FASAB Update Presenters Monica R Valentine Ross Simms

FASAB Update Presenters Monica R. Valentine Ross Simms Federal Accounting Standards Advisory Board

Disclaimer § Views expressed are those of the speakers.

Overview § § § § Recently Completed Risk Assumed Land Leases Reporting Model Budget and Accrual Reconciliation Implementation Guidance for Opening Balances of PP&E

Recently Completed § Opening Balances – for “first-time” adopters (SFFAS 50) § Flexibility afforded § Working on implementation guidance § Insurance Programs (SFFAS 51) § Strengthens definitions, measurement and recognition § Streamlines disclosures § Tax Expenditures (SFFAS 52) § Creates awareness and understanding § Points to more comprehensive information

Risk Assumed Project Two Phases: § Insurance Programs § Risk Assumed Phase II (RAII)

Insurance Programs The issuance of SFFAS 51, Insurance Programs, on January 18, 2017, effectively concluded the first phase of risk assumed. SFFAS 51 updated current standards that are limited to insurance contracts and explicit guarantees (other than loan guarantees). Effective FY 2019.

Risk Assumed II (RAII) Will study significant risk shocks such as 3. 7. 1 Photo by SPRC. org t 9 mis he y: T b age no Eco Im Photo by USAToday to determine accounting standards that provide concise, meaningful, and transparent information regarding the potential impact to the fiscal health of the federal government.

Risk Meets Reporting Objectives § Operating Performance § Risk may be assumed without immediately affecting the budget. Risk may accumulate over time. § Stewardship § Risk should be considered in assessing whether future budgetary resources are likely to be sufficient to sustain public services. 13

RAII Status & Challenges § Status § Two roundtables § USAFacts Report § Challenges § Model for Reporting RA § Balance of Information § Consider Enterprise Risk Management (ERM) Reporting § Unique Risk Definitions § Measure Risks Assumed

Land § Undertaken as a result of SFFAS 50 on Opening Balances. § Land reporting should be: § Consistent § Comparable § Useful § Hope for a proposal this year

How Do We Account for Land Now? – 2 Buckets § SFFAS 6: General PP&E land rights § Capitalize § SFFAS 29: Stewardship land § Note disclosures § No asset dollar amount shown on balance sheet

What is the Board Considering? Goal – Consistency and Accountability § Reclassifying G-PP&E Land § Requiring Disclosures § Key amendments to SFFAS 6 & 29 would include: § clarifying the categorization and reporting of land use, § broad acreage disclosure of acreage held-for-disposal § Rescinding Stewardship Land guidance in Technical Release 9.

Land Project History & Tentative Timeline July 2016 • August 2016 – April 2017 - Staff works with Task Force Further developed nonfinancial (for example, acreage) reporting recommendations May 2017 – August 2017 • Finalize and issue exposure draft December 2017 – April 2018 • Finalize guidance or standards

Stewardship vs. GPP&E Federal Land by Acreage (in Millions) 0 100 200 300 Stewardship 400 G-PP&E 500 600

Proposed Land Use Categories

Leases § FASAB collaborated with GASB to develop standards for governmental organizations. § Lease proposal issued late last year and comments received. § Board is deliberating on comments.

Leases Proposal § Single Model Approach § short-term exception - 24 months § Leases create “right of use” assets (resources) § Leases create liabilities (obligation) § Treatment should help identify the interest cost associated with leases.

Leases Proposal Intragovernmental Exceptions: § Leases between two consolidation entities § (as defined in SFFAS 47) § Expensed by lessee when due and payable § Minimal disclosure requirements

Leases Areas under Deliberation § Clarify the nature of “right to use” § Scope § Weighing benefit vs cost § Need for implementation guidance § Implementation date

Reporting Model § Proposed conceptual guidance

Reporting Model

Reporting Model GAAP ORFNI Meet Reporting Objectives Required by FASAB Voluntary or Administrative Directive Qualitative Characteristics Limitations

Reporting Model § Next Steps § Near term – Improve User Access Streamline User needs Clarity

Reporting Model – Potential Model for the Long Term Topical Format

Reporting Model – Potential for the Long Term Electronic, internet based Access to detail Customization

Budget and Accrual Reconciliation § Goal § Improve the component reporting entity’s budgetary and net cost reconciliation § Support the Government-Wide Accounting (GWA) reconciliation

Budget and Accrual Reconciliation § Board’s proposal § Reconcile net outlays and net cost § Present as a financial statement or as a note disclosure § Include information on noncash outlays § Board deliberating comments received as of April 2017

Implementation Guidance for Opening Balances of PP&E § Developing implementation guidance regarding § SFFAS 50, Establishing Opening Balances for General Property, Plant, and Equipment: Amending Statement of Federal Financial Accounting Standards (SFFAS) 6, SFFAS 10, SFFAS 23, and Rescinding SFFAS 35

Implementation Guidance for Opening Balances of PP&E § Explain alternative valuation methods in greater detail § Describe examples of documentation to support the valuation as outlined in SFFAS 6, Accounting for Property, Plant, and Equipment, as amended

Additional General PP&E Guidance § Issued Technical Release 17, Conforming Amendments to Technical Releases for SFFAS 50, Establishing Opening Balances for General Property, Plant, and Equipment § Amends previously issued TRs to acknowledge the rescission of SFFAS 35 § Clarifies that all standards-level implementation guidance for general PP&E (with the exception of certain provisions applicable to internal use software) now resides in SFFAS 6, as amended