Accounting and Reporting of Government Land Project
FASAB Contact: Domenic N. Savini, firstname.lastname@example.org, 202-512-6841
|Request for Comment||Due Date||Word Version|
of questions for
|Comment Letters||Final Pronouncements|
|Accounting and Reporting of Government Land (PDF)||July 30, 2018||Word Version|
of Questions for
|Comment Letters||N/A – Currently Under Due Process|
SFFAS 6 requires that land and land rights acquired for or in connection with other general PP&E are to be capitalized at the cost incurred to bring the assets to a form and condition suitable for use. “Acquired for or in connection with other general PP&E” is defined as land acquired with the intent to construct general PP&E and land acquired in combination with general PP&E, including not only land used as the foundation, but also adjacent land considered to be the general PP&E’s common grounds.
SFFAS 29 defines “stewardship land” as land other than land acquired for or in connection with other general PP&E. It requires disclosures regarding policies for managing land, categories of land, and physical quantity information.
Implementation of the above requirements has resulted in significant differences in accounting treatment for land holdings. Because the land acquired during our Nation’s formation is sometimes used in connection with other general PP&E, it is not generally valued as would be GPP&E land acquired for similar purposes. That is, GPP&E will only include land and land rights with an identifiable cost that was specifically acquired for or in connection with construction of general PP&E. It is important to note that stewardship land is expensed when acquired and quantity information is provided in a note.
Further, debate exists over the most appropriate way to account for and report land. Issues include:
- Reporting on land is incomplete (as noted above, neither the total cost of land nor the total physical quantity of land is consistently reported).
- Whether some information that is currently reported is consistent with reporting objectives and qualitative characteristics.
- Given that cost information for capitalized land remains unchanged, the information may lose relevance over time due to general inflation as well as specific changes in the value of land. Some suggest that all land be valued periodically at re-measured amounts (such as, fair value). Others suggest that non-financial measures (such as acreage) by reported.
- Review whether Stewardship Land and GPP&E Land should follow a consistent accounting and reporting approach.
Specific project objectives include:
- Obtain an understanding of how the predominant use or managerial intent influences the information needs of users and, potentially, the importance of the reporting objectives (for example, identifying the most appropriate reporting objective).
- Identify the measurement attribute(s) and/or non-financial attributes most appropriate for meeting the reporting objectives.
- Assess practical limitations of the selected measurement attributes or non-financial attributes; for examples factors to consider in establishing fair value such as determining the “highest and best use”, what is legally permissible, physically possible, and economically feasible.
- Obtain agency feedback and best practices relevant to assessing the cost-benefit associated with options under consideration.
- Recommend recognition, measurement, and disclosure requirements.
- SFFAS 6: Accounting for Property Plant and Equipment
- SFFAS 29: Heritage Assets and Stewardship Land
HISTORY OF BOARD DELIBERATIONS
April 23, 2020
At the April meeting, members reviewed a revised pre-ballot draft of SFFAS 59, Accounting and Reporting of Government Land. The principal provisions of this proposed Statement involve replacing the requirement to report general property, plant, and equipment (G-PP&E) land and permanent land rights on the balance sheet at historical cost with a requirement to disclose land acres and predominant use classifications for all land including stewardship. The acreage and predominant use classification information initially would be presented as required supplementary information (RSI) for a period of four years (fiscal year [FY] 2021-2024) and transition to note disclosures along with G-PP&E land and permanent land rights de-recognition in FY 2025.
Members unanimously agreed to extend by one year the effective and transitional period dates in light of Coronavirus Disease 2019 (COVID-19). However, some members acknowledged that a longer delay may be warranted given that the COVID-19 delay does not address the technical difficulties identified by Messrs. Soltis and Bell in their most recent dissent, as supported by a Department of Interior (DOI) memorandum dated April 17, 2020. As a result, the Board agreed to change the effective date and RSI transition dates at paragraphs 14 and 15 to reflect the one-year COVID-19 extension. The Statement will not become effective until FY 2022 with a transition to note disclosures beginning in FY 2026.
Messrs. Soltis and Bell highlighted the information in the memorandum, noting that in some cases there may be misunderstandings about what the pre-ballot requirements are and what the effect of those requirements may be. They suggested that the Board meet with DOI to better understand the Department’s concerns. Members then discussed obtaining more feedback from DOI.
Some members indicated that DOI has had sufficient opportunities to provide feedback throughout the due process period and others expressed concern about establishing precedent of obtaining additional feedback at this late stage of a project. Although some Board members believed that it would be beneficial to obtain additional feedback from DOI, they were equally concerned that this would further delay the project. Some Board members were not concerned with establishing a precedent and saw value in obtaining additional feedback from all key significant land-holding agencies. In closing, members agreed to meet with all key land-holding agencies to discuss the requirements in the pre-ballot draft to not only better understand their concerns, but also to also correct any misunderstanding regarding the Board’s proposal.
The Board then discussed paragraph A38 in the basis for conclusions, which details the Board’s reasoning related to the timing of the transition of nonfinancial information from RSI to notes. Additionally, this paragraph includes details of the project the Board has added to its technical agenda to monitor implementation challenges. Members agreed to various editorial changes.
Briefing materials – Tab A
February 26-27, 2020
The Board reviewed a revised draft of the Statement titled Accounting and Reporting of Government Land. The principal provisions of this proposed Statement involve replacing the requirement to report general property, plant, and equipment (G-PP&E) land and permanent land rights on the balance sheet at historical cost with a requirement to disclose land acres and predominant use classifications for all land including stewardship. The acre and predominant use classification information initially would be presented as required supplementary information (RSI) for a period of four years (fiscal year [FY] 2021-2024) and transition to note disclosures along with G-PP&E land and permanent land rights de-recognition in FY 2025.
Staff revised the draft to include changes based on the December 2019 meeting:
- Extended the effective date of the transition of the non-financial information from RSI to note disclosures by one year
- Allowed agencies to implement the Statement early
- Added proposed language to the basis for conclusions to address the concerns of Messrs. Bell and Soltis
At the December 2019 meeting, Messrs. Bell and Soltis expressed concerns regarding the related to the specific costs of preparing and auditing the non-financial information with which to compare the benefit of the non-financial information.
The revised draft proposed allowing early implementation so that early adopters could share their experiences with the Board, allowing for timely identification of challenges as well as best practices that could be used to (1) assess cost/benefit issues and (2) assist other agencies during implementation.
However, members did not agree noting (1) experience at smaller agencies would not reflect the experience of the larger landholding agencies and (2) the resulting lack of comparability. In general, members believed that monitoring the preparation and audit of the non-financial information during the RSI period would suffice, contingent upon Government Accountability Office (GAO) audit guidance.
GAO anticipates developing audit guidance after agencies have initially implemented and developed the non-financial information for RSI. As such, when the methods of developing that information are known, audit guidance for that information can be developed. Information on the cost to audit the information can then be assessed after the audit guidance on the non-financial information is provided and auditors work through the audit process.
The Board expects to pre-ballot a revised Statement subsequent to the February meeting and ballot no later than the April meeting.
Issue Paper for February 26-27, 2020 – Tab F (PDF)
December 17-18, 2019
At the December 2019 meeting, the Board considered the dissent of Messrs. Soltis and Bell on the draft Statement of Federal Financial Accounting Standards (SFFAS) 58 titled Accounting and Reporting of Government Land.
The principal provisions of this proposed Statement involve replacing the requirement to report general property, plant, and equipment (G-PP&E) land on the balance sheet at historical cost with a requirement to disclose estimated acres of land (non-financial information) for both G-PP&E land and stewardship land in three discrete predominant land use sub-categories. Effective in fiscal year (FY) 21, the estimated acre information initially would be presented as required supplementary information (RSI) with an expected transition to note disclosures in FY 24.
Messrs. Soltis and Bell explained their reasons for their dissent. The major concern is that not enough is known about the cost of preparing and auditing the non-financial acre information to ascertain whether the benefit of moving the information from RSI to note disclosures is greater than the cost of doing so. In their opinion, both acres and predominant use classifications have not been previously audited, and the amount of precision needed around them has not been sufficiently established. As such, they believe the Board needs to make a firm commitment, explicitly referenced in the standards, to reassess the costs and benefits of the information before determining a date for the transition from RSI to note disclosures.
Members generally seemed reluctant to remove a specific requirement for transitioning from RSI to note disclosures in the standards because, without a date certain for transition, practitioners may not apply resources toward making the information auditable. However, members were open to extending the transition period, and some members suggested conditioning the transition on a reassessment of the guidance. Messrs. Soltis and Bell appeared open to alternatives that would clearly communicate and ensure that the Board will revisit implementation challenges during the transition period.
Staff will consider the feedback from the Board members and suggest alternatives at the February 2020 meeting for finalizing the Statement.
Issue Paper for December 17-18, 2019 – Tab D (PDF)
October 23-24, 2019
Given Mr. Soltis’ preliminary dissent, the Board did not ballot the draft proposed Statement of Federal Financial Accounting Standards (SFFAS) 58, Accounting and Reporting of Government Land. The principal provisions of this proposed Statement involve replacing the requirement to report general property, plant, and equipment (G-PP&E) land on the balance sheet at historical cost with a requirement to disclose estimated acres of land for G-PP&E land and stewardship land in three discrete predominant land use sub-categories. Effective in FY 2021, the estimated acre information initially would be presented as required supplementary information and transitioned to note disclosures in FY 2024. Additionally, Mr. Bell confirmed that he would be joining in the dissent.
Messrs. Soltis and Bell explained that a primary reason for their dissents is because it is not clearly evident what cost and effort would be needed to bring the nonfinancial information (estimated acres of land) into the financial statements as note disclosures. They also expressed concern with removing the cost of G-PP&E land currently reported in the financial statements. In their opinion, removing land from the balance sheet would not only require separating costs of combined assets, such as dams, but also would diminish accountability over G-PP&E land. Although Messrs. Soltis and Bell acknowledged that changes to the basis for conclusions have improved the communication of the Board’s reasons for the proposed requirements, they do not believe the benefits of the requirements have been demonstrated to outweigh the costs. As an example, they pointed to information on acres of land that is available in other types of reporting, and there should be a consideration of how that information might be best included in the financial statements.
The Board discussed these concerns and the reasons for proceeding with the requirements in the draft Statement. These included assessing the cost of developing amounts and classifications of estimated acres compared with the cost of estimating the historical cost of land. Members expressed concerns that existing financial reporting is incomplete because it does not convey the federal government’s significant ownership of land. The Board also asserted that predominant use land classifications are not a new requirement in financial reporting (for example, SFFAS 29, Heritage Assets and Stewardship Land) or in real property reporting requirements (for example, General Services Administration’s federal real property profile).
The Board briefly discussed the possibility of modifying or excluding the final Statement’s requirement for the nonfinancial data to transition to note disclosures. The Board must resolve several other open questions at future meetings. Some of these issues cannot be addressed until the December 2019 meeting when (1) Mr. Soltis’ final dissent can be discussed and (2) all Board members are expected to be present.
Issue Paper for October 23-24, 2019 – Tab A (PDF)
August 28-29, 2019
Members of the Federal Accounting Standards Advisory Board (FASAB or “the Board”) discussed temporary land rights, the required supplementary information (RSI) transition period and effective date language, and the draft basis for conclusions.
Concerning temporary land rights, members agreed to require prospective capitalization and amortization of such costs for those eligible entities adopting to exclude land and land rights from their opening balances.
In their review of the basis for conclusions, members continued making progress by generally accepting the June changes. The Board also noted additional areas for improvement:
- Staff should state the Board’s conclusion early in the basis for conclusions.
- Staff should clarify that physical unit groupings (such as number of national parks) do not contribute to either the operating performance or stewardship objectives.
- Staff should clarify that the historical cost of land in the financial statements is of limited value.
Lastly, members preferred alternate language concerning the RSI transition and effective date. The alternate language separates the transitional guidance from the disclosure requirements into two distinct paragraphs. That is, the information required by the draft Statement of Federal Financial Accounting Standards (SFFAS) on land is effective for fiscal year 2021 and is expected to transition to basic information in fiscal year 2024 after being reported as RSI for a period of three years. Early adoption will not be permitted.
Members did not identify any remaining technical issues and are expected to ballot the proposed Statement at the October meeting.
Issue Paper for August 28-29, 2019 – Tab B (PDF)
June 26-27, 2019
At the June meeting, members discussed the draft basis for conclusions, required supplementary information (RSI) transition period and effective date language, and temporary land rights (TLRs).
Although the Board agreed that the basis for conclusions improved from its April version, members asked staff to focus not only on the content, but the section’s logical flow and the ability to clearly express Board intent and rationale for each area discussed.
Members generally agreed that, given the definite or fixed useful life of TLRs, they should be capitalized and depreciated/amortized. Members agreed that capitalizing TLRs is consistent with the allocation (that is, period costs) concept in accounting. Accordingly, members requested that staff add a TLR section to the basis for conclusions.
Members disagreed with allowing those entities electing to exclude land and (all) land rights from opening balances to be permitted to expense all future land rights including TLRs. That is, entities adopting the alternative method would need to prospectively capitalize and depreciate/amortize TLRs. Accordingly, members agreed to change the proposed SFFAS 6, Property, Plant, and Equipment, paragraph 40.f.i amendment to reflect the prospective capitalization of TLRs.
Members discussed clarifying the RSI transition period and effective date language by ensuring that the guidance clearly states:
- For general property, plant, and equipment (G-PP&E) land, existing requirements to display balances and disclose information remain in effect until FY 2024, when the RSI information transitions to basic.
- For both G-PP&E land and stewardship land (SL), no balance sheet reference to RSI should be made during the transition period.
- For SL, existing requirements to reference a note on the balance sheet that discloses information without displaying any asset dollar amount should continue until FY 2024, when the RSI information transitions to basic.
The Board did not identify additional technical matters; however, members reserved judgment until they review a final basis for conclusions.
- Staff will incorporate a revised basis for conclusions pursuant to Board deliberations and work with members to help ensure that their concerns are reflected in the forthcoming revisions.
- Staff will address the technical issue raised concerning TLRs.
- Staff will clarify guidance concerning the RSI transition period and effective date.
Issue Paper for June 26-27, 2019 – Tab D (PDF)
April 24-25, 2019
At the April meeting, members discussed the draft basis for conclusions to ensure its sufficiency in communicating the Board’s rationale regarding key matters deliberated. Members focused on three areas: project history, incorporation of the conceptual framework, and summary of outreach efforts.
Members generally agreed to rearticulate and reinforce some of the more important details of what led the Board to certain decisions concerning the land project. Additionally, members agreed to further increase transparency by adding a task force participant list (as used in the exposure draft [ED]) as an appendix to the draft Statement of Federal Financial Accounting Standards (SFFAS).
Incorporation of the Conceptual Framework
Members generally agreed to incorporate Statement of Federal Financing Accounting Concepts (SFFAC) 5, Definitions of Elements and Basic Recognition Criteria for Accrual-Basis Financial Statements, specifically paragraph 9. The Board’s decision concerning land is wholly consistent with FASAB’s conceptual framework. In addition, FASAB can improve transparency with the disclosures.
One member summarized that the vast holdings of land in the federal government cannot adequately be conveyed to the public by trying to value land. This is due to the inherent limitations in valuation attributes and methods and the complexity of keeping said valuations relevant and reliable in a portfolio of over 622 million acres.
Summary of Outreach Efforts
Members clarified the intent of the Statement to better summarize key points made by the additional subject matter experts invited to the October 2018 meeting.
The Board also discussed a technical issue concerning temporary land rights (proposed amendment to SFFAS 6, Accounting for Property, Plant, and Equipment). The proposed amendment addresses entities adopting the guidance in SFFAS 50, Establishing Opening Balances for General Property, Plant, and Equipment: Amending SFFAS 6, 10, and 23, and Rescinding SFFAS 35. The amendment would allow entities opening balances pursuant to SFFAS 50 to expense future acquisitions of temporary land rights. Entities not adopting SFFAS 50 would be required to capitalize and amortize temporary land rights.
The Board asked staff to incorporate a revised basis for conclusions pursuant to Board re-deliberations and address the technical issue raised concerning temporary land rights.
Issue Paper for April 24-25, 2019 – Tab D (PDF)
February 27, 2019
At the February meeting, members discussed the following technical issues:
- Continued capitalization of general property, plant, and equipment (G-PP&E) land and permanent land rights
- Inseparable capitalized land costs
- The implementation timeline
Continued capitalization of G-PP&E land and permanent land rights
Staff proposed various criteria that would need to be met for an entity to either disclose the cost of G-PP&E land and permanent land rights or report that amount on the face of the financial statements. In light of staff’s analysis, members questioned whether any exceptions should be granted to the proposed de-recognition requirement for G-PP&E land and permanent land rights. Some members noted that there was no need for exceptions because any entity could include disclosures of the cost of G-PP&E land and permanent land rights at its discretion without explicit guidance. Other members noted that it would be confusing if some entities reported G-PP&E land and permanent land rights on the face of the financial statements while others did not. The forthcoming Statement would not necessarily have to apply to the entries in an entity’s general ledger, only to its financial statement reporting. That is, if the cost of G-PP&E land and permanent land rights needs to be capitalized for management purposes, it still can be. In conclusion, the Board generally agreed that there would be no exceptions to the de-recognition requirement for G-PP&E land and permanent land rights.
Inseparable capitalized land costs
Staff proposed an exception to the de-recognition requirements for G-PP&E land and permanent land rights that would allow a composite asset approach when the cost of land was not separable from the related building or infrastructure. Staff’s proposal included an exception for both existing and future acquisitions. As with the first issue, the Board did not believe it was necessary to explicitly provide an exception in this circumstance. The Board believes that if the cost of G-PP&E land and permanent land rights is material, additional effort should be made to identify its cost. Staff suggested that in those circumstances where land and permanent land rights could be treated as incidental to the associated capital asset, the Accounting and Auditing Policy Committee (AAPC or “the Committee”) could potentially provide guidance similar to its existing guidance in paragraph 46 of Technical Release (TR) 9, Implementation Guide for Statement of Federal Financial Accounting Standards 29: Heritage Assets and Stewardship Land. This would address land that does not have an identifiable cost or where cost is nominal or insignificant.
The Board generally agreed with having the AAPC provide additional guidance and asked staff to work with agencies and clarify the Board’s position that if the cost of G-PP&E land and permanent land rights is material, additional effort should be made to identify its cost.
Staff proposed two alternatives: (1) a requirements phase-in approach with acreage information beginning as required supplementary information (RSI) and converting to basic note disclosure information and (2) a graduated phase-in approach predicated on the amount of consolidated acreage entity holdings.
The Board believed that the second option would pose significant challenges for preparation of the consolidated financial report of the U.S. Government. The Board also believed that the proposed timeline in the requirements approach did not provide sufficient time for the Board to act should there be greater challenges than expected with auditing the acreage information. The Board generally agreed to a simplified, requirements phase-in approach effective in fiscal year (FY) 2021, followed by a two-year RSI reporting period with acreage information converting to basic and de-recognition of G-PP&E in FY 2024. In addition, transition guidance will not permit early implementation.
- Staff will work with agencies and clarify the Board’s position that if the cost of G-PP&E land and permanent land rights is material, additional effort should be made to identify its cost.
- Staff will incorporate a revised basis for conclusions pursuant to Board deliberations.
Issue Paper for February 27, 2019 – Tab C (PDF)
December 19-20, 2018
Members discussed a summary of the major issues raised during the October 2018 meeting. During the October session, respondents and interested parties gave their feedback on the Accounting and Reporting of Government Land exposure draft (ED). The major proposals in the land ED include reclassifying general property, plant, and equipment (G-PP&E) land as a non-capitalized asset and disclosing the acreage of both stewardship land (SL) and G-PP&E land. Staff provided revised draft standards reflecting the feedback as well as proposed next steps.
Members generally agreed with staff’s proposed changes:
- Deleting the physical unit disclosure requirements
- Deleting the requirement to reference deferred maintenance and repairs presentations in required supplementary information
- Limiting disclosure requirements to primary categories of SL and G-PP&E land
- Simplifying the “estimated acres” reporting requirement by only requiring that beginning and ending balances be provided
- Clarifying that “acres of land held for disposal or exchange” applies only to land conveyed to non-federal entities
- Clarifying the type of information to be disclosed at the government-wide level
Members did not specifically agree that rate-setting agencies should be allowed the option to continue capitalizing G-PP&E land on their balance sheets. The Board noted that historical cost information on land could be provided in notes and, moreover, such cost recoveries are not typically based on or confined to generally accepted accounting principles. However, the Board asked staff to develop language to accommodate issues deemed significant by an entity that could require it to continue capitalizing G-PP&E land.
Apart from clarifying Board discussions and decisions at the meeting, members reserved comment concerning anticipated changes to the basis for conclusions.
- Staff will develop language to accommodate issues deemed significant by an entity that could require it to continue capitalizing G-PP&E land.
- Staff will develop language that existing G-PP&E land should be derecognized only if practicable; that is, the Statement will accommodate agencies that have inseparable capitalized land costs.
- Staff will rework the implementation timeline to ensure that the final Statement (1) requires a specific transition date from RSI to note disclosure, (2) extends the time required for the transition so that the Board has an opportunity to modify guidance should the issues with auditability of the information not be resolved by the transition date, and (3) allows for early implementation.
Issue Paper for December 19-20, 2018 – Tab A (PDF)
October 24-25, 2018
At the October 2018 Board meeting members heard directly from those respondents who accepted the Board’s invitation to clarify comments concerning the Accounting and Reporting of Government Land Exposure Draft as well as opinions of interested parties. Attendees spoke during both days and the Board did not re-deliberate its proposal at this time. A summary of the respondent views and opinion of the interested parties follows:
October 24th – Preparer Clarifications: Panels 1 through 6
The following respondent agencies were represented: Defense, Interior, GSA, Energy, NASA, and USDA/Forest Service.
DoD, Energy, NASA, and Forest Service agreed with reclassifying G-PP&E Land as proposed in the ED. The general belief among these agencies is that (1) geographic information system (GIS) can be readily adopted to comply with the acreage reporting requirements and satisfy most auditor concerns, (2) valuing land is too costly and questionable in light of environmental liabilities, and (3) there will be very little to no financial statement impact to expensing G-PP&E land. Key concerns raised include: (1) comparability of physical units and potential for inconsistent application within agencies, (2) not all agencies have consistent GIS policies throughout their bureaus, and (3) system changes to policies and information technology databases/applications will require additional time and effort to implement.
GSA and Interior disagreed with reclassifying G-PP&E Land as proposed in the ED. The agencies presented the following concerns: (1) G-PP&E land is an asset which should remain on the balance sheet in order not to distort financial reporting, (2) the Board’s proposal veers away from its conceptual framework while over-emphasizing one asset category over all the others, (3) separating a land value from a building value is complicated, (4) because reporting G-PP&E acres is already being done in the FRPP as well as in performance reports, the ED leads to duplicative reporting, (5) because there are no internal controls over systems that maintain acreage information, audit precision and related burdens are problematic, (6) there will be significant financial statement impact to expensing G-PP&E in the statement of net cost, (7) physical units is not meaningful and already exists in other reports, (8) the ED leads to many implementation issues that will require FASAB to spend time developing additional guidance such as Technical Bulletins, (9) some rate-setting entities use and require historical cost information concerning land, and (10) some agency GIS personnel have existing backlog taking precedent such as land disputes which will not allow them to satisfactorily support audit initiatives.
October 25th – Subject Matter Experts: Panels 7 through 12
The following subject matter experts provided their views and perspectives to the proposed ED: GAO (Elizabeth Erdmann and Richard Johnson; Natural Resources and Environment), Mr. Daniel Murrin (Retired EY Partner), EY (Ms. Kimberly Hancy), Cotton & Company (Mr. Alan Rosenthal), AGA/FMSB (Ms. Jean Dalton), Mr. Hal Steinberg (former FASAB Board member), and Bureau of Land Management (Mr. Robert Jolley). Please note that Ms. Dalton presented on behalf of AGA’s Respondent Letter #13 and Mr. Steinberg clarified his written comments contained in Respondent Letter #2. A summary of the major themes raised by the interested parties follows:
Cost versus benefit (Preparer Burden) –
- The cost of aggregating land information given the de-centralized manner in which such information is stored may be cost prohibitive.
- Data collection should be commensurate with user needs.
- SFFAS 50 provides sufficient flexibilities with the use of deemed cost to allow certain entities under specific conditions to forgo reporting a cost for G-PP&E land.
- The desire to achieve a clean opinion for the Department of Defense (DoD) and the resulting inconsistencies created by SFFAS 50 do not provide a compelling need to adopt the proposed practice and extending it government-wide.
- Use of the Public Land Statistics report for financial accountability purposes would require an extensive and potentially cost-prohibitive investment of additional resources.
Financial Management –
- This proposal runs contrary to the intent of legislation such as the CFO Act and the Federal Financial Management Improvement Act which were enacted to bring about improvements in the agencies’ financial management.
- Excluding Land from the Balance Sheet understates the financial position of the government.
- This proposal sends the wrong signal to agencies encouraging them to seek special dispensation from FASAB as opposed to maintaining sound financial management practices.
- The scale and level of detail for data published in the Public Land Statistics report is designed to meet the overall public need and does not provide sufficient information for direct financial determinations.
- Land is an asset that benefits future periods and performance and as such, should remain on the balance sheet.
Proposed Disclosures –
- Congress seeks information for a variety of purposes.
- Physical unit information to include acres is not very informative to users without context.
- Requiring performance information and arraying it against cost information to promote assessment of effectiveness and efficiency seems more appropriate and valuable to users.
Materiality and Presentation –
- Agencies should be allowed enough flexibility to tell their story and be creative.
- Materiality is a key concern and without clearer guidance in this regard, acreage or other non-financial information may be more suitable for Required Supplementary Information (RSI).
- Consideration should be given to presentation formats other than disclosures and the use of agreed upon procedures to help increase reliability.
Transition Period and Effective Date –
- Given actual experiences, the preparer transition period should not be underestimated and it can take multiple years or cycles for auditors to gain comfort.
- BLM is working with and coordinating with the United States Geological Survey PAD-US initiative. This includes reviewing data definitions and reconciling differences.
- Agency overlaps in reported land area data for the Surface Management Area data layer are an issue that BLM is working to reconcile for more accurate representation of the SMA.
At the conclusion of the last panel’s session, the Board requested staff to:
- Analyze G-PP&E land values in relation to G-PP&E building values.
- Reconsider the DM&R disclosure requirement as it already exists in SFFAS 42.
- Explore the correlation of data reliability between the U.S. Geological Survey and BLM systems.
- Identify the Pros/Cons of Disclosure compared to RSI.
- Summarize the major themes addressed by the panels for future discussion.
Issue Paper for October 24-25, 2018 – Tab A (PDF)
August 29-30, 2018
At the August Board meeting, staff provided an overview of the 18 comment letters received on the Accounting and Reporting of Government Land exposure draft (ED). The Board noted its desire to achieve a balanced perspective regarding land reporting and asked staff to continue its outreach in that regard.
There were no Board deliberations or decisions based on the respondent comments because members desired additional clarification from the respondents. Members directed staff to extend an invitation to all respondents to address the Board at the October meeting.
As such, members identified certain technical issues arising from their review of the respondent comments where they desired further information, clarification, and feedback. The technical issues include but are not limited to the following:
- Data availability and reliability
- Effect of expensing land on the statement of net cost
- Preparer’s perspective concerning audit burden related to estimating acres
- Auditor’s perspective concerning audit burden related to estimating acres
- Application of materiality to non-financial information
- Extent to which audit burden acts as a constraint to reporting of acres, if at all
- Consistency within FASAB’s conceptual framework
- Preparer concerns over removal of general plant, property, and equipment land from the balance sheet
Staff was asked to invite all 18 respondents of the ED to present to the Board, allowing them an opportunity to clarify their responses and address technical issues such as those identified above. Staff will also continue its outreach to federal land managers and the audit community, as well as other interested parties, to ensure the Board has a balanced perspective regarding land reporting.
The clarification discussions will occur at the October Board meeting and an agenda will be finalized after invitations are accepted and processed.
Issue Paper for August 29-30, 2018 – Tab C (PDF)
June 27-28, 2018
The Board did not discuss the land project at its June meeting. Comments are requested on the proposed SFFAS titled Accounting and Reporting of Government Land.
The Board requests comments on the ED by July 30, 2018. The ED and the specific questions raised are available at http://www.fasab.gov/documents-for-comment/.
April 25-26, 2018
On April 30, 2018, FASAB released for public comment the proposed SFFAS titled Accounting and Reporting of Government Land.
The exposure draft (ED) proposes to do the following:
- Reclassify general property, plant, and equipment (G-PP&E) land as a non-capitalized asset
- Clarify the definition for stewardship land (SL)
- Require the reporting of G-PP&E land and SL using three predominant use sub-categories
- Conservation and preservation land
- Operational land
- Commercial use land
- Require consistent and comparable disclosures of information for land (that is, reporting estimated acres of land, physical quantity information, estimated acres of land held for disposal or exchange, and predominant land use)
Members believe that the proposed requirements address concerns that the Stewardship and Operating Performance reporting objectives and qualitative characteristics of information in financial reports, such as relevance and comparability, are not being met. The proposed changes would require disclosure of relevant and comparable non-financial information in a manner that meets user needs while also considering preparer concerns.
The Board requests comments on the ED by July 30, 2018. The ED and the specific questions raised are available at http://www.fasab.gov/documents-for-comment/.
February 21-22, 2018
Members reviewed a pre-ballot draft land exposure draft (ED) that contained revisions primarily based on members’ input from the December 2017 meeting. Major changes included (1) consolidating and clarifying the questions for respondents, (2) communicating the Board’s intent to issue future implementation guidance, and (3) stating that supporting documentation need not be precise or tied to a singular approach when disclosing acres of land.
Members generally agreed with the revised pre-ballot questions for respondents and revisions to the basis for conclusions. Additionally, the Board agreed that physical unit information should not be required at the government-wide level. Specifically, aggregating physical unit information that is not comparable among the reporting entities adversely affects FASAB’s qualitative characteristics of relevance and understandability. That is, logical relationships would not readily exist between the physical unit information provided and acres of land reported.
Finally, the Board agreed to ballot the land ED proposing a two-year implementation period. Staff was asked to consider several remaining non-technical edits and prepare for a ballot draft.
Issue Paper for February 21-22, 2018 – Tab C (PDF)
December 20, 2017
At the December 20, 2017, Board meeting, members considered several open issues so that a pre-ballot draft could be reviewed at the February 2018 meeting. Specifically, the following key actions were taken by the Board:
- Disclosure requirements. The Board adopted staff’s revised single (uniform) set of note disclosure requirements. These would apply to both general property, plant, and equipment (G-PP&E) (SFFAS 6, Accounting for Property, Plant, and Equipment) and stewardship land (SL) (SFFAS 29, Heritage Assets and Stewardship Land). Revisions included (1) clarifying that both physical units and estimated acreage information would be required and (2) allowing preparers to report the net amount of transfers between G-PP&E land and SL categories and among the three sub-categories, as opposed to discretely identifying all transfers.
- Defining physical units. Members agreed that the Board should consider detailed implementation guidance after issuing the standards. However, members asked staff to provide examples indicating under what circumstances each type of physical unit would be an appropriate choice. Further, similar to segment reporting in the private sector, management should base selection of the type of physical unit on its internal management practices.
- Addressing supporting documentation. Staff recommended (1) requiring “estimated” acreage rather than “acreage,” so that it is clear that estimates are permitted and (2) including a discussion of non-conventional audit support in the basis for conclusions. Members approved the addition of “estimated” to the language. Members generally supported addressing the non-conventional audit documentation in the basis for conclusions. The Board will discuss what it considers to be reasonable support for those estimates. In addition, implementation guidance addressing reasonable estimation methods and documentation might be appropriate after FASAB issues the standards. The basis for conclusions should describe the types of implementation guidance envisioned by the Board and solicit comments.
- Other matters. Members reaffirmed proposing a two-year implementation period and asked staff to limit the amount of respondent questions by streamlining and clarifying select questions. Staff was also asked to revise the draft illustrations to include physical unit information.
Issue Paper for December 20, 2017 – Tab C (PDF)
October 25-26, 2017
At the October 26, 2017, Board meeting, members considered staff recommendations concerning issues raised during the review of the August meeting materials. Specifically, the following technical issues were addressed by the Board:
- Single note disclosure – The Board agreed that a single (uniform) set of note disclosure requirements should be adopted in both SFFAS 6, Accounting for Property, Plant, and Equipment, and SFFAS 29, Heritage Assets and Stewardship Land.
- Definition of physical unit – Members asked staff to identify and/or illustrate the different types of “physical unit” measurements (for example, number of national parks, land parcels, regional offices, areas, zones, etc.) that are in use by entities.
- Predominant use definition and reporting – The Board decided that a predominant use definition and associated factors should be developed through implementation guidance.
- Multi-use land lacking predominant use – The Board did not agree with the staff recommendation to establish a fourth multi-use sub-category when an entity cannot ascertain predominant use.
- Application of materiality to non-financial information – Upon reconsideration of their August meeting decision to develop a materiality discussion in the basis for conclusions, members decided to defer this topic for potential development as implementation guidance.
Supporting documentation – Some members asked that additional research be done concerning the types of evidence preparers will need to support the proposed disclosures.
- Implementation approach – The majority of members favored the two-year implementation timeline. At minimum, it allows the Board to address respondent concerns and adjust the Statement’s effective date accordingly.
- Amendments to SFFAS 42’s deferred maintenance and repairs (DM&R) requirements – The Board agreed with the proposed amendments to paragraphs 13 and 15 of SFFAS 42, Deferred Maintenance and Repairs: Amending Statements of Federal Financial Accounting Standards 6, 14, 29, and 32. This would ensure that any DM&R on (non-capitalized) general property, plant, and equipment (G-PP&E) land would be measured and reported along with other (capitalized) general PP&E and stewardship land.
Staff expects to present a revised draft ED at the December Board meeting and, pending deliberations, a pre-ballot draft thereafter.
Issue Paper for October 25-26, 2017 – Tab F (PDF)
August 30-31, 2017
At the August 31, 2017, Board meeting, members offered edits on a draft ED, as well as suggested additional matters to be included in a revised draft ED for subsequent deliberations.
Concerning land rights, members agreed to treat permanent land rights consistent with proposed requirements for owned land. However, they did not agree to limit the reporting of remaining land rights to those only with a fixed term. The Board also did not come to a consensus on how to best address remaining land rights.
Some members believe that a disclosure should be added to the draft ED to concisely explain, in broad terms, what other remaining land rights an entity possesses. Members agreed to explore and evaluate available options regarding potential disclosure for these remaining land rights. Members agreed to retain the current stewardship land (SL) and general property, plant, and equipment (G-PP&E) distinctions accompanied by the three proposed sub-categories. Members asked that the draft ED clarify the intent that land be categorized based on predominant use in one of the three sub-categories to avoid duplication. Members asked staff to develop either a definition of predominant use or a list of factors for use in assessing predominant use.
The Board generally agreed with the proposed amendments and also agreed to consider amending Statement of Federal Financial Accounting Standards (SFFAS) 42, Deferred Maintenance and Repairs: Amending Statements of Federal Financial Accounting Standards 6, 14, 29, and 32. Current deferred maintenance and repairs (DM&R) requirements apply to capitalized G-PP&E and stewardship property, plant, and equipment (PP&E), whereas reporting is optional for non-capitalized G-PP&E or fully depreciated assets. As a result of the proposed amendment to SFFAS 6, Accounting for Property, Plant and Equipment, paragraph 25 that excludes land from capitalization, G-PP&E land would be unintentionally exempted from DM&R reporting. Amending SFFAS 42 would ensure that any DM&R on (non-capitalized) G-PP&E land would be measured and reported along with other (capitalized) general PP&E and SL.
Staff was tasked with developing a revised draft ED for further consideration at the next Board meeting.
Issue Paper for August 30-31, 2017 – Tab F (PDF)
June 21-22, 2017 Board Meeting
At the June 22, 2017, Board meeting, members reviewed a draft ED. The Board agreed with the staff recommendation that the ED should highlight the two major proposed changes being considered: (a) reclassifying general property, plant, and equipment (G-PP&E) land as a non-capitalized asset with no dollar amounts reported on the balance sheet and (b) requiring consistent and uniform disclosures and presentation of information for G- PP&E land and stewardship land (SL).
Staff has initially identified four standards requiring amendments:
- SFFAS 6, Accounting for Property, Plant, and Equipment
- SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting
- SFFAS 29, Heritage Assets and Stewardship Land
- SFFAS 32, Consolidated Financial Report of the United States Government Requirements: Implementing Statement of Federal Financial Accounting Concepts 4 “Intended Audience and Qualitative Characteristics for the Consolidated Financial Report of the United States Government”
Additionally, staff has identified for rescission guidance regarding SL contained in Technical Release (TR) 9, Implementation Guide for Statement of Federal Financial Accounting Standards 29: Heritage Assets and Stewardship Land. Please note that TR 9 would retain guidance relating to heritage assets.
Members also identified three additional issues, two of which were resolved during the meeting: (1) land rights, (2) land leases, and (3) the lack of a distinct definition for SL. The Board agreed that because land rights are intangible assets, any open issues related to their treatment not addressed by SFFAS 6 should be excluded from the land project’s scope. Members also agreed that leased land should be subject to the revised lease standards and that disclosures should be harmonized to the extent practical. The Board requested staff develop a definition for SL along with the incorporation of additional edits.
Lastly, members requested the following questions be added to the draft ED:
- Should the disclosures related to G-PP&E and SL be combined into a single note disclosure?
- Do the three proposed predominant use categories supersede the G-PP&E and SL categories, making them obsolete?
- What type of audit guidance will preparers need to satisfy the proposed accounting standards?
The Board tasked staff with developing a revised draft ED for further consideration.
Issue Paper for June 2017 – Tab H (PDF)
April 26-27, 2017 Board Meeting
At the April 27, 2017, Board meeting, members reviewed February’s broad options A and B and the incorporation of non-financial information (NFI) into the financial report. Specifically, members discussed the following major topics: (1) potential suspension of the land project, (2) balance sheet reporting, (3) land held-for-disposal, and (4) NFI presentation.
After considering reasons for and against the suspension of the land project, members unanimously agreed that the land project should continue as scheduled. Members noted that budget uncertainties are insufficient reasons to suspend a project, and concerns over preparer burden are separate matters that can be addressed as the Board develops its standards.
Members generally agreed to adopt a modified broad option A: no balance sheet reporting of land (to include not valuing land held-for-disposal). Members noted the importance of having consistent accounting standards to improve financial reporting of land. Any conceptual limitations can be addressed via the incorporation of NFI. As such, members believe a modified option A best addresses consistency while maintaining, if not improving, reporting objectives.
Concerning NFI, members generally agreed with the five NFI data points contained in tab D but did not agree on their placement. Some members felt all data points should be presented as Required Supplementary Information, whereas others preferred broad acreage and unit-count information be reported as basic information. Members generally agreed with the three land use reporting categories and noted that predominant use would be reflected in the three categories. The revenue-generating data point could, in essence, be folded into the commercial use category.
The Board tasked staff with developing a draft ED for the next meeting.
Issue Paper for April 2017 – Tab D (PDF)
February 22, 2017
At the February 22, 2017, Board meeting, members reviewed survey results addressing specific user opinions and information requirements needed by the user community regarding federal land. The Board also identified broad options to improve reporting on land so that they can be considered in detail at the next meeting. Some significant discussion points from the session include the following:
- It is clear that historical cost information is not useful to the majority of users, who believe that the reporting of land is currently deficient. Prior analyses of user needs reveal that financial statements are a starting point for users, wherein they often branch off into other venues to obtain information.
- Although it seems clear that historical cost information is of limited value, the use of non-financial information (NFI) does not seem supported by the survey.
- Members discussed performance reporting. Staff noted that citizens in particular want audited information, whereas internal managers prefer disaggregated information. For the latter group, reliance upon system internal controls is sufficient.
- The Board might be overestimating the importance of land information in financial statements to users.
- In regards to measuring economic gain, members noted that the entire area of property is an important issue for management. However, in most cases sale or disposal of land for economic gain/loss would probably be immaterial, and immediate recognition might suffice as appropriate guidance.
- Consistency and accountability seem to be the two principles in play, and these objectives can be achieved either from financial display or NFI perspectives.
Members seemed to gravitate towards focusing on NFI for land, questioning the need for fair value recognition. The Board requested staff have the task force identify the type of audit coverage, if any, it would recommend for each type of NFI that it believes should be disclosed, presented, or referenced in the financial report. The end result should assist members in better identifying appropriate placement of key NFI in the financial report.
Issue Paper for February 22, 2017 – Tab D (PDF)
December 19-20, 2016
At the December 19, 2016, Board meeting, FASAB hosted two educational sessions. The morning session consisted of representatives from the Department of the Interior (Interior) and the Department of Defense (DoD), who were invited to share their views concerning the Board’s accounting and reporting of government land project. Additionally, at this session, Interior provided an overview of its process for disposing land.
During the afternoon educational session, representatives from the Department of Energy, DoD, and the General Services Administration were invited to provide an overview of their processes for disposing of land.
The educational sessions assisted the members and staff in understanding land management decision making. The members greatly appreciate the time these agencies spent in preparing their remarks for the Board and will benefit from the expertise they shared.
Issue Paper for December 19, 2016 – Tab B (PDF)
October 19-20, 2016 Board Meeting
At the October 2016 Board meeting, members generally agreed on two major points: (1) greater clarity and uniformity in land reporting seems warranted and would foster greater transparency and (2) additional information is needed from users to inform deliberations.
Specifically, some members made the following observations:
- The importance of knowing how many acres an agency holds for the benefit of future generations
- Acreage information seems to be the common denominator needed by most, if not all, users
- The presentation of unit information alone has limited value
- Some level of audit assurance is needed
- A better grasp of overall user needs, including those of Congress, is warranted to help mitigate or reduce agency burden
Also, certain members expressed interest in better understanding the role of cost information and its relative importance to users.
Members noted that there seems to be competing interests among users. Specifically, there are users who desire better accountability over land reporting, users who desire specific property/parcel information for economic/financial exploitation, and users with local concerns over land holdings in their immediate jurisdictions.
Some members felt that in-depth deliberations could not commence until they had a broader understanding of user needs. However, other members noted that deliberations could begin by initially providing some clear guideposts or principles that were supported by task force discussions. For example, the Board could explore topics such as incorporation of non-financial information maintained by agencies and where such information should reside in the financial statements—as basic information, required supplementary information, or other information. Additionally, members expressed that deliberations could also commence predicated on FASAB’s reporting objectives. Simply put, discussions could be based on what the Board considers to be effective reporting. For example, the Board could discuss reporting the total inventory of an agency’s land holdings from the standpoint of what citizen-users expect from their government: accountability and stewardship.
In conclusion, members agreed to have staff contact additional users to obtain additional (or more specific) information about their requirements/data points. This additional outreach to the user community will better guide deliberations. As such, members of the user community are welcome and encouraged to contact staff to offer input or to join the existing task force. Regarding user input, staff expects to compile results from a brief 12 question survey by the end of December. If you or anyone you know would like to be part of this user survey or join the task force, please contact Mr. Domenic Savini as soon as possible. Thank you.
Issue Paper for October 2016 – Tab 1
August 24-25, 2016 Board Meeting
The Land project was not discussed at the August 2016 meeting.
July-August Task Force Meetings
The task force met on July 7 and August 11 and plans to meet again on October 4 as it addresses several issues for potential Board discussion.
Some issues discussed at the task force meetings include the following:
- Rating and ranking the qualitative characteristics most germane to land where the consensus opinion was that “understandability” and “reliability” were paramount to the reporting of land
- Rating and ranking the federal financial reporting objectives where the consensus opinion was that “operating performance” and “budgetary integrity” were most important to this project
- Discussing if non-financial information, such as acreage, can stand alone in meeting the stewardship objective
- Initially identifying three major reporting themes available to the Board for consideration – status quo, uniform accounting, and token (symbolic) value
At October’s meeting, the task force plans to expand discussions relative to the three major themes listed above, including identification of any other option and the associated benefits/drawbacks and cost/benefits with each.
If you’d like to join the task force, please contact Domenic Savini for details.
June 29-30, 2016 Board Meeting
At the June Board meeting, staff presented at tab B an update on the progress of the Accounting and Reporting of Government Land project and also sought approval of the proposed next steps, including the most efficient and economical use of the task force, identification of issues best suited for Board deliberations as opposed to task force deliberations, and a proposed timeline.
Although the Board was generally satisfied with the project plan’s next steps, members asked staff for continued updates to ensure that options, along with associated benefits and drawbacks, be brought to the table for discussion.
In particular, the Board asked staff to
- consider user information needs;
- explore and identify what information agencies use to manage land;
- identify types of information, such as acreage, that would help demonstrate the government’s stewardship and accountability over federal lands;
- address whether land held for disposal (for example, sale, public-private partnerships, donated to state and local governments) should be valued; and
- consider whether a uniform land accounting policy is a viable option given initial agency and task force feedback that current land classifications of stewardship land (SL) and general property, plant and equipment (G-PP&E) land be retained.
The Board discussed the remaining three items staff had proposed to exclude from additional agency fact finding within the project: land rights, land improvements, and land impairment. Members generally agreed with staff’s recommendations not to pursue these matters with the task force at this time but reserved these items for future research and Board deliberations.
Issue Paper for June 2016 – Tab B
February 24-25, 2016 Board Meeting
During the 3 Three-Year Plan review and pursuant to earlier project discussions, the Board members approved the proposed project plan and asked staff to carefully consider the following issues: the type of information entities need in order to manage program requirements; fair value measurements and potential valuation inconsistencies that intended-use classifications and related changes could have on said measurements; whether land held-for-sale should be fair valued and if so, subject to impairment; reliability of buyer-oriented appraisals; and whether a new standard on land should replace SFFAS 6 and/or SFFAS 29.
Project Plan for April 2016 – Tab D