FASAB Update CIGIE/GAO Financial Statement Audit Conference

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FASAB UpdateCIGIE/GAO Financial Statement Audit
Conference

• Wendy Payne
• Executive Director
• March 30, 2011

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Disclaimer

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

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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

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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

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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)

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SFFAS 37 - Social Insurance Additional
Requirements _____________________________________
__________________

• Together in one section in managements
  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

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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!

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SFFAS 39 - Subsequent Events

• AICPA Audit standards included in accounting
  standards
• Audit standards not included
• Related parties
• Going concern

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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

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• Current Projects

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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

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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
  http//www.fasab.gov/conceptsfinan.html)
• FASAB Task Force report issued December 22nd

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Federal Reporting ModelCFR 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

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Federal Reporting ModelNext Steps

• Consider implications of user needs study and
  task force recommendations for existing concepts
• Study of component entity reporting model

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Federal Entity

• FASAB established concepts in mid-90s
• 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?

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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

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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

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Emerging Issues

• Internal Use Software
• Leases
• Risk Assumed
• Capacity challenges in a more constrained
  environment

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Contact and Website Information

• General inquiries can be directed to
  fasab_at_fasab.gov
• Phone [phone]
• www.FASAB.gov
• Listserv
• Exposure Drafts
• Active Projects
• I can be reached at paynew_at_fasab.gov or
• 202 512-7357