Managerial Cost Accounting – Federal Reporting Model

Project Objective:

The objective of this project is to evaluate federal managerial cost accounting and reporting requirements. This project is part of the board’s overall initiative to revisit the federal reporting model to determine where improvements might be needed.

Statement of Federal Financial Accounting Standards (SFFAS) 7, Accounting for Revenue and Other Financing Sources, addressed presentation of gross and net cost on the statement of net cost and SFFAS 4, Managerial Cost Accounting Concepts and Standards for the Federal Government, established one concept and five standards on managerial cost accounting. These standards influence not only presentation of information on the statement of net cost but also the development of cost accounting systems internally. To date, the board has not undertaken a comprehensive review of the outcome resulting from these general standards. In late 2008, the Board considered undertaking a project entitled “linking cost to performance.” At the December 2009 board meeting, the board approved staff undertaking a review of managerial cost accounting and reporting standards as part of the existing reporting model project.

HISTORY OF BOARD DELIBERATIONS (reverse chronology)

 
August 25-26, 2010 Board Meeting
As a result of the board’s deliberations in June, staff was directed to contact the Office of Management and Budget (OMB) to inquire about partnering with OMB and / or the CFO Council to promote managerial cost accounting within the federal government. Members indicated that having OMB and/or CFO Council support and leadership for the development and distribution of a best practices guide would be essential to its success. The board did not want to continue to allocate staff resources to the project unless staff was working in a joint effort with OMB and/or the CFO Council.

After staff consultation with OMB, OMB concluded that a joint effort was not necessary. Instead, the CFO Council would develop any desired tools and/or guides in the future.

FASAB’s cost accounting project is now closed. However, since the forum on cost accounting was considered extremely useful by participants, FASAB staff plans to hold another educational session on managerial cost accounting in January or February 2011.

Issue Paper for August 2010 (PDF)

June 23-24, 2010 Board Meeting
At the June 23, 2010, meeting, staff provided a brief overview of the FASAB forum on “Managerial Cost Accounting: Requirements, Uses, and Best Practices” that was held Tuesday, June 15, 2010, in the GAO Auditorium.  In addition to Ms. Ranagan’s session on the requirements of Statement of Federal Financial Accounting Standards 4 (SFFAS 4) and the results of staff’s recent survey, speakers included Steve Porter, Director of the Activity Based Information (ABI) Division at the Patent and Trademark Office (PTO); Doug Webster, former Chief Financial Officer (CFO) at the Department of Labor; and Peggy Sherry, Acting CFO at the Department of Homeland Security. The forum was very well received and attendees suggested that additional sessions be offered in the future.  The Board and staff greatly appreciate the speakers’ willingness to share their time and experiences with the larger federal financial management community.   Presentations are available to download at http://www.fasab.gov/costacc_bestuses.html. Staff plans to organize another educational session on cost accounting to be held in the near future.

The board then discussed the results of the detailed cost accounting surveys and the future direction of the project.  As a result of the board’s deliberations, staff was directed to contact OMB to inquire about partnering with OMB and / or the CFO Council to promote managerial cost accounting within the federal government.  Staff will present an updated project plan to the board after it receives confirmation that OMB and / or the CFO Council will work jointly with FASAB staff.  Until such coordination is confirmed, staff will direct resources to other active projects as assigned (Natural Resources and Financial Accounting Standards Board (FASB) Reporting by Federal Entities).

Issue Paper for June 2010 (PDF)
Complete Responses in their Original Form (PDF)

April 28-29, 2010 Board Meeting
At the February 2010 meeting, the board approved the use of a questionnaire to solicit information on agencies’ successes and challenges in implementing Statement of Federal Financial Accounting Standards 4, Managerial Cost Accounting Concepts and Standards in the Federal Government (SFFAS 4), as amended and supplemented.  However, the board suggested that staff might have more success using a two-step approach to sending out the questionnaire: (1) send a brief one-page questionnaire to agency management to gauge the use of cost accounting within an agency and solicit contact information for the principal people involved in implementing SFFAS 4, and (2) send a more detailed questionnaire to those principal contacts identified in the first step.

At the advice of the board, staff conducted the survey as a two-part process.  Staff plans to provide the results of research, consolidated survey responses, and staff analysis to members for discussion at the June 23, 2010, board meeting.

Issue Paper for April 2010 –   Tab I (PDF)

February 24-25, 2010 Board Meeting
The Board approved the use of a questionnaire to solicit information on agencies’ successes and challenges in implementing Statement of Federal Financial Accounting Standards 4, Managerial Cost Accounting Concepts and Standards in the Federal Government (SFFAS 4), as amended and supplemented.  However, the Board suggested that staff might have more success using a two-step approach to sending out the questionnaire: (1) send a brief one-page questionnaire to agency management to gauge the use of cost accounting within an agency and solicit contact information for the principal people involved in implementing SFFAS 4, and (2) send a more detailed questionnaire to those principal contacts identified in the first step.

Issue Paper for February 2010