FAR 30.202-7—Determinations.
Plain-English Summary
FAR 30.202-7 explains how the government determines whether a contractor’s CAS Disclosure Statement is both adequate and compliant. It covers two separate reviews: an adequacy determination, which asks whether the statement is current, accurate, complete, and sufficiently describes the contractor’s cost accounting practices, and a compliance determination, which asks whether those disclosed practices comply with the Cost Accounting Standards (CAS) and, where applicable, FAR part 31. The section also assigns roles to the auditor and the CFAO, sets out the required notices to the contractor, and explains when the contracting officer must receive a copy of the adequacy notice. In practice, this section is the gatekeeper for CAS administration: a contractor cannot move from disclosure to compliance review until the disclosure is found adequate, and an inadequate or noncompliant statement must be corrected. It also makes clear that a notice of adequacy is not an approval of the contractor’s practices and does not mean every practice has been disclosed or accepted for estimating, accumulating, or reporting costs.
Key Rules
Auditor reviews disclosure first
The auditor must review the Disclosure Statement to determine whether it is current, accurate, and complete, then report the results to the CFAO. This review is the starting point for the government’s determination process.
CFAO decides adequacy
The CFAO must determine whether the Disclosure Statement adequately describes the contractor’s cost accounting practices. Adequacy is about whether the statement sufficiently describes the practices, not whether the practices are compliant.
Adequacy notice has limits
If the statement is adequate, the CFAO must notify the contractor in writing and provide a copy to the auditor, with a copy to the contracting officer if the proposal triggers submission of a Disclosure Statement. The notice must state that the practices are adequately described, that the CFAO is not aware of additional practices that should be disclosed, that the notice is not a finding that all practices were disclosed, and that disclosure does not make a practice approved for estimating or accumulating/reporting cost data.
Inadequate statements must be corrected
If the Disclosure Statement is inadequate, the CFAO must notify the contractor of the deficiencies and request a revised Disclosure Statement. The process does not move forward on an inadequate submission until the contractor corrects it.
Adequacy notice should be timely
The CFAO should generally issue the adequacy or inadequacy notification within 30 days after receiving the Disclosure Statement. This timing expectation helps keep CAS administration moving and avoids unnecessary delays.
Compliance review follows adequacy
After adequacy is notified, the auditor must conduct a detailed compliance review to determine whether the disclosed practices comply with CAS and, as applicable, FAR part 31, then advise the CFAO of the results. Compliance review is separate from adequacy review and occurs only after adequacy is established.
CFAO acts on noncompliance
The CFAO must make a compliance determination or otherwise act on a report of alleged noncompliance under FAR 30.605(b). The response should include requesting a revised Disclosure Statement that corrects any CAS noncompliance. Noncompliances involving FAR part 31 are handled separately.
Responsibilities
Auditor
Review the Disclosure Statement for currency, accuracy, and completeness; report adequacy review results to the CFAO; after adequacy is notified, perform a detailed compliance review of the disclosed practices against CAS and applicable FAR part 31 requirements; and advise the CFAO of the compliance results.
CFAO
Determine whether the Disclosure Statement adequately describes the contractor’s cost accounting practices; issue written adequacy or inadequacy notice; provide the adequacy notice to the auditor and, when required, the contracting officer; state the required limitations in an adequacy notice; request a revised Disclosure Statement when the submission is inadequate; make a compliance determination or take action on alleged noncompliance under FAR 30.605(b); and request revisions that correct CAS noncompliance.
Contractor
Submit a current, accurate, and complete Disclosure Statement that adequately describes its cost accounting practices; revise and resubmit the statement if the CFAO identifies inadequacies; and correct any CAS noncompliance identified during the compliance process.
Contracting Officer
Receive a copy of the adequacy notice when the proposal triggers submission of a Disclosure Statement, so the contracting file reflects the status of the CAS disclosure process.
Practical Implications
A notice of adequacy is not an approval of the contractor’s cost accounting practices. Contractors should not treat it as permission to use the disclosed practice for proposal estimating or cost accumulation without further analysis.
Adequacy and compliance are different reviews. A statement can be adequately described yet still fail CAS compliance, so contractors should prepare for a second, more detailed review after adequacy is issued.
Incomplete or vague disclosures are a common problem. Contractors should ensure the Disclosure Statement fully describes all relevant practices and is kept current before submission to avoid delays and revision requests.
The 30-day target for adequacy notice is important for schedule management, but it is a general expectation rather than an absolute deadline. Contractors and contracting officers should still monitor progress closely to avoid procurement delays.
FAR part 31 issues are handled separately from CAS noncompliance. Parties should not assume that a CAS-focused correction resolves all cost allowability or accounting issues under part 31.
Official Regulatory Text
(a) Adequacy determination. (1) As prescribed by 48 CFR 9903.202-6 , the auditor shall- (i) Conduct a review of the Disclosure Statement to ascertain whether it is current, accurate, and complete; and (ii) Report the results to the CFAO. (2) The CFAO shall determine if the Disclosure Statement adequately describes the contractor’s cost accounting practices. Also, the CFAO shall- (i) If the Disclosure Statement is adequate, notify the contractor in writing, and provide a copy to the auditor with a copy to the contracting officer if the proposal triggers submission of a Disclosure Statement. The notice of adequacy shall state that- (A) The disclosed practices are adequately described and the CFAO currently is not aware of any additional practices that should be disclosed; (B) The notice is not a determination that all cost accounting practices were disclosed; and (C) The contractor shall not consider a disclosed practice, by virtue of such disclosure, an approved practice for estimating proposals or accumulating and reporting contract and subcontract cost data; or (ii) If the Disclosure Statement is inadequate, notify the contractor of the inadequacies and request a revised Disclosure Statement. (3) Generally, the CFAO should furnish the contractor notification of adequacy or inadequacy within 30 days after the CFAO receives the Disclosure Statement. (b) Compliance determination. (1) After the notification of adequacy, the auditor shall- (i) Conduct a detailed compliance review to ascertain whether or not the disclosed practices comply with CAS and part 31 , as applicable; and (ii) Advise the CFAO of the results. (2) The CFAO shall make a determination of compliance or take action regarding a report of alleged noncompliance in accordance with 30.605 (b). Such action should include requesting a revised Disclosure Statement that corrects the CAS noncompliance. Noncompliances with part 31 shall be processed separately.