AAPC Project Related to Conforming Amendments to Existing Technical Releases for Leases

FASAB Contact, Ricky A. Perry, Jr., Senior Analyst, PerryRA@fasab.gov

Request for Comment	Due Date	Word Version of questions for Respondents	Comment Letters	Final Pronouncements
Conforming Amendments to Technical Releases for SFFAS 54, Leases: An Amendment of SFFAS 5, Accounting for Liabilities of the Federal Government and SFFAS 6, Accounting for Property, Plant, and Equipment (PDF)	April 1, 2019	Word Version of Questions for Respondents (Download)	Comment Letters	Implementation Guidance for Leases (PDF)

Project Objective

SFFAS 54, Leases: An Amendment of SFFAS 5, Accounting for Liabilities of the Federal Government and SFFAS 6, Accounting for Property, Plant, and Equipment, revises the financial reporting standards for federal lease accounting. It provides a comprehensive set of lease accounting standards to recognize federal lease activities in the reporting entity’s general purpose federal financial reports and includes appropriate disclosures for both intragovernmental and non-intragovernmental leases. SFFAS 54 was issued on April 17, 2018, and is effective for periods beginning after September 30, 2020.

SFFAS 54 amends the lease accounting standards in SFFAS 5 and 6, which were issued in 1995, and among other things, eliminates the distinction between “capital” and “operating” leases. The issuance of SFFAS 54 required the amendment of several statements and also requires the amendment of Technical Release (TR) 10 and 16. This TR is intended to eliminate references in any TRs that conflict with SFFAS 5 and 6, as amended by SFFAS 54. This proposal does not provide a complete update of the above TRs; the amendments conform the TRs to the provisions of SFFAS 54.

Specifically, this TR provides conforming amendments to the following documents:

• TR 10, Implementation Guidance on Asbestos Cleanup Costs Associated with Facilities and Installed Equipment
• TR 16, Implementation Guidance For Internal Use Software

HISTORY OF ACTIVITY

June 24, 2020

In light of the recently-issued SFFAS 58: Deferral of the Effective Date of SFFAS 54, Leases, and the software licenses working group’s feedback, staff recommended that the Board pause the development of a Technical Bulletin (TB) on non-perpetual software licenses and pause the associated activities related to conforming amendments to existing Technical Releases resulting from SFFAS 54. The Board expressed its intent to begin considering projects to comprehensively address intangible assets and service-based IT arrangements (SBITAs). Such actions would be executed with the intent of forgoing the development and issuance of a TB. The intangibles and SBITAs projects will resume any conforming amendments to existing TRs and be coordinated with the leases project team at a later time.

February 7, 2019

Federal Accounting Standards Advisory Board (FASAB) staff presented a draft TR exposure draft that proposes amendments to TR 10 and 16. This TR would provide amendments to existing TRs to acknowledge the guidance in SFFAS 54.

This proposal would make conforming changes to terminology related to leases in TR 10 and 16. It would also clarify that reporting entities should capitalize the cost of internal use software, including software licenses, when such software meets the criteria for general property, plant, and equipment in accordance with SFFAS 10. In this case, the lease accounting concepts would no longer apply.

During the February Accounting and Auditing Policy Committee (AAPC or “the Committee”) meeting, the Committee approved the TR exposure draft (ED), Conforming Amendments to Technical Releases for SFFAS 54, Leases: An Amendment of SFFAS 5, Accounting for Liabilities of the Federal Government and SFFAS 6, Accounting for Property, Plant, and Equipment, for release. The ED was released on February 14, 2019, with comments requested by April 1, 2019.