was not needed at this time. Instead, where
appropriate in individual Standards, reference will be made to credits
relating to that particular cost.

problems with terminations involved allowability and reasonableness rather than allocability. The Board approved dropping the project from the Cost Accounting Standards Board Technical Work Plan and the sending of a letter to the Defense Acquisition Regulatory Council summarizing the results of the Staff's research.

3. Accounting for Labor-related Costs The Board decided, based on research done by the Staff that there are no accounting problems in this area that would justify the development of a Standard at this time.

4. Accounting for Scrap Research in this area revealed that the problems were mostly in the area of scrap identification, reporting and proposing. It was believed that an interpretation to Standard 401, Consistency in Estimating, Accumulation and Reporting Costs would adequately cover this problem area.

Interpretation No. 1 to CAS 401 was issued

in 1976 making a Standard in this area unnecessary.