FASAB Update on Recently Issued Standards

FASAB Update on FASAB Update on Recently Issued Recently Issued

StandardsStandards

May 23, 2006May 23, 2006DOI Annual Business ConferenceDOI Annual Business Conference

Melissa Loughan, CPAMelissa Loughan, CPA

FASAB Update on Recently FASAB Update on Recently Issued StandardsIssued Standards

DISCLAIMERDISCLAIMER

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

Federal Accounting Standards Federal Accounting Standards Advisory BoardAdvisory Board

• What is FASAB?What is FASAB?

• What do we do?What do we do?

Focus of today’s discussion…Focus of today’s discussion…

• Standards completed in Standards completed in 20052005– SFFAS 30 SFFAS 30 Inter-Entity Cost Inter-Entity Cost

ImplementationImplementation– SFFAS 29 SFFAS 29 Heritage Assets and Heritage Assets and

Stewardship LandStewardship Land—Issued July 7, —Issued July 7, 2005 2005

– SFFAS 27 SFFAS 27 Identifying and Identifying and Reporting Earmarked FundsReporting Earmarked Funds

• Current ProjectsCurrent Projects

Inter-entity Costs (SFFAS 30)Inter-entity Costs (SFFAS 30)

• Objective: full cost of Objective: full cost of programs programs – Requires full implementation of the Requires full implementation of the

inter-entity cost provision in SFFAS 4inter-entity cost provision in SFFAS 4– Par. 110 rescindedPar. 110 rescinded

• Effective for FY 2009Effective for FY 2009– Earlier implementation encouragedEarlier implementation encouraged

SFFAS 30 ChallengesSFFAS 30 Challenges

• Identifying material costs Identifying material costs Recognition is limited to material items Recognition is limited to material items

that :that :(1)(1)are significant to the receiving are significant to the receiving

entity, entity, (2)(2)form an integral or necessary part form an integral or necessary part

of the receiving entity’s output, of the receiving entity’s output, and and

(3)(3)can be identified or matched to the can be identified or matched to the receiving entity with reasonable receiving entity with reasonable precision.precision.

SFFAS 30 ChallengesSFFAS 30 Challenges

• Identifying “broad and Identifying “broad and general support”general support”

Support services provided by an Support services provided by an entity to all or most other entities entity to all or most other entities should not be recognized unless should not be recognized unless such services form a vital and such services form a vital and integral part of the operations or integral part of the operations or output of the receiving entity.output of the receiving entity.

AAPC GuidanceAAPC Guidance

• Guidance / Technical Release Guidance / Technical Release to be issued by end of yearto be issued by end of year– Implementation Issues Implementation Issues – Broad and General for all entitiesBroad and General for all entities– Discussion of Materiality FactorsDiscussion of Materiality Factors

• Collect individual inter-entity Collect individual inter-entity requests for guidance on requests for guidance on specific cases and forward to specific cases and forward to OMBOMB

Heritage Assets and Heritage Assets and Stewardship Land (SFFAS 29)Stewardship Land (SFFAS 29)

• Objective: Fair presentation of Objective: Fair presentation of assets not recognized on the assets not recognized on the balance sheetbalance sheet– Requires line item on the Balance Sheet but Requires line item on the Balance Sheet but

no dollar amountno dollar amount– Requires disclosure of non-financial Requires disclosure of non-financial

informationinformation

• Phased implementation through Phased implementation through FY 2009FY 2009

Heritage Assets and Heritage Assets and Stewardship Land ProjectStewardship Land Project

• Project ObjectiveProject Objective– Determine categorization of HA & SL information within Determine categorization of HA & SL information within

the traditional modelthe traditional model & & disclosure requirements for the disclosure requirements for the U.S. Government-wide F/S U.S. Government-wide F/S

• Exposure Draft FeedbackExposure Draft Feedback– Need more specific guidance, such as categories and Need more specific guidance, such as categories and

reporting standards, on reporting for HA/SL.reporting standards, on reporting for HA/SL.– Board should consider audit implications, especially the Board should consider audit implications, especially the

additional audit costs. additional audit costs. – Proposed standard would result in less useful information Proposed standard would result in less useful information

presented by agencies. presented by agencies.

• Board ResponseBoard Response – Technical Release from the AAPC will address issuesTechnical Release from the AAPC will address issues– Additional Language added regarding categorization, Additional Language added regarding categorization,

unitization & supporting documentationunitization & supporting documentation– Phased-In Implementation based on a phase-in of Phased-In Implementation based on a phase-in of

required reporting disclosures that are classified as basicrequired reporting disclosures that are classified as basic

Highlights from SFFAS 29Highlights from SFFAS 29 Heritage Assets and Stewardship Land Heritage Assets and Stewardship Land

• Reclassifies HA & SL information as Reclassifies HA & SL information as basicbasic which means which means more audit coveragemore audit coverage– Line on the balance sheet--KEY CHANGELine on the balance sheet--KEY CHANGE– Non-financial information in the notesNon-financial information in the notes

• Condition reporting considered RSICondition reporting considered RSI

• Minor changes to the disclosure Minor changes to the disclosure requirements for HA & SLrequirements for HA & SL

• Disclosure requirements for the U.S. Disclosure requirements for the U.S. Government-wide Financial StatementGovernment-wide Financial Statement

• Incorporates all standards for heritage Incorporates all standards for heritage assets and stewardship land into one assets and stewardship land into one documentdocument


DisclosuresDisclosures

• A concise statement explaining how HA A concise statement explaining how HA & SL relate to the mission of the entity. & SL relate to the mission of the entity.

• A brief description of the entity’s A brief description of the entity’s stewardship policies for HA & SL. stewardship policies for HA & SL.

• A concise description of each major A concise description of each major category of HA & land use for SL. The category of HA & land use for SL. The appropriate level of categorization appropriate level of categorization should be meaningful and determined by should be meaningful and determined by the preparer based on the entity’s the preparer based on the entity’s mission, types of assets, and how it mission, types of assets, and how it manages the assets.manages the assets.



• Heritage assets should be quantified in terms of Heritage assets should be quantified in terms of physical units. The appropriate level of physical units. The appropriate level of aggregation and physical unitsaggregation and physical units[1][1] of measure for of measure for each major category should be meaningful and each major category should be meaningful and determined by the preparer based on the entity’s determined by the preparer based on the entity’s mission, types of heritage assets, and how it mission, types of heritage assets, and how it manages the assets. For each major category manages the assets. For each major category of heritage asset the following should be of heritage asset the following should be reported: see next slide…reported: see next slide…

[1][1] Defining physical units as individual items to Defining physical units as individual items to be counted is neither required nor prohibited. be counted is neither required nor prohibited. Particularly for collection-type heritage assets, it Particularly for collection-type heritage assets, it may be more appropriate to define the physical may be more appropriate to define the physical unit as a collection, or a group of assets located unit as a collection, or a group of assets located at one facility, and then count the number of at one facility, and then count the number of collections or facilities.collections or facilities.



1.) 1.) The number of physical units by major The number of physical units by major category; major categories should be category; major categories should be classified by collection or non-collection classified by collection or non-collection type heritage assets for which the entity type heritage assets for which the entity is the steward as of the end of the is the steward as of the end of the reporting period;reporting period;

2.) The number of physical units by major 2.) The number of physical units by major category that were acquired and the category that were acquired and the number of physical units by major number of physical units by major category that were withdrawn during the category that were withdrawn during the reporting period; andreporting period; and



3.) A description of the major methods of 3.) A description of the major methods of acquisition and withdrawal of heritage acquisition and withdrawal of heritage assets during the reporting period. This assets during the reporting period. This should include disclosure of the number should include disclosure of the number of physical units (by major category) of of physical units (by major category) of transfers of heritage assets between transfers of heritage assets between Federal entities and the number of Federal entities and the number of physical units (by major category) of physical units (by major category) of heritage assets acquired through heritage assets acquired through donation or devise, if material. In donation or devise, if material. In addition, the fair value of heritage assets addition, the fair value of heritage assets acquired through donation or devise acquired through donation or devise during the reporting period should be during the reporting period should be disclosed, if known and material. disclosed, if known and material.


• Disclosure requirements for the U.S. Disclosure requirements for the U.S. Government-wide F/SGovernment-wide F/S– provides for a general discussion provides for a general discussion – direct users to the applicable entities’ financial direct users to the applicable entities’ financial

statements for more detailed information on statements for more detailed information on heritage assets and stewardship landheritage assets and stewardship land

• Incorporates all standards for Incorporates all standards for heritage assets and stewardship heritage assets and stewardship land into one document land into one document – SFFAS 6, par. 57-76 rescindedSFFAS 6, par. 57-76 rescinded– SFFAS 8, Chapter 2 & 4 rescindedSFFAS 8, Chapter 2 & 4 rescinded– SFFAS 14, par. 10-11 rescindedSFFAS 14, par. 10-11 rescinded– SFFAS 16 rescinded SFFAS 16 rescinded

Effective Date—Effective Date—Phased In-ImplementationPhased In-Implementation

• FY 2006FY 2006– How relates to missionHow relates to mission– Description of stewardship policiesDescription of stewardship policies– Condition reporting as RSI Condition reporting as RSI – Reference multi-use heritage assetsReference multi-use heritage assets

• FY 2008FY 2008– Previous year requirementsPrevious year requirements– Description of major categories and ending balances Description of major categories and ending balances

• FY 2009--all disclosure requirementsFY 2009--all disclosure requirements– Previous year requirementsPrevious year requirements– Number of units added and withdrawn by major categoryNumber of units added and withdrawn by major category– Description of major methods of acquisition and Description of major methods of acquisition and

withdrawalswithdrawals

• Exceptions reported as RSI until phased-inExceptions reported as RSI until phased-in

AAPC GuidanceAAPC Guidance

• Guidance / Technical Release Guidance / Technical Release to be issued by end of yearto be issued by end of year– Standardized CategoriesStandardized Categories– Definitions of Units of MeasurementsDefinitions of Units of Measurements

• Two sub-groupsTwo sub-groups– Heritage AssetsHeritage Assets– Stewardship LandStewardship Land

Identifying and Reporting Identifying and Reporting Earmarked FundsEarmarked Funds ( (SFFAS 27)SFFAS 27)

• Objective: Fair presentation of Objective: Fair presentation of restricted use revenues and their restricted use revenues and their impact on the government’s impact on the government’s finances.finances.

• Effective FY 2006Effective FY 2006

• ImpactsImpacts– Balance SheetBalance Sheet– Statement of Changes in Net PositionStatement of Changes in Net Position

• Required Note DisclosuresRequired Note Disclosures

Earmarked Funds: DefinitionEarmarked Funds: Definition

Three required criteria:Three required criteria:1.1. A statute committing the Federal Government to A statute committing the Federal Government to

use specifically identified revenues and other use specifically identified revenues and other financing sources only for designated activities, financing sources only for designated activities,

benefits or purposes;benefits or purposes; 2.2. Explicit authority for the earmarked fund to retain Explicit authority for the earmarked fund to retain

revenues and other financing sources not used in revenues and other financing sources not used in the current period for future use to finance the the current period for future use to finance the designated activities, benefits, or purposes; anddesignated activities, benefits, or purposes; and

3.3. A requirement to account for and report on the A requirement to account for and report on the receipt, use, and retention of the revenues and receipt, use, and retention of the revenues and other financing sources that distinguishes the other financing sources that distinguishes the earmarked fund from the Government’s general earmarked fund from the Government’s general revenues.revenues.

Earmarked Funds: Balance SheetEarmarked Funds: Balance Sheet

• The portion of cumulative results The portion of cumulative results of operations (and unexpended of operations (and unexpended appropriations, if any) attributable appropriations, if any) attributable to earmarked funds should be to earmarked funds should be shown separately on the face of shown separately on the face of the Balance Sheet. the Balance Sheet.

• Display format is not prescribed: Display format is not prescribed: sub-lines, “stacked” approach or sub-lines, “stacked” approach or columns may be used.columns may be used.

Earmarked Funds: Statement of Earmarked Funds: Statement of Changes in Net PositionChanges in Net Position

• Earmarked non-exchange revenue and Earmarked non-exchange revenue and other financing sources, including other financing sources, including appropriations, and net cost of appropriations, and net cost of operations should be shown separately operations should be shown separately on the Statement of Changes in Net on the Statement of Changes in Net Position. The portion of cumulative Position. The portion of cumulative results of operations attributable to results of operations attributable to earmarked funds should also be shown earmarked funds should also be shown separately. separately.

• Display format is not prescribed: sub-Display format is not prescribed: sub-lines, “stacked” approach or columns lines, “stacked” approach or columns may be used.may be used.

Earmarked Funds: Note DisclosureEarmarked Funds: Note Disclosure

• A component entity should disclose all A component entity should disclose all earmarked funds for which it has program earmarked funds for which it has program management responsibility by either a list, management responsibility by either a list, by official title, or a statement indicating by official title, or a statement indicating where the information can be obtained. where the information can be obtained.

• The information required for individual The information required for individual earmarked funds may be presented earmarked funds may be presented separately on the face of the entity's basic separately on the face of the entity's basic financial statements or disclosed in the financial statements or disclosed in the accompanying notes. accompanying notes.

• Information for funds not presented Information for funds not presented individually may be aggregated, but must individually may be aggregated, but must be provided even if the aggregate total is be provided even if the aggregate total is immaterial. immaterial.


Required narrative disclose for each individually Required narrative disclose for each individually reported earmarked fund, or portion thereof, for reported earmarked fund, or portion thereof, for which a component entity has program which a component entity has program management responsibility:management responsibility:

1.1. A description of each fund's purpose, how the A description of each fund's purpose, how the entity accounts for and reports the fund, and its entity accounts for and reports the fund, and its authority to use those revenues and other authority to use those revenues and other financing sources.financing sources.

2.2. The sources of revenue or other financing for the The sources of revenue or other financing for the period and an explanation of the extent to which period and an explanation of the extent to which they are inflows of resources to the Government they are inflows of resources to the Government or the result of intragovernmental flows.or the result of intragovernmental flows.

3. Any change in legislation during or subsequent to 3. Any change in legislation during or subsequent to the reporting period and before the issuance of the reporting period and before the issuance of the financial statements that significantly the financial statements that significantly changes the purpose of the fund or that redirects changes the purpose of the fund or that redirects a material portion of the accumulated balance. a material portion of the accumulated balance.


The following information should be disclosed for The following information should be disclosed for individual earmarked funds:individual earmarked funds:

1.1. Condensed information about assets and Condensed information about assets and liabilities showing investments in Treasury liabilities showing investments in Treasury securities, other assets, liabilities due and securities, other assets, liabilities due and payable, other liabilities, cumulative results of payable, other liabilities, cumulative results of operations and net position. operations and net position.

2. 2. Condensed information on gross cost, Condensed information on gross cost, exchange revenue, net cost, nonexchange exchange revenue, net cost, nonexchange revenues and other financing sources, and revenues and other financing sources, and change in net position.change in net position.

3. 3. The total cumulative results of operations The total cumulative results of operations shown in the note disclosure should agree shown in the note disclosure should agree with the cumulative results of operations for with the cumulative results of operations for earmarked funds shown on the face of the earmarked funds shown on the face of the component entity’s basic financial statements.component entity’s basic financial statements.

Earmarked Funds: Note on Earmarked Funds: Note on InvestmentsInvestments

Investments in Treasury securities for earmarked funds Investments in Treasury securities for earmarked funds should be accompanied by a note that explains the should be accompanied by a note that explains the following issues:following issues:

The U.S. Treasury does not set aside assets to pay future The U.S. Treasury does not set aside assets to pay future expenditures associated with earmarked funds. Instead, the expenditures associated with earmarked funds. Instead, the cash generated from earmarked funds is used by the U.S. cash generated from earmarked funds is used by the U.S. Treasury for general Government purposes.Treasury for general Government purposes.

Treasury securities are issued to the earmarked fund as Treasury securities are issued to the earmarked fund as evidence of earmarked receipts and provide the fund with the evidence of earmarked receipts and provide the fund with the authority to draw upon the U.S. Treasury for future authority to draw upon the U.S. Treasury for future authorized expenditures (although for some funds, this is authorized expenditures (although for some funds, this is subject to future appropriation).subject to future appropriation).

Treasury securities held by an earmarked fund are an asset Treasury securities held by an earmarked fund are an asset of the fund and a liability of the U.S. Treasury, so they are of the fund and a liability of the U.S. Treasury, so they are eliminated in consolidation for the U.S. Government-wide eliminated in consolidation for the U.S. Government-wide financial statements. financial statements.

When the earmarked fund redeems its Treasury securities to When the earmarked fund redeems its Treasury securities to make expenditures, the U.S. Treasury will finance those make expenditures, the U.S. Treasury will finance those expenditures in the same manner that it finances all other expenditures in the same manner that it finances all other expenditures. expenditures.

Current ProjectsCurrent Projects

• Fiduciary ActivitiesFiduciary Activities• CFR – DisclosuresCFR – Disclosures• Conceptual FrameworkConceptual Framework

– ObjectivesObjectives– ElementsElements– The Financial Report (to begin this year)The Financial Report (to begin this year)– Entity Issues (to begin this year)Entity Issues (to begin this year)

• Social Insurance and LiabilitiesSocial Insurance and Liabilities• Natural ResourcesNatural Resources

FASAB On-Line ResourcesFASAB On-Line Resources

• www.fasab.govwww.fasab.gov– All exposure drafts and final All exposure drafts and final

pronouncements.pronouncements.– Electronic mailing list for updates Electronic mailing list for updates

including newsletter and requests for including newsletter and requests for comment.comment.

– Active project pages including Active project pages including briefing materials.briefing materials.

FASAB Contact InformationFASAB Contact Information

• SFFAS 29 and 30 Point of Contact:SFFAS 29 and 30 Point of Contact:– Melissa LoughanMelissa Loughan– 202-512-5976202-512-5976– [email protected]@fasab.gov

• SFFAS 27 Point of Contact:SFFAS 27 Point of Contact:– Eileen ParlowEileen Parlow– 202-512-7356202-512-7356– [email protected]@fasab.gov

• AAPC Point of Contact for Task ForcesAAPC Point of Contact for Task Forces– Monica ValentineMonica Valentine– 202-512-7362202-512-7362– [email protected]@fasab.gov

mailto:[email protected]

FASAB Update on Recently Issued Standards

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