1

FASAB – Coming of Age

The Federal Accounting The Federal Accounting Standards Advisory BoardStandards Advisory Board

Tom Allen, CPATom Allen, CPAWendy Comes, CPAWendy Comes, CPA

2

Disclaimer

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.

3

Recent Issuances Becoming Effective

• Trust Funds:Trust Funds:– Earmarked FundsEarmarked Funds– Fiduciary FundsFiduciary Funds

• Technical Bulletin - AsbestosTechnical Bulletin - Asbestos

4

Implementation Guidance for Standards in Development

• Stewardship Land & Heritage Stewardship Land & Heritage AssetsAssets

• Inter-Entity CostsInter-Entity Costs

• NASA – Theme AssetsNASA – Theme Assets

• Interpretation – Remanufactured Interpretation – Remanufactured ItemsItems

5

Status of Major Projects

• Conceptual FrameworkConceptual Framework– ObjectivesObjectives– ElementsElements

• Social Insurance and Research Social Insurance and Research on Other Liabilitieson Other Liabilities

• Natural ResourcesNatural Resources

6

Conceptual Framework Phases

• Objectives and qualitative Objectives and qualitative characteristicscharacteristics

• Elements and Recognition Elements and Recognition CriteriaCriteria

• Financial Reporting Model and Financial Reporting Model and Sustainability ReportingSustainability Reporting

• Measurement AttributesMeasurement Attributes• EntityEntity

7

Objectives

• RoundtablesRoundtables

• Strategic Planning & White Strategic Planning & White PaperPaper– Defining the Board’s role and priorities Defining the Board’s role and priorities

in meeting the broad objectives of in meeting the broad objectives of SFFAC 1SFFAC 1

8

Roundtable Meetings - Objectives of Federal Financial Reporting

• Objective 1 – Budgetary Objective 1 – Budgetary IntegrityIntegrity

• Objective 2 – Operating Objective 2 – Operating PerformancePerformance

9

Reporting Objectives - continued

• Objective 3 – StewardshipObjective 3 – Stewardship

• Objective 4 – Systems and Objective 4 – Systems and ControlControl

10

Elements

• An An assetasset is a resource that embodies is a resource that embodies economic benefits or services that economic benefits or services that the federal government can control.the federal government can control.

• A A liabilityliability is a present obligation of is a present obligation of the federal government to provide the federal government to provide assets or services to another entity assets or services to another entity at a determinable date, when a at a determinable date, when a specified event occurs, or on specified event occurs, or on demand.demand.

11

Recognition Criteria

• An item meets the definition of An item meets the definition of an element.an element.

• The item is measurable. The item is measurable. (Quantifiable in monetary (Quantifiable in monetary terms.)terms.)

12

Sustainability

• A major component of the A major component of the federal reporting model under federal reporting model under consideration.consideration.

• Fiscal outlookFiscal outlook

• A task force approved at the A task force approved at the July meeting.July meeting.

13

Measurement Attributes

• Identification of the universe of Identification of the universe of attributes (measurement attributes (measurement techniques versus attributes)techniques versus attributes)

• Determine when it is appropriate Determine when it is appropriate to use each attribute to use each attribute

14

Reporting Entity

• SFFAC 2 – Entity and DisplaySFFAC 2 – Entity and Display– Review the characteristics of entities Review the characteristics of entities

that make them “reporting entities”that make them “reporting entities”– Test the criteria for inclusion in a Test the criteria for inclusion in a

reporting entityreporting entity• ControlControl• Financial interdependenceFinancial interdependence

• Standards implementing Standards implementing conceptsconcepts

• Work beginning next quarterWork beginning next quarter

15

History of Social Insurance

• Deliberated in 70’s and 80’sDeliberated in 70’s and 80’s• Deliberated during SFFAS 5Deliberated during SFFAS 5• SFFAS 17 Compromise:SFFAS 17 Compromise:

– Actuarial NPVsActuarial NPVs– Cash flows in relation to GDPCash flows in relation to GDP– Beneficiary to worker ratiosBeneficiary to worker ratios– Tax needed for actuarial balanceTax needed for actuarial balance

• SFFAS 25 (as amended)SFFAS 25 (as amended)– Made the Statement of Social Insurance basicMade the Statement of Social Insurance basic

16

Social Insurance

• A majority of the Board A majority of the Board tentatively agrees that an tentatively agrees that an obligation exists prior to due obligation exists prior to due and payable (40 quarters work in and payable (40 quarters work in covered employment)covered employment)

17

Social Insurance Issues

• UnderstandabilityUnderstandability– Ability to change lawAbility to change law– Size and volatilitySize and volatility

• Not useful from a budgetary Not useful from a budgetary perspectiveperspective

18

Natural Resources

• Recognizing oil and gas proved Recognizing oil and gas proved reserves at calculated current reserves at calculated current valuevalue

• Results in information on:Results in information on:– Quantity of proved reservesQuantity of proved reserves

– Value of proved reservesValue of proved reserves

– Royalty revenue and depletion of Royalty revenue and depletion of reservesreserves

– Extensive disclosure and RSIExtensive disclosure and RSI

19

Natural Resources, continued

• Applying the oil and gas Applying the oil and gas framework to:framework to:– CoalCoal– TimberTimber– GrazingGrazing– OtherOther

20

LOOKING AHEAD

21

Refining/Completing the Federal Reporting Model

• Inclusion of all assets/liabilities Inclusion of all assets/liabilities and appropriately recording and appropriately recording changes in them.changes in them.

• The reporting entityThe reporting entity

• Reporting beyond the traditional Reporting beyond the traditional balance sheet and operating balance sheet and operating statementstatement

22

Additional Reporting

• Statement of Social InsuranceStatement of Social Insurance

• Sustainability ReportingSustainability Reporting

• Articulation of these Statements Articulation of these Statements to traditional Balance Sheet and to traditional Balance Sheet and Operating StatementsOperating Statements

23

Expanded Outreach to Potential Federal Financial Report Users

• Increase due process feedbackIncrease due process feedback

• FASAB’s educational roleFASAB’s educational role

• User focus meetingsUser focus meetings

24

My Perception of FASAB’s Biggest Challenges

• IndependenceIndependence

• ResourcesResources

25

Initial Assessment

• Competent staffCompetent staff

• Committed BoardCommitted Board

• Generally strong agency Generally strong agency supportsupport

26

FASAB 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 briefing Active project pages including briefing materials.materials.