OECD Accruals Symposium U. S. Federal Accounting Standards Update Tom Allen FASAB Chairman Disclaimer Views expressed are those of the speaker.
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Transcript OECD Accruals Symposium U. S. Federal Accounting Standards Update Tom Allen FASAB Chairman Disclaimer Views expressed are those of the speaker.
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 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(?)
Cash flow projections as a percent of GDP and taxable payroll
Dependence ratio
Sensitivity analysis
RSI
Issues
Italicized items are currently required by standards.
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 standardssetter 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 AccrualBasis 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.
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