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OECD Accruals SymposiumU. S. Federal Accounting Standards

Update

Tom Allen FASAB Chairman

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Disclaimer

Views expressed are those of the speaker. The Board expresses its views in official publications.

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Primary Focus of FASAB Stewardship--Information on whether:

the government’s financial condition improved or deteriorated

programs are sustainable as currently constructed

Operating Performance—Information to evaluate: The service efforts, costs and accomplishments

of government The manner in which these are financed Management of the entity’s assets and

liabilities

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FASAB Projects

Fiscal Sustainability Reporting Social Insurance Revisiting Conceptual Framework Changes in Assumptions Oil and Gas Resources Source of GAAP Legacy PP&E Estimates AAPC – Technical Releases

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Social Insurance Purpose

Provide information on Impact on the government’s financial condition

and position as a result of the programs Whether social insurance programs are

sustainable Likelihood social insurance programs will be able

to provide benefits to those planning on receiving them

Background Social Insurance programs have high

participation among citizens Fiscal challenges

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Social Insurance Information that may be presented

Present value of program revenues and scheduled benefits Causes of the changes in present values during the reporting

period Assumption changes Legislation Future amounts attributable to events during the period(?)

RSI Cash flow projections as a percent of GDP and taxable payroll Dependence ratio Sensitivity analysis

Italicized items are currently required by standards.

Issues What is essential social insurance information? How should information be displayed? When expense and liability should be recognized?

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Changes in Assumptions & Selecting Discount Rates

Purpose Guidance for displaying changes in

assumptions Provides more transparent and useful

information prepared in a more consistent manner.

Background Change in assumptions may exceed all other

costs What Treasury rates should be used when

calculating present values for expense and liability amounts

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Changes in Assumptions & Selecting Discount Rates

Exposure Draft Proposed: Gains and losses from changes in

assumptions displayed on the statement of net cost separate from other costs and exchange revenue

Components of expenses associated with long-term liabilities disclosed in notes

Guidance on what rate to use in present value measurements of long-term liabilities

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Oil and Gas Resources

Purpose - recognizing assets and liabilities for federal oil and gas resources

Background Federal government has extensive oil and

gas resources throughout the country and on the Outer Continental Shelf.

Quantity and value of these assets not provided

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Oil and Gas Resources

Recognizing asset for oil and gas proved reserves at current value

Results in information on: Quantity of proved reserves Value of proved reserves Royalty revenue and depletion of

reserves Extensive disclosure and RSI

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Applicability of FASB GAAP

Purpose Provide FASAB guidance regarding applicability

of FASB GAAP to federal entities

Background 1999 - AICPA recognized FASAB as standards-

setter for federal entities Some entities follow FASB GAAP

Federal government corporations US Postal Service Others

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FASB GAAP

Issues What are user needs What requirements would address user

needs and Treasury reporting needs What are the reporting costs, burdens,

challenges Status

Surveying entities

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Estimating the Cost of Legacy PP&E Purpose:

Reduce the cost of compliance through amendment to standards.

Background: Some LARGE agencies do not have systems to

capitalize cost as PP&E is acquired. The benefits of PP&E accounting are realized primarily

through timely data derived from quality systems. The cost of estimating cost may exceed the benefits of

doing so. Issue: When do you stop permitting estimation

based on less rigorous documentation?

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AAPC Status and Activities AAPC is the source for level D GAAP

(Technical Releases). Representatives from central agencies, IG and

CFO communities, and FASAB. Implementation guidance can be provided

relatively quickly. Recently Completed efforts:

Inter-entity cost implementation Stewardship Land/Heritage Assets

Implementaton Active Effort – General PP&E Q&A

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AAPC – Q&A regarding General PP&E

Concerns raised regarding the level of precision sought during audits and continuing questions regarding permissible treatments.

Questions expected regarding: Group and Composite depreciation

methods Capitalization of indirect cost Spare parts Deployed assets

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Recently Issued

SFFAC 5, Definitions of Elements and Basic Recognition Criteria for Accrual- Basis Financial Statements Defines 5 elements Provides basic recognition criteria

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Convergence with Public Sector Accounting Standards Setters

FASAB monitors others’ progress on standards - seeking opportunities to collaborate Members attend meetings Staff track projects

FASAB/GASB Collaboration on Measurement Attributes Planned

Participation in IPSASB’s Fiscal Sustainability Project Planned

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FASAB On-Line Resources

www.fasab.gov All exposure drafts and final

pronouncements. Electronic mailing list for updates. Active project pages include deliberative

material.