Asbestos-Related Liabilities

Project Objective:

In March 2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. (FIN) 47, Accounting for Conditional Asset Retirement Obligations (now part of FASB Accounting Standards Codification (ASC) 410-20, Asset Retirement Obligations).  FIN 47 clarifies that the term conditional asset retirement obligation as used in FASB Statement No. 143, Accounting for Asset Retirement Obligations (now part of ASC 410-20), refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN 47 states that the obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and (or) method of settlement.  Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The primary objective of this project is to consider the appropriate recognition and measurement of asbestos-related cleanup costs.

Exposure Draft Comment Letters Final Pronouncement
Exposure Draft, Recognition and Measurement of Asbestos-Related Cleanup Costs (PDF) – DRAFT Comment Letters Technical Bulletin 2006-1, Recognition and Measurement of Asbestos-Related Cleanup Costs (PDF) – FINAL
Exposure Draft, Deferral of the Effective Date of Technical Bulletin 2006-1, Recognition and Measurement of Asbestos-Related Cleanup Costs (PDF) – DRAFT Comment Letters Technical Bulletin 2009-1, Deferral of the Effective Date of Technical Bulletin 2006-1, Recognition and Measurement of Asbestos-Related Cleanup Costs (PDF) – FINAL
Exposure Draft, Implementation Guidance on Asbestos Cleanup Costs Associated with Facilities and Installed Equipment (PDF) – DRAFT Comment Letters Technical Release 10, Implementation Guidance on Asbestos Cleanup Costs Associated with Facilities and Installed Equipment (PDF) – FINAL
Exposure Draft, Extended Deferral of the Effective Date of Technical Bulletin 2006-1, Recognition and Measurement of Asbestos-Related Cleanup Costs (PDF) – DRAFT Comment Letters Technical Bulletin 2011-2, Deferral of the Effective Date of Technical Bulletin 2006-1, Recognition and Measurement of Asbestos-Related Cleanup Costs (PDF) – FINAL

HISTORY OF BOARD DELIBERATIONS (reverse chronology)

June 22, 2011 Board Meeting
On June 14, 2011, FASAB staff hosted a roundtable on implementation of Technical Bulletin 2006-1 (2006-1) to provide an opportunity for the federal community to learn about others’ experiences and methodology for estimating asbestos cleanup costs and discuss best practices and issues surrounding implementation of 2006-1.

At the June 22, 2011, meeting, board members directed staff to develop a technical bulletin that proposes to extend the deferral of 2006-1 by one year. Staff will provide board members with a draft to review via email, and expects the ED to be released for public comment in mid-July if a majority of members do not object.

Issue Paper for June 2011 (PDF)
Minutes from Roundtable (PDF) (PDF)

April 27-28, 2011 Board Meeting
On April 15, 2011, staff received a formal letter from the Department of the Interior (DOI), requesting that the board revisit Technical Bulletin 2006-1, Recognition and Measurement of Asbestos-Related Cleanup Costs, to consider permitting agencies to report the estimated asbestos cleanup liability in required supplementary information (RSI) for two to three years until such time that sufficient survey data has been obtained.

Members had an opportunity to ask representatives from DOI questions about its request at the April 28, 2011, board meeting during a separate discussion related to Technical Bulletin 2011-1, Accounting for Federal Natural Resources Other than Oil and Gas. At that meeting, several of the board members agreed that they would like to have a status of what other agencies were doing before they make a decision on it. Mr. Allen directed staff to come back to the board at the next meeting with a summary of what other agencies are doing and provide a recommendation.

Issue Paper for April 2011 (PDF)

Deliberations prior to April 2011
This project was initiated in May 2006 after two agencies notified FASAB staff that their independent public accountant had requested that the agency reconsider its accounting for nonfriable asbestos-related cleanup costs for fiscal year 2006. The agency contacted FASAB due to the extensive work that would be required to estimate its liability for nonfriable asbestos-related cleanup costs and the implications for other federal agencies. FASAB staff issued Technical Bulletin 2006-1 to provide agencies additional time to develop a reasonable estimate of their asbestos-related cleanup costs. Technical Bulletin 2006-1 was subsequently deferred for two years by Technical Bulletin 2009-1. In June 2010, the Accounting and Auditing Policy Committee (AAPC) issued Technical Release 10, Implementation Guidance on Asbestos Cleanup Costs Associated with Facilities and Installed Equipment.

As of April 2011, the current effective date of Technical Bulletin 2006-1, as amended, is for fiscal periods beginning after September 30, 2011 (i.e., fiscal year 2012). Early implementation is encouraged.

Meeting Minutes Discussion Area
August 26‑27, 2009 (PDF) Discussed comment letters received on Technical Bulletin 2009-1, which proposed to defer Technical Bulletin 2006-1 for two years
July 26-27, 2006 (PDF) Discussed comment letters received on Technical Bulletin 2006-1
May 24-25, 2006 (PDF) Discussed proposed Technical Bulletin 2006-1