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Research into the Application of the Liability Definition
At the January 2006 FASAB meeting, FASAB approved a plan whereby this project will develop principles for classes of liabilities. Recognition and measurement criteria will be developed for the different classes of liabilities - the end result will be a statement of federal financial accounting standards that helps implement the concepts statement on elements.
At the May FASAB meeting, staff provided an update on the project. Classifications will be updated based on input from task force meetings. It was explained that the intent of the project is to allow transactions to be categorized in order to facilitate the application of the liability definition.
The Board struggled with this project at the September FASAB meeting. It seemed to some board members that this project was in conflict with the social insurance project. The Board agreed that there is a continuum of liability categories and bright lines often cannot be drawn. Staff was instructed to attempt to develop obligating events for sub-classes of liabilities (the 4 categories of liabilities are contained in SFFAS 5).
A final recommended standard was approved at the March FASAB meeting. The standard will be issued as SFFAS 31 absent objections from any of the FASAB sponsors.
The Memorandum of Understanding (the agreement that governs the operations of FASAB) was amended on July 24 (the amending language was approved by the Treasury Secretary, the OMB Director, and GAO's Comptroller General) to allow an additional 90 day review period in unusual situations. This additional review period was invoked for the review of the fiduciary activities standard as a result of the recent appointments of Secretary of the Treasury Paulson and OMB Director Portman and the complexity of the issues addressed in the fiduciary activities recommended standard. Consequently, SFFAS 31 will not be issued until October 23 at the earliest and perhaps later.
At the July FASAB meeting, audit issues were raised by the Department of the Interior suggesting that implementation of the recommended standard would impose enormous audit costs for Interior.
At the September FASAB meeting, the Board approved level D staff implementation guidance (questions and answers) that address Interior's concerns. Also, an authoritative letter will be sent to Interior that also responds to Interior's concerns. These actions will allow the sponsors to approve the recommended standard by October 23.
SFFAS 31 was issued on October 24, 2006. At the November FASAB meeting, the Board discussed staff implementation guidance (SIG). Work will continue on the SIG.
The standard will be effective starting in FY 2009.
Implementing SFFAC 4 for the CFR
This project specifies disclosure requirements appropriate for the Consolidated Financial Report of the U.S. Government (CFR). It amends previously issued standards and implements Statement of Federal Financial Accounting Concepts 4, Intended Audience and Qualitative Characteristics for the Consolidated Financial Report of the U.S. Government. Agency level financial accounting standards are not changed - only requirements for the CFR are changed.
An exposure draft entitled Consolidated Financial Report of the United States Government Requirements: Implementing Statement of Federal Financial Accounting Concepts 4 "Intended Audience and Qualitative Characteristics for the Consolidated Financial Report of the United States Government" was issued on October 27, 2005 with comments due by March 1, 2006.
(For purposes of full disclosure, the editor of the FASAB Digest was the project manager for this project until an exposure draft was approved.)
At the March FASAB meeting, the Board considered comments regarding the exposure draft. The Board made no changes to the document. Accordingly, a pre-ballot final standard was prepared for the Board to approve at the May FASAB meeting.
At the May FASAB meeting, the Board approved a final recommended standard (the document needed some minor editing so balloting was done electronically). The standard will be issued in September 2006 as SFFAS 32 absent objections from any of the FASAB sponsors. The standard will be effective starting in FY 2006. (The standard was issued on September 28.)
Reporting the Effect of Actuarial Gains and Losses
This project proposes a standard for displaying actuarial gains and losses as a discrete item on the statement of net cost, and for selecting certain discount rates and valuation dates for present valuations.
A separate display of actuarial gains and losses on the statement of net cost would allow users to see the basic programmatic cost trends separate from the effect of actuarial gains and losses that sometimes exceed other operating costs and may cause extreme volatility in annual costs.
The proposed effective date is FY 2008.
At the September FASAB meeting, the Board discussed a draft exposure draft. It was noted that this project applies to all actuarially determined liabilities and is consistent with the majority view contained in the preliminary views document related to social insurance programs. Revisions were made to the draft exposure draft.
At the November FASAB meeting, the Board discussed a second iteration of a draft exposure draft entitled Reporting the Effect of Changes in Assumptions and Other Requirements for Accounting for Post-Employment and Retirement Benefits in which references to social insurance were eliminated. The draft exposure draft addresses financial statement displays, note disclosures, and discount rates.