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					February 27, 2008




               FASAB Update


                          1
Disclaimer



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




                                     2
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


                                                    3
Technical Agenda Setting
 The Board will review its current slate of
  projects in April.
 Roundtables suggest the following
  Emerging Issues:
     Cost Accounting – Tighter Standards Needed?
     Evaluating Existing Standards
     Deferred Maintenance and Asset Impairment
     Lease Accounting
     Application of the Liability Definition


                                                    4
Active FASAB Projects
   Fiscal Sustainability Reporting
   Social Insurance
   Revisiting Conceptual Framework
   Changes in Assumptions
   Oil and Gas Resources (Omitted)
   Source of GAAP (Omitted)
   Legacy PP&E Estimates
   AAPC – Technical Releases
                                      5
Fiscal Sustainability Reporting
 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



                                             6
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
     Consistent time horizons for all components
      of report
   Summary Display with net present value
    as the “bottom line” – fiscal imbalance
                                                   7
Social Insurance
 Purpose
   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

                                                           8
Social Insurance
   Information that may be presented
       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?


                                                                          9
Revisiting Conceptual
Framework
 Completed Phases:
   Review Objectives
   Elements
 Remaining Phases:
   Financial Reporting Model
   Entity
   Measurement Attributes
 Review and Maintenance…

                                10
Revisiting 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

                                                11
Revisiting Conceptual
Framework - Entity
 Purpose
   Ensure users provided with complete
    financial information
   Guidance on whether certain activities
    should be included with an entity.
 Revisiting SFFAC 2, Entity and
  Display
 Will also lead to standards

                                             12
Revisiting Conceptual
Framework - Measurement
 Purpose
   Critical aspect of financial reporting
   Defining “measurement attributes”
   Guidance for selecting measurement
    attributes
   Enhance consistency in standards




                                             13
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

                                                 14
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
                                          15
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?


                                                            16
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

                                                17
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
                                       18
Recently Issued
 SFFAC 5, Definitions of Elements and
  Basic Recognition Criteria for Accrual-
  Basis Financial Statements
   Defines 5 elements
   Provides basic recognition criteria




                                          19
Convergence with Public Sector
Accounting Standards Setters
 FASAB monitors others’ progress on
  standards - seeking opportunities to
  collaborate
   Members attend meetings
   Staff track projects
 First Joint Meeting of FASAB and
  GASB scheduled for Aug 2008
  (Measurement Attributes)
 IPSASB liaisons maintained.

                                         20
FASAB On-Line Resources
 www.fasab.gov
   All exposure drafts and final
    pronouncements.
   Electronic mailing list for updates.
   Active project pages include deliberative
    material.




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