Evaluation of Existing Standards

FASAB Contact: Melissa Batchelor, Assistant Director, batchelorm@fasab.gov, 202-512-5976

Request for CommentDue DateWord Version of questions for RespondentsComment LettersFinal Pronouncements
Loss Allowance for Intragovernmental Receivables (PDF)October 1, 2019Word Version of Questions for Respondents (Download)Comment LettersN/A – Currently Under Due Process
Guidance on Recognizing Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5 (PDF)March 11, 2019 (updated due to shutdown)Word Version of Questions for Respondents (Download)Comment Letters Cleanup Cost Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5 & SFFAS 6 (PDF)


Clarification of Paragraphs 40-41 of SFFAS 6, Accounting for Property, Plant, and Equipment, as amendedMay 31, 2018N/AComment LettersClarification of Paragraphs 40-41 of SFFAS 6, Accounting for Property, Plant, and Equipment, as amended (PDF)
Assigning Assets to Component Reporting Entities (PDF)October 13, 2017Word Version of Questions for Respondents (Download) Comment LettersAssigning Assets to Component Reporting Entities (PDF)
Intragovernmental Exchange Transactions (PDF)September 29, 2017Word Version of Questions for Respondents (Download)Comment LettersIntragovernmental Exchange Transactions (PDF)
Amending Inter-entity Cost Provisions (PDF)November 30, 2017Word Version of Questions for Respondents (Download)Comment LettersAmending Inter-entity Cost Provisions (PDF)

Project Objective:

Because of competing demands in the federal financial management community, some believe existing requirements should be evaluated and any unnecessary requirements eliminated. When appropriate, the Board explores opportunities for burden reduction by considering feedback from the community on changes to existing standards and areas where clarification may be needed to existing standards.

The goal is to be responsive to requests for guidance, especially for requests that meet the above purpose and benefits clearly exceed costs. Requests that clarify existing standards and changes to existing standards that reduce taxpayer burden without negative consequences will fulfill objectives. To accomplish these goals, ongoing efforts may include providing additional forums for preparers, auditors, and users to identify requirements they believe are unnecessary (this could be done through an open-ended written request for input or roundtable discussions). All requests should be assessed against the reporting objectives. Requests may be addressed through the appropriate level of GAAP guidance.

Specific areas to be considered initially:

  • Imputed cost – Amending SFFAS 4 to rescind the existing requirement to impute costs that are under reimbursed (inter-entity costs) except for business-type activities.
  • Intragovernmental Exchange Transactions – Guidance to aid in classifying certain transactions between government agencies as transfers (recognized on the statement of changes in net position) or as revenue/expense (recognized on the statement of net cost).
  • Assigning assets – Assets may be owned by one component of a large department but used and/or funded by another component. There is presently no authoritative guidance to aid management in deciding which component should report each asset.
  • Assigning liabilities – Liabilities arising from government-related events may be caused by one component of a large department but paid for by another component. There is presently no authoritative guidance to aid management in deciding which component should report each liability.

HISTORY OF BOARD DELIBERATIONS

August 28-29, 2019

Assigning Liabilities

On August 16, 2019, FASAB issued Interpretation 9, Cleanup Cost Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5 & SFFAS 6.

With the issuance of SFFAS 47, Reporting Entity, SFFAS 55, Amending Inter-entity Cost Provisions, and Technical Bulletin (TB) 2017-2, Assigning Assets to Component Reporting Entities, there was a need for additional guidance to assist in the application of cleanup cost liability standards at the component reporting entity level.

Interpretation 9 provides clarification and guidance regarding cleanup cost liabilities when the component reporting entity responsible for reporting on an asset during its useful life is different from the component reporting entity that will eventually be responsible for settling the liability for the cleanup cost of that asset.

Intragovernmental Allowances for Losses

On August 30, 2019, FASAB released for comment a proposed TB titled Loss Allowance for Intragovernmental Receivables. The proposed TB would clarify that the recognition of losses, provided in paragraphs 41-51 of SFFAS 1, Accounting for Selected Assets and Liabilities, applies to both intragovernmental receivables and receivables from nonfederal entities. The proposed TB would also clarify that an allowance recognized in a reporting entity’s financial statements does not alter the underlying statutory authority to collect the receivable or legal obligation of the other intragovernmental entity to pay.

The exposure draft and the specific questions raised are available on the FASAB website in PDF and Microsoft Word format, respectively (https://www.fasab.gov/documents-for-comment/). While FASAB encourages that all comments be submitted by October 1, 2019, late submissions are also reviewed by the Board.

June 26-27, 2019

Assigning Liabilities

At the June 2019 Board meeting, FASAB unanimously approved Interpretation of Federal Financial Accounting Standards 9, Cleanup Cost Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5 & SFFAS 6. The Interpretation has been submitted to members representing the Department of the Treasury (Treasury), OMB, and GAO for review. If none of these members object within 45 days after its submission, then FASAB will issue the document. This is anticipated to be August 16, 2019.

The Interpretation provides clarification and guidance regarding cleanup cost liabilities when the component reporting entity responsible for reporting on an asset during its useful life is different from the component reporting entity that will eventually be responsible for settling the liability for the cleanup cost of that asset.

Intragovernmental Allowances for Losses

At the June 2019 Board meeting, the Board considered a draft Technical Bulletin (TB), Loss Allowance for Intragovernmental Receivables, to address a request for guidance from Treasury regarding intragovernmental allowances for losses.

The draft TB would provide clarity and resolve the perceived uncertainty related to intragovernmental allowances for losses. This TB would clarify SFFAS 1, Accounting for Selected Assets and Liabilities, by establishing that even though SFFAS 1 identifies the two types of receivables, the absence of explicit guidance distinguishing between the accounting of intragovernmental receivables and receivables from nonfederal entities does not mean the standards only apply to receivables from nonfederal entities. This TB would also clarify that recognition of losses, provided in paragraphs 41-51 of SFFAS 1, apply to both intragovernmental receivables and receivables from nonfederal entities.

The majority of the Board expressed support for the TB. However, one member disagreed with the guidance in the document. After discussing the member’s concerns, the Board confirmed its majority position that there is no differentiation in the standards as it applies to both receivables. Members agreed to certain edits to the draft TB based on the member’s concerns. Staff will add language to be more specific that, although there is an allowance, monies owed can still be collected.

The Board will review an updated TB, Loss Allowance for Intragovernmental Receivables, that incorporates the agreed upon changes for a 15-day review. If a majority of the members do not object, the TB will be exposed to the public for comment.

Issue Paper for June 26-27, 2019 – Tab A and I (PDF)

April 24-25, 2019

Assigning Liabilities

At the April 2019 meeting, the Board discussed responses to the ED, Guidance on Recognizing Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5, and considered the staff analysis and recommendations.

The majority of respondents generally disagreed with the proposal that the sub-component reporting entity responsible for managing litigation would have the information needed to recognize contingent liabilities and should report information in accordance with SFFAS 5, Accounting for Liabilities of the Federal Government. In addition, the agency that requested guidance in this area determined that the impact of not including guidance would be immaterial or minimal. No other contingent liability examples have been provided for consideration.

The Board agreed with staff’s recommendation to remove guidance for contingent liabilities from the proposed interpretation because there does not appear to be a need for guidance in the contingent liability area.

The majority of respondents generally agreed that the SFFAS 5 liability recognition criterion that “[a] future outflow or other sacrifice of resources is probable” should be considered met by the component reporting entity that recognizes the general property, plant, and equipment (PP&E) during its useful life. In that case, the liability should be reported on the balance sheet of the component reporting entity recognizing the general PP&E until the general PP&E and the associated liability are transferred to another entity for cleanup.

The Board agreed with staff’s recommendation to move forward with the proposed Interpretation that addressed the cleanup costs. Staff will provide a draft proposed Interpretation before the June 2019 Board meeting for member comments. Staff will incorporate Board member comments with the goal of providing a pre-ballot proposed Interpretation at the June 2019 meeting.

Intragovernmental Allowances for Losses

At the April 2019 Board meeting, Treasury’s Bureau of the Fiscal Service representatives provided the Board their perspective on the intragovernmental allowances for losses issue. Treasury had previously raised the concern regarding the recognition of losses against intragovernmental receivables among federal entities. Treasury does not believe it is appropriate for an agency to record a loss allowance for intragovernmental receivables, particularly in cases where the balances are required by statute to be repaid.

The Treasury representatives presented an overview of the intragovernmental allowances for losses, focusing on the history and composition of the intragovernmental differences. The presentation also provided detail regarding the Treasury Judgement Fund, one of the largest material allowances.

Treasury also discussed that it issued policy and made system changes to require no allowance for losses of intragovernmental receivables and to ensure consistent treatment government-wide. However, Treasury’s Deputy Chief Financial Officer did not believe there was adequate justification to change the accounting for the Treasury Judgment Fund as suggested by the policy. Treasury believes SFFAS 1, Accounting for Selected Assets and Liabilities, paragraph 44 is not clear on whether it applies to intragovernmental receivables, implying that there could be delineation in the application of doubtful accounts against “public” and “intragovernmental” receivables.

The Board discussed whether the intragovernmental allowances for losses issue needed to be addressed. Certain members believed that the issues were bookkeeping or not within FASAB’s purview. In addition, some believed it could be resolved without FASAB actions, either through the closing package, top level journal vouchers, or simply through judgment. The Board also noted that the allowance approach is not actually a “write-off” of a receivable; it is an adjustment to estimate the amount that is realizable.

However, the Board agreed that there appeared to be uncertainty regarding the language related to intragovernmental allowances for losses in SFFAS 1. The Board will determine how to clarify in the appropriate document according to the generally accepting accounting principles (GAAP) hierarchy.

Issue Paper for April 24-25, 2019 – Tab A (PDF)

February 27, 2019

The Board did not discuss the evaluation of existing standards project during the February 2019 Board meeting.

December 19-20, 2018

Assigning Liabilities

In light of the partial government shutdown, FASAB has extended the comment deadline for the ED Guidance on Recognizing Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5 to March 11, 2019.)

FASAB is seeking comments on the proposed Interpretation, Guidance on Recognizing Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5. The Interpretation would provide clarification for contingent liabilities when one or more sub-component reporting entities within a single component reporting entity are designated to manage litigation and/or pay any resulting liabilities on behalf of one or more other sub-component reporting entities. The Interpretation would also provide guidance regarding cleanup cost liabilities when the component reporting entity responsible for reporting on an asset during its useful life is different from the component reporting entity that will eventually be responsible for environmental remediation upon disposal of that asset.

The ED and the specific questions raised are available on the FASAB website in PDF and Microsoft Word format, respectively (http://www.fasab.gov/documents-for-comment/).

Intragovernmental Allowances

In June 2018, the Department of the Treasury (Treasury) raised a concern regarding the recognition of losses against intragovernmental receivables among federal entities. Treasury does not believe it is appropriate for an agency to record a loss allowance for intragovernmental receivables, particularly in cases where the balances are required by statute to be repaid.

The educational session at the December 2018 meeting provided the Board with a perspective from an agency with significant intragovernmental receivables. A representative from the General Services Administration (GSA) provided a brief overview of GSA’s types of receivables and reporting. No specific decisions were made at the meeting. An additional educational session is planned as the Board considers the topic.

Issue Paper for December 19-20, 2018 – Tab E (PDF)

October 24-25, 2018

Assigning Liabilities

On October 17, 2018, FASAB requested comments on a proposed Interpretation, Guidance on Recognizing Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5. The proposed Interpretation would provide guidance to assist in the application of identified general liability standards and principles at the component reporting entity level. Comments are due by January 17, 2019.

The Interpretation would provide clarification for contingent liabilities when one or more sub-component reporting entities within a single component reporting entity are designated to manage litigation and/or pay any resulting liabilities on behalf of one or more other sub-component reporting entities. The Interpretation would also provide guidance regarding cleanup cost liabilities when the component reporting entity responsible for reporting on an asset during its useful life is different from the component reporting entity that will eventually be responsible for environmental remediation upon disposal of that asset.

The ED and the specific questions raised are available on the FASAB website (http://www.fasab.gov/documents-for-comment/).

August 29-30, 2018

Assigning Liabilities

The Board reviewed a draft of an ED Interpretation titled Guidance on Identified Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5. The document is available in the Board briefing materials at tab A.

The draft ED Interpretation is intended to provide clarification and guidance regarding contingent liabilities and cleanup costs when multiple component reporting entities are involved. The draft ED Interpretation would provide clarification for contingent liabilities where a sub-component reporting entity or different sub-component reporting entities within a single component reporting entity may be designated to manage litigation and/or pay any resulting liabilities on behalf of other sub-component reporting entities. It would also provide guidance regarding cleanup cost liabilities where the component reporting entity responsible for reporting the asset is different from the component reporting entity that will eventually be responsible for environmental remediation upon disposal of that asset.

The Board did not have any open technical issues pertaining to the draft ED Interpretation and agreed with staff’s recommendation to move to a pre-ballot draft after the August meeting. The ED Interpretation is anticipated to be released in October 2018.

Issue Paper for August 29-30, 2018 – Tab A  (PDF)

June 27-28, 2018

Assigning Liabilities

At the June 2018 meeting, the Board considered options for guidance on selected liabilities. Due to recent pronouncements (SFFAS 47, Reporting Entity; SFFAS 55; and Technical Bulletin [TB] 2017-2, Assigning Assets to Component Reporting Entities), there may be a need for additional guidance to assist in the application of the general liability standards and principles. This new guidance could address issues that may not have been considered when the pronouncements were originally written. Specifically, guidance may be needed for clean-up costs and contingent liabilities.

Because guidance regarding the application of the general liability standards has been provided through pronouncements at a lower level of generally accepted accounting principles (GAAP), such as TBs and Technical Releases, they may require updating to ensure conformance and consistency with new pronouncements. Necessary updates will be made to the affected GAAP documents.

Issue Paper for June 27-28, 2018 – Tab A (PDF)

Proposed Staff Implementation Guidance 6.1

At the June 2018 meeting, the Board considered the comment letters on staff’s proposed Staff Implementation Guidance (SIG) 6.1: Clarification of Paragraphs 40-41 of SFFAS 6, Accounting for Property, Plant, and Equipment, as amended. SIG 6.1 answers the question regarding use of both the alternative methods for establishing opening balances (as allowed by 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) and the alternative for estimated net remaining cost per the second sentence in paragraph 41 of SFFAS 6, as amended.

A majority of members did not object to issuing the SIG. FASAB staff issued SIG 6.1 on July 17, 2018.

April 25-26, 2018

Assigning Liabilities

At the April 2018 meeting, the Federal Accounting Standards Advisory Board (FASAB or “the Board”) considered the issue of assigning liabilities and whether additional flexibilities or guidance should be provided in a generally accepted accounting principles (GAAP) document.

This topic of “assigning liabilities” addresses the last issue area presented at the June 2017 meeting that related to the Department of Defense (DoD) request for guidance regarding the need for certain flexibilities.

The Board considered specific examples of liability issues at DoD along with staff’s recommendation for each (see the April 2018 briefing materials at tab A). Much of the Board’s discussion focused on whether there was a general liability principle that could be established to address the issues.

The Board requested staff determine if there was a general liability principle that could be applied. In determining if a general principle can be developed, staff should consider unintended consequences, including effects on other agencies and consistency with current GAAP pronouncements. The Board also directed staff to identify GAAP literature that may need to be updated as a result of the general liability principal.

Proposed Staff Implementation Guidance 6.1

FASAB staff released proposed Staff Implementation Guidance (SIG) 6.1, Clarification of Paragraphs 40-41 of SFFAS 6, Accounting for Property, Plant, and Equipment, as amended. The proposed SIG is intended to assist preparers in the application of FASAB literature. SIG does not establish new requirements.

After the issuance of Statement of Federal Financial Accounting Standards (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, a question regarding use of both the alternative methods for establishing opening balances and the alternative for estimated net remaining cost per the second sentence in paragraph 41 of SFFAS 6, as amended, was raised. The SIG answers the question and provides additional explanation.

FASAB staff requests comments on the proposal by May 31, 2018. The proposed SIG is available at the FASAB website at http://www.fasab.gov/documents-for-comment/.

Issue Paper for April 25-26, 2018 – Tab A (PDF)

February 21-22, 2018

The Board approved Statement of Federal Financial Accounting Standards (SFFAS) 55, Amending Inter-entity Cost Provisions. It was submitted to the sponsors for the 90-day review period.

This Statement will revise SFFAS 4, Managerial Cost Accounting Standards and Concepts, to provide for the continued recognition of significant inter-entity costs by business-type activities and will rescind the following:

  • SFFAS 30, Inter-Entity Cost Implementation: Amending SFFAS 4, Managerial Cost Accounting Standards and Concepts
  • Interpretation 6, Accounting for Imputed Intra-departmental Costs: An Interpretation of SFFAS No. 4

With the rescission of SFFAS 30, paragraphs 110 and 111 of SFFAS 4, as amended, will be restored to their original language prior to the issuance of SFFAS 30. However, the Board amended the standards to require business-type activities to recognize inter-entity costs. Recognition of inter-entity costs by activities that are not business-type activities will not be required with the exception of inter-entity costs for personnel benefits and the Treasury Judgment Fund settlements unless otherwise directed by the Office of Management and Budget (OMB). Notwithstanding the absence of a requirement, non-business-type activities may elect to recognize imputed cost and corresponding imputed financing for other types of inter-entity costs.

The Statement will be effective for periods beginning after September 30, 2018, with earlier implementation permitted.

Issue Paper for February 2018 – Tab D (PDF)

December 20, 2017

Amending Inter-entity Cost Provisions

At the December 2017 meeting, the Board considered responses to the exposure draft (ED) titled Amending Inter-entity Cost Provisions. The Board also reviewed staff’s analysis and an updated proposed Statement. A majority of respondents generally agreed with the proposal to revise Statement of Federal Financial Accounting Standards (SFFAS) 4, Managerial Cost Accounting Standards and Concepts, to provide for recognition of inter-entity costs by business-type activities and to rescind SFFAS 30, Inter-entity Cost Implementation: Amending SFFAS 4, Managerial Cost Accounting Standards and Concepts, and Interpretation 6, Accounting for Imputed Intra-departmental Costs: An Interpretation of SFFAS No. 4.

The Board discussed edits to clarify that entities may elect to recognize imputed cost. Members agreed to move to a pre-ballot draft after the meeting and a ballot draft for the February 2018 meeting.

Issue Paper for December 20, 2017 – Tab A (PDF)


October 25-26, 2017


Intragovernmental Exchange Transactions

At the October 2017 meeting, the Board considered the comment letters and staff’s proposed Technical Bulletin (TB) 2017-1, Intragovernmental Exchange Transactions. The majority of respondents generally agreed with the proposed guidance. Specifically, respondents believed the TB provided guidance to aid in determining whether intragovernmental arrangements were exchange transactions. One respondent neither agreed nor disagreed with the proposal. One respondent disagreed with the proposal.

Respondents provided minor suggestions and editorial comments that were incorporated into the final guidance or addressed in the basis for conclusions. In the proposed Intragovernmental Exchange Transactions TB, staff clarified the following:

  • Recognition and measurement of exchange transactions is excluded from the scope of the TB.
  • Revenue recognition is based on amounts billed by the providing entity to the receiving entity.
  • SFFAS 4, Managerial Cost Accounting Standards and Concepts, as amended, is the basis for determining full cost.

A majority of members did not object to issuing the TB. FASAB staff issued TB 2017-1, Intragovernmental Exchange Transactions, on November 1, 2017.

Assigning Assets to Component Entities

At the October 2017 meeting, the Board considered the comment letters and staff’s proposed TB 2017-2, Assigning Assets to Component Reporting Entities. The majority of respondents generally agreed with the proposed guidance. Specifically, respondents believed the TB provided guidance to address areas not directly covered in existing Statements and clarified that assets may be assigned by a reporting entity to its component reporting entities on a rational and consistent basis. The majority of respondents also agreed that reporting entities should describe the policies used to assign significant assets.

Respondents provided minor suggestions and editorial comments that were incorporated into the final guidance or addressed in the basis for conclusions. In the proposed Assigning Assets to Component Reporting Entities TB, staff clarified the following:

  • In the year of implementation, assets assigned to another component reporting entity should be treated as transfers of assets per SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting.
  • This guidance is permissive and does not require any agency to change accounting practices.

A majority of members did not object to issuing the TB. FASAB staff issued TB 2017-2, Assigning Assets to Component Reporting Entities on November 1, 2017.

August 30-31, 2017

A new project was added to accommodate requests for guidance, especially when benefits clearly exceed costs. When appropriate, the Board explores opportunities for burden reduction by considering feedback from the community on changes and clarification to existing standards and areas.

Amending Inter-entity Cost Provisions

SFFAS 4, Managerial Cost Accounting Standards and Concepts, and Interpretation 6, Accounting for Imputed Intra-departmental Costs: An Interpretation of SFFAS No. 4, require reporting entities to recognize the full costs of services received from other federal reporting entities, even if there is no requirement to reimburse the providing reporting entity for the full cost of such services. Consideration of the implementation challenges faced by the Department of Defense (DoD) and the experiences of other federal reporting entities led FASAB to reconsider certain inter-entity cost provisions for all federal reporting entities.

The Board approved an ED at the August 2017 meeting, and the proposed SFFAS entitled Amending Inter-entity Cost Provisions was released. This Statement would revise SFFAS 4 to provide for recognition of inter-entity costs by business-type activities and rescind the following:

  • SFFAS 30, Inter-entity Cost Implementation: Amending SFFAS 4, Managerial Cost Accounting Standards and Concepts
  • Interpretation 6, Accounting for Imputed Intra-departmental Costs: An Interpretation of SFFAS No. 4

The Board requests comments on the ED by November 30, 2017.

Assigning Assets to Component Reporting Entities

Assets may be owned by one component of a larger reporting entity, such as a department, but used and/or funded by another component of the same entity. Individual standards addressing asset recognition and related reporting do not provide detailed guidance to resolve the question of which component reporting entity should report an asset. This is especially challenging for large, complex departments, such as DoD, that have numerous components and sub-components.

A proposed Technical Bulletin (TB), entitled Assigning Assets to Component Reporting Entities, was released for comments. The TB would provide that assets may be assigned by a reporting entity to its component reporting entities on a rational and consistent basis. For example, an asset would be assigned to the component reporting entity holding legal title, funding the asset, using the asset in its operations, or on another rational and consistent basis. There should be a process in place to ensure all assets within a reporting entity are assigned to a component reporting entity.

Comments are requested by October 13, 2017.

Intragovernmental Exchange Transactions

A proposed TB, entitled Intragovernmental Exchange Transactions, was released for comment on September 5, 2017. Comments were requested by September 29, 2017. The TB would provide guidance for determining when an intragovernmental transaction is an exchange transaction.

Issue Papers for August 30-31, 2017 – Tab B1, B2, and G (PDF)