1. U. S. Federal Accounting Standards Update
OECD Accruals Symposium
U. S. Federal Accounting Standards Update
Tom Allen
FASAB Chairman

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

3. 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

4. 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

5. Social Insurance Purpose Background 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

6. Social Insurance Information that may be presented Issues
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?

7. 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
Changes in assumption(s) create differences between the new estimate and the prior estimate. For example, the discount rates may change from 3 percent to 4 percent. The effect of such changes is a gain or a loss that sometimes exceed all other operating costs of the program. These gains and losses may cause extreme volatility in total annual costs.

8. 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
Discount rates for present value measurements of long-term liabilities should be interest rates on marketable Treasury securities of similar maturities to the cash flows of the payments for which the estimate is being made, unless the discount rate is specifically provided in other FASAB standards.

9. 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

10. 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

11. Applicability of FASB GAAP
Purpose
Provide FASAB guidance regarding applicability of FASB GAAP to federal entities
Background
AICPA recognized FASAB as standards-setter for federal entities
Some entities follow FASB GAAP
Federal government corporations
US Postal Service
Others

12. FASB GAAP Issues Status What are user needs
What requirements would address user needs and Treasury reporting needs
What are the reporting costs, burdens, challenges
Status
Surveying entities
Staff plans to determine the user needs of the entities currently reporting under FASB, develop proposed reporting requirements that would incorporate those user needs with the needs of Treasury in compiling the consolidated financial report of the U.S. Government (CFR), and then prepare a draft survey to get feedback on the potential costs, burdens, and hurdles to providing the information necessary to satisfy the proposed reporting requirements. 

13. 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?

14. 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
staff forwarded both technical releases (8 & 9) to the FASAB on January 7, 2008 to start the 45-day review period that will end on February 20, This time frame will allow the Committee to meet the requirement that the 45-day review period include the FASAB meetings on February 13 & 14, 2008.

15. 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

16. Recently Issued
SFFAC 5, Definitions of Elements and Basic Recognition Criteria for Accrual- Basis Financial Statements
Defines 5 elements
Provides basic recognition criteria

17. 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
Board considered options and barriers to convergence and decided that collaboration on particular issues would be better than pure convergence or adoption. For example, IPSASB standards have many options because some countries use cash accounting while others use accrual accounting. There is not much incentive for governments to use a single set of standards like in the private sector.

18. FASAB On-Line Resources
All exposure drafts and final pronouncements.
Electronic mailing list for updates.
Active project pages include deliberative material.