FASAB UPDATE Josh Williams March 18 2021 DISCLAIMER

FASAB UPDATE Josh Williams March 18, 2021

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

Our Response to COVID-19 • Postponing implementation of new standards • Proactively identifying and prioritizing accounting issues • Encouraging technical inquiries • Providing training

Training Offered Free virtual courses using federal agency platforms • FASAB Accounting Concepts and Standards (8 government CPEs) • Federal Accounting for Climate- Related Events (1 government CPE) • Accounting for Internal Use Software (2 government CPEs) • BRAND NEW!! Understanding Government Debt Reporting (3 government CPEs)

Agenda – LEARNING OBJECTIVES 1. 2. 3. 4. 5. 6. 7. 8. What is the GAAP hierarchy for federal reporting entities? How does FASAB translate user needs into accounting standards? What is in the Annual Report and Three-Year Plan? What are the research topics and active projects? What guidance has been proposed? How can you get involved in the standards-setting process? Do you need Help With GAAP? How to stay connected!

GAAP Hierarchy for Federal Reporting Entities Level A GAAP FASAB Interpretations FASAB Standards Level B GAAP FASAB Technical Bulletins Level C GAAP FASAB AAPC Technical Releases Level D GAAP FASAB Staff Implementation Guides Widely recognized and prevalent federal practices Using the highest category GAAP possible is like wearing your: 6

FASAB Translates to User Needs

Annual Report & Three-Year Plan • Statement from the Chair • Three-year plan for the technical agenda • Status of current projects • Potential projects

Research Topics & Active Projects

Research Topics • Climate Impact and Risk Reporting • Intangible Assets • Reexamination of Existing Standards

Climate Impact & Risk Reporting • Research climate-related • Impacts to federal PP&E • Adaption activities to ensure resilience of federal PP&E • For the Board to consider approving a project to update missing accounting and financial reporting guidance

Intangible Assets • A task force is researching the significance of intangible assets throughout federal reporting entities. • For the Board to consider ultimately approving a project to develop accounting and financial reporting guidance • Task force objectives 1. Identify existing intangible assets throughout federal reporting entities 2. Consider the benefits to users of federal financial reports from reporting such intangible assets 3. Consider if preparers can reasonably measure and recognize the identified intangible assets in financial reports

Reexamination of Existing Standards • Research existing SFFASs and other pronouncements • Identify areas where clarification or amendments are needed • Address issues related to • Inconsistencies with current practices • Confusion or difficulties applying requirements • Need for clarifications • Usefulness of disclosures and other required information

Active Projects • Reporting Model • Technical Clarifications • Public- Private Partnerships

Reporting Model Initiative • Budgetary Information • Management’s Discussion and Analysis • Note Disclosures

Reporting Model | Budgetary Information • Improve budgetary information • Usefulness • Understandability • Should we develop disclosures, a new basic statement, or schedules?

Reporting Model | Management’s Discussion & Analysis (MD&A) • January – February 2021 – Staff facilitated MD&A Pilot to develop sample MD&As according to draft MD&A Vision Framework • March 2021 – Users review sample MD&As and provide feedback • April 2021 – Staff presents findings from MD&A pilot and user feedback to Board for recommendations on how to update standards to streamline MD&A

Reporting Model | Note Disclosures • Revisiting Disclosure Concepts • The purpose of note disclosures • Relationship between notes and basic financial statements • Codification of note disclosures concepts in the conceptual framework • Types of information appropriate for note disclosures

Technical Clarification of Existing Standards • Clarifying Debt Cancellation Guidance • A limited scope project to address the need for review and clarification of paragraph 313 of SFFAS 7 • The proposed Interpretation would clarify that standards provide that debt cancellation is a non-exchange activity that should be reported on the SCNP and that paragraph 313 of SFFAS 7 should not be interpreted to require that a particular line item “gain” or “loss” be displayed on the SCNP.

Public - Private Partnerships (P 3 s) • Overall Goal - Making the full costs of P 3 s transparent • Phase I - On April 27, 2016 the Board issued SFFAS 49, Public. Private Partnerships: Disclosure Requirements effective FY 19 • Phase II – Measurement and Recognition • What do we measure, if anything? Our share of the P 3’s net assets or just the underlying asset? What do we do with the P 3 s profits/losses? Are they income or investment returns? How do we treat a P 3 s liabilities? Should P 3 s be simply consolidated? • If you have an interest in joining the P 3 Task Force, send Dom Savini an email at savinid@fasab. gov (FYI – he assigns homework!!)

Proposed Guidance

Accounting and Reporting of Government Land (As of March 2021 pending Congressional and Sponsor review) • Reclassifying G-PP&E land permanent land rights as a non-capitalized asset • Referencing a note on the balance sheet that discloses information about G-PP&E land permanent land rights without an asset dollar amount • Reporting estimated acres of G-PP&E land Stewardship Land using three predominant use sub-categories: • Conservation and preservation land, Operational land, and Commercial use land • Reporting estimated acres of land held for disposal or exchange • Reporting land rights information, whether such rights are permanent or temporary, and amounts paid during the year to maintain such rights

Technical Clarification of Existing Standards • Clarification of Non-federal Non-entity FBWT Classification • The goal is to resolve ambiguity regarding the presentation of nonfederal non-entity FBWT as it relates to SFFAS 1. • An Interpretation exposure draft was released for comment on October 29, 2020. • Respondents generally agreed with the proposed guidance that non-federal non-entity amounts received for unfilled orders that are reflected in FBWT should be reported as an intragovernmental. • The proposed Interpretation is expected to be issued Spring 2021.

Leases Post-Issuance Activities • SFFAS 58 • Deferred effective date • Implementation Guidance for Leases • In due process (ED comments received 2/5/2021) • Omnibus Amendments to Leases-Related Topics • In due process (ED comments received 2/5/2021) • Additional activities

SFFAS 54: Leases– Big Picture Off Balance Sheet On Balance Sheet Pre-SFFAS 54 Operating Leases Short-Term Leases Intragovernmental Leases Easy-to-avoid rules resulting in offbalance-sheet financing Capital Leases Lease Assets / Lease Liabilities

How Can You Get Involved in the Standards-setting Process? Collaboration, Education & Outreach

Outreach Activities Workshops & Trainings GAAP Implementation & Year-Round Education Board Educational Sessions Other Standard-Setters Technical Inquiries Round Tables RE Staff Liaison to Gov Working Group Published Articles Professional Org Presentations Educational Briefings Key RE – Research phase DE – Development Phase Key: FI – Finalization REPhase – Research phase Surveys Developing GAAP * Due Process* FASAB Members & Staff DE Collaboration w/ Other Standard-Setters Task Forces & Working Groups FI Clarification Discussions Annual Update Implementation Group Meetings Public Hearings Promulgated GAAP DE – Development Phase FI – Finalization Phase 27

Do You Need Help with GAAP? Send in a Technical Inquiry If you need help applying GAAP for implementation or existing accounting issues then visit our updated Technical Inquiry Page to learn • How we can help • Who we help • What you can expect from the TI process once you submit the new form at https: //fasab. gov/technical-inquiries-2/