OECD Accruals Symposium

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• OECD Accruals Symposium

U. 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 governments financial condition improved or
  deteriorated
• programs are sustainable as currently constructed
• Operating PerformanceInformation to evaluate
• The service efforts, costs and accomplishments of
  government
• The manner in which these are financed
• Management of the entitys 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 PPE Estimates
• AAPC Technical Releases

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Social Insurance

• Purpose
• Provide information on
• Impact on the governments 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 PPE

• Purpose
• Reduce the cost of compliance through amendment
  to standards.
• Background
• Some LARGE agencies do not have systems to
  capitalize cost as PPE is acquired.
• The benefits of PPE 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 PPE QA

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AAPC QA regarding General PPE

• 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 IPSASBs 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.