FASAB Update CIGIE/GAO Financial Statement Audit Conference Wendy Payne Executive Director March 30, 2011

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

Overview ___________________________ Recently Completed Projects –Comprehensive Long-Term Fiscal Projections (SFFAS 36 – Sept 2009) –Social Insurance – Additional Requirements (SFFAS 37 - April 2010) –Natural Resources (SFFAS 38 - April 2010) –Subsequent Events (SFFS 39 – August 2010) –Deferred Maintenance (SFFAS 40 – Late Spring 2011) Current Projects –Measurement –Federal Financial Reporting Model –Federal Entity –Deferred Maintenance –Evaluating Existing Standards Property, plant & equipment Earmarked funds

SFFAS 36 - Comprehensive Long-term Fiscal Projections _______________________________________________________ Basic Information (audited) –the present value of projected receipts and non- interest spending under current policy without change including its relationship to projected GDP –changes in the present value of projected receipts and non-interest spending from the prior year –the assumptions underlying the projections –factors influencing trends –significant changes in the projections from period to period

SFFAS 36 - Comprehensive Long-term Fiscal Projections, cont. _______________________________________________________ Required Supplemental Information –the projected trends in: the relationship between receipts and spending deficits or surpluses Treasury debt held by the public as a share of GDP –possible results using alternative scenarios –the likely impact of delaying corrective action when a fiscal gap exists (“cost of delay”)

SFFAS 37 - Social Insurance – Additional Requirements _______________________________________________________ Together in one section in management’s discussion and analysis -- critical information about costs, assets and liabilities, social insurance commitments, budget flows, and the long-term fiscal projections A new summary section within the statement of social insurance displaying open and closed group measures A new basic financial statement to present the reasons for changes during the reporting period in the open group measure reported on the statement of social insurance

SFFAS 38 - Natural Resources _______________________________________________________ A schedule of estimated federal oil and gas petroleum royalties: –the present value of future federal royalty receipts on proved reserves known to exist as of the reporting date –the amounts to be distributed to others (state governments) Required Supplemental Information for 3 years beginning in FY2012 Deferral has been requested!

SFFAS 39 - Subsequent Events AICPA Audit standards included in accounting standards Audit standards not included: –Related parties –Going concern

SFFAS 40 – Deferred Maintenance and Repairs Amended the definition only Repairs – clarify that deferred repairs are included Capital – clarify that deferred capital improvements are not included Preserves the notion that management determines acceptable condition

Current Projects

Measurement Attributes A statement of concepts to assist the board in establishing standards – Exposure Draft issued 9/13/10 Identifies how ‘initial amounts’ and ‘re-measured amounts’ contribute to meeting reporting objectives Defines a suite of measurement attributes Considering unique information needs in the federal environment, for example: –Value in use –Constant dollar reporting

Federal Reporting Model Concerns exist regarding the benefits of accrual basis financial statements relative to the cost of preparing them –FASAB conducting a user needs study –Federal CFO Council preparing a proposal –Recently developed a report on experiences in other countries with the assistance of OECD and its members (report will be available soon at FASAB Task Force report issued December 22nd

Federal Reporting Model CFR Recommendations Web delivery model Government-wide performance information Net cost and spending by function Statement of spending requirements Intergovernmental financial dependency Improved reconciliation of deficit and operating cost Reclassify the reconciliation of cash and debt changes Re-orient the balance sheet and improve stakeholder link Explain the difference between net liabilities and fiscal gap Establish a web-site for reports and raise awareness in the near- term

Federal Reporting Model Next Steps Consider implications of user needs study and task force recommendations for existing concepts Study of component entity reporting model

Federal Entity FASAB established concepts in mid-90’s Standards now being developed Questions: –What to include in CFR (all entities “established by” the federal government or a subset)? –How to present information (all consolidated, some separately displayed or disclosed)? –Boundary between “related” parties, core and non- core entities?

Deferred Maintenance and Asset Impairment Deferred maintenance viewed as critical management issue Experimental reporting has been underway since 1998 Definitions – revised definition and title (deferred maintenance and repairs) Open Issues: –Measurement techniques –Relevant metrics to report (dollars and/or condition) Task force of facilities managers, accountants, and auditors formed to assist

Evaluating Existing Standards Why –Cost/benefit issues? –Communication challenges –Expectations How –Outreach to preparers, auditors and “users” –Development of options Property, plant and equipment –Implementation issue unresolved –Is replacement cost a better goal? Earmarked funds – assessing implementation and adjusting reporting requirements

Emerging Issues Internal Use Software Leases Risk Assumed Capacity challenges in a more constrained environment…

Contact and Website Information General inquiries can be directed to Phone: –Listserv –Exposure Drafts –Active Projects I can be reached at