Cost Accounting Standards (CAS) must be applied to awards:

Cost Accounting Standards (CAS) are a set of regulations established to ensure consistency and fairness in the allocation of costs to federal contracts. CAS is specifically relevant for government contracting and applies to certain contracts with the federal government above a certain threshold. The applicability of CAS primarily focuses on federal contracts, which is why contracts over $500,000 trigger the requirement for compliance.

The correct response connects directly to the criteria set forth regarding federal contracts and the stipulation that CAS applies to awards above that monetary threshold. This requirement aims to ensure that contractors maintain accurate cost accounting practices, ultimately protecting the federal government and taxpayer interests.

In contrast, contracts without federal funding would not fall under the purview of CAS, as the standards are designed to govern federal expenditures. Similarly, while CAS might seem applicable regardless of the funding source, it specifically targets federal contracts to maintain uniformity in accounting standards across federal awards. Moreover, while A-122 governs cost principles for non-profit organizations, it does not define the applicability of CAS, which is solely focused on federal contracts, making this option less fitting in the context of CAS applicability. Hence, this understanding reinforces the correct choice concerning the specific circumstances under which CAS must be followed.