AICPA National Governmental Accounting and Auditing Update

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AICPA National Governmental Accounting and
Auditing Update         

• Addressing the Tough Issues
• Tom Allen
• FASAB Chairman

August 20-21, 2007 September 17-18, 2007
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Disclaimer

• Opinions are my own, not those of the Board.

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If you received the following statement from a
company, would you believe you were entitled to
receive payment?

• "This (program) is more than a retirement
  program." 
• "(It) can also provide benefits if you become
  disabled and support your family when you die." 
• "Your benefits will be based on your lifetime"
  (payments to us).

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Does the company have a liability?

• If so, when?
• When they start receiving payments from you?
• When you are eligible to receive payments even if
  you stop paying them?
• When they start making payments to you?
• When their monthly payment to you isn't paid
  until the following month?
• Would  their obligation change if they say they
  may only be able to pay you 75 of the benefit
  starting some years in the future and you have no
  legal recourse to enforce your claim?

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Results of Due Process Feedback and May Public
Hearing On Social Insurance
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May Public Hearing on Social Insurance

• First Testifier(s)
• Words matter. Recognizing a liability on the
  balance sheet has consequences. Once you call it
  a liability, people will not understand that it
  can be changed.

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May Public Hearing on Social Insurance

• Second testifier(s)
• Agreed that recognition of future Social
  Insurance benefits on the financial statements
  will diminish other liabilities and expenses, but
  asserted that it should be viewed positively
  since it reflects reality.

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Social Insurance

• Resolution of Social Insurance is impacted as
  much or more by political issues than by
  accounting issues

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Social Insurance

• Possible Ways Forward
• Focus on other ways to report information on
  social commitments
• Re-title and reformat statement of position and
  operating statement
• Combination of A and B

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OMB/CFO Council

• Smarter Accountability Project
• To consider the public reporting model

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Comptroller Generals Legislative
Recommendations Improving Transparency in
Accounting and Budgeting
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Table 1 Key Financial Indicators
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Does anyone even care?
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USA Today - May 29, 2007

• Bottom line taxpayers are now on the hook for
  record 59.1 trillion in liabilities, a 2.3
  increase from 2006. That amount is equal to
  516,348 for every US household. By comparison,
  US households owe an average of 112,043 on
  mortgages, car loans, credit cards, and all other
  debt combined.

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Federal Fiscal Tsunami
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Lets Make it Personal

• Would you support changes to social insurance
  programs if it hits your pocketbook?
• Maybe people would care enough to support change
  even if it hit their pocketbook, if we could
  communicate clearly the fiscal challenges the
  country is facing.

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FASAB Project on Fiscal Sustainability

• Under Fiscal Sustainability, what should the
  primary focus be?
• Ability to meet obligations in the future
• Intergenerational equity
• Other?
• What is the best way to communicate fiscal
  sustainability

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WIKI Online Collaboration

• Possible Web Site to gather your thoughts and
  ideas all the way through the process

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Other FASAB Projects

• Elements
• Reporting Gains and Losses from Changing
  Assumptions
• Reporting Entity
• Natural Resources

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FASAB On-Line Resources

• www.fasab.gov
• All exposure drafts and final pronouncements.
• Electronic mailing list for updates including
  newsletter and requests for comment.
• Active project pages including briefing
  materials.