The Federal Accounting Standards Advisory Board

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The Federal AccountingStandards Advisory Board

• From the Grounds, Up, and Beyond
• May 7, 2008
• AGA-DC/GWSCPA Conference

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Disclaimer

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

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Objectives

• The Grounds or conceptual framework for
  developing federal financial reporting standards
• Anticipating standards starting Up, how the
  FASAB considers the cost and benefits of
  standards
• Once standards are Up how the FASAB assists
  with implementing them and the role of the AAPC
• Projects that may lead to standards Beyond the
  existing ones

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The Grounds the FASABs Conceptual Framework

• What is the role of Concepts?
• Guide the Board in developing standards
• Help users understand the information provided by
  financial reporting
• Help preparers and auditors in understanding the
  Boards reasoning
• Are Concepts GAAP?
• Considered other literature
• May be relied on in the absence of GAAP

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The Grounds the FASABs Conceptual Framework

• The FASAB Revisiting Conceptual Framework in
  Phases
• Objectives and Qualitative Characteristics
  (completed)
• Elements and Basic Recognition Criteria
  (completed)
• Financial Reporting Model
• Measurement Attributes
• Entity

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FASABs Near-Term Focus
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The Grounds the FASABs Conceptual Framework

• Primary Focus of FASAB
• Stewardship--Information on whether
• the governments financial condition improved or
  deteriorated
• programs are sustainable as currently constructed
• Operating PerformanceInformation to evaluate
• The service efforts, costs and accomplishments of
  government
• The manner in which these are financed
• Management of the entitys assets and liabilities

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The Grounds the FASABs Conceptual Framework

• Issued SFFAC 5 Definitions of Elements and Basic
  Recognition Criteria for Accrual Basis Financial
  Statements
• Defines 5 Elements
• Discusses Basic Recognition Criteria
• meets definition
• measurable

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The Grounds the FASABs Conceptual Framework

• Financial Reporting Model
• Purpose
• Guidance for selecting methods of communicating
  information
• Stewardship objective requires long-range
  projections other information
• Enhance comparability and consistency
• Revisiting SFFAC 2, Entity and Display
• Explain each financial statement
• Ensure all objectives are adequately addressed by
  the model
• Issued ED Distinguishing Basic Information,
  RSI, and Other Accompanying Information

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The Grounds the FASABs Conceptual Framework

• Measurement Attributes
• Purpose
• Critical aspect of financial reporting
• Defining measurement attributes
• Guidance for selecting measurement attributes
• Enhance consistency in standards

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The Grounds the FASABs Conceptual Framework

• Federal Entity
• Purpose
• Ensure users provided with complete financial
  information
• Guidance on whether certain activities should be
  included with an entity.
• Revisiting SFFAC 2
• Will lead to a STANDARD
• Federal Entity Task Force
• Survey on boundaries of reporting entity

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Up - How the FASAB Considers Cost/Benefit in
Developing Standards

• Agenda setting
• Significance relative to meeting the reporting
  objectives
• Pervasiveness of the issue among federal entities
• Proposal Development
• Consider how the proposal improves financial
  reporting and contributes to the reporting
  objectives
• Staff communications
• Communications with task forces, agencies,
  councils, AICPA, others

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Up - How the FASAB Considers Cost/Benefit in
Developing Standards

• Exposure Drafts
• Constituents asked to comment on proposed
  standards
• Informational presentations at conferences
• Field tests
• Helps to identify implementation issues

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Up How the FASAB Assists with Implementation

• Additional Guidance
• Interpretations
• Clarifies existing standards
• Technical Bulletins
• provide guidance for applying FASAB Statements
  and Interpretations and resolving accounting
  issues not directly addressed by them. The
  following kinds of guidance may be provided in a
  Technical Bulletin
• Guidance to clarify, explain, or elaborate on an
  underlying Statement or Interpretation,
• Guidance to address areas not directly covered by
  existing Statements or Interpretations,
• Interim guidance on problems in applying an
  existing Statement or Interpretation currently
  under study by the FASAB, or
• If applicable, guidance for applying FASB or GASB
  standards to federal activities.

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Up How the FASAB Assists with Implementation

• Staff Implementation Guidance
• Guidance on the appropriate application of FASAB
  literature
• Does not result in a new requirement

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Up How the FASAB Assists with Implementation

• Accounting and Auditing Policy Committee (AAPC)
• What is the AAPC?
• A permanent committee established by the FASAB.
• The AAPCs mission is to assist the federal
  government in improving financial reporting by
  timely identifying, discussing, and recommending
  solutions to accounting issues within the
  framework of existing authoritative literature.

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Up How the FASAB Assists with Implementation

• AAPC
• Is the AAPC guidance authoritative?
• Section III. I (3) of FASABs Rules of Procedure
  authorize AAPC to issue technical releases
  related to existing federal accounting standards.
• Technical releases are intended to provide
  guidance on the specific application of SFFASs,
  Interpretations of SFFASs, and Technical
  Bulletins.
• AAPCs technical releases are in the third
  category of authoritative guidance in the Federal
  GAAP hierarchy as stated in the AICPAs Statement
  on Auditing Standards 91.
• AAPC may not amend existing standards or
  promulgate new standards.

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Up How the FASAB Assists with Implementation

• AAPC
• How can I submit an issue to the AAPC for
  consideration?
• The AAPC encourages the submission of Federal
  accounting issues to its website at
  http//fasab.gov/aapc/issue_sub.html.
• However, the AAPC is not intended to serve as a
  mediator for preparers, program managers, and/or
  auditors.

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Up How the FASAB Assists with Implementation

• AAPC
• What is the process for developing technical
  releases?
• Assigned to AAPC member to develop and to serve
  as task force chair if necessary.
• The result of the task forces work, including
  recommended actions, will be discussed at public
  meetings of the AAPC.
• AAPC will seek input from a variety of sources,
  as needed, to reach a consensus.

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Up - How the FASAB Assists with Implementation

• AAPC
• Recent technical releases
• TR7 Clarification of Standards Relating to the
  National Aeronautics and Space Administrations
  Space Exploration Equipment
• TR8Clarification of Standards Relating to
  Inter-Entity Costs
• TR9 Implementation Guidance for SFFAS 29
  Heritage Assets and Stewardship Land

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Up - How the FASAB Assists with Implementation

• AAPC project in process -- GPPE
• Task Force to address General PPE Issues
• The objective of the task force is to assist in
  developing implementation guidance for federal
  G-PPE as it relates to SFFAS 6, Accounting for
  PPE, SFFAS 23, Eliminating the Category National
  Defense Property Plant, Equipment, and other
  related G-PPE Guidance developed by the FASAB.
• Sub-groups
• Acquisition
• Use
• Disposal
• Records Retention

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Beyond Future Standards

• Fiscal Sustainability Reporting
• Social Insurance
• Changes in Assumptions
• Oil and Gas Resources

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Beyond Future Standards

• Fiscal Sustainability
• Are we able to continue financing the current
  basket of goods and services provided by the
  government indefinitely?
• Purpose
• Provide information to help readers determine
  whether future budgetary resources will likely be
  sufficient to sustain public services and to meet
  obligations as they come due. 
• Enhance understanding of long-term fiscal issues

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Beyond Future Standards

• Fiscal Sustainability Reporting
• Current Proposals
• Long-term projections
• Present values of receipts and outlays for major
  programs, such as Social Security and Medicare,
  and all other
• Present values of receipts and outlays also as a
  percent of present value of GDP
• Narrative discussion and graphs
• Summary Display with net present value as the
  bottom line fiscal imbalance

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Beyond Future Standards

• Social Insurance
• Purpose
• Provide information on
• Impact on the governments 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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Beyond Future Standards

• Social Insurance
• Issues
• What is essential social insurance information?
• How should information be displayed?
• When expense and liability should be recognized?
• Challenges
• Understandability
• Ability to change law
• Size and volatility
• Usefulness

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Beyond Future Standards

• 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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Beyond Future Standards

• Changes in Assumptions Selecting Discount Rates
• Exposure Draft Issued
• 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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Beyond Future Standards

• 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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Beyond Future Standards

• Oil and Gas Resources
• ED Issued--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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How can I stay informed?

• Visit www.fasab.gov

• Sign up for FASAB listserv

• Read bi-monthly FASAB newsletter

• Attend meetings

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FASAB On-Line Resources
www.fasab.gov
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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.