Reexamination of Existing Standards
For questions about this project, email reexamination@fasab.gov.
| Request for Comment | Due Date | Word Version of questions for Respondents | Comment Letters | Final Pronouncements |
|---|---|---|---|---|
| Reexamination of Existing Standards (PDF) | September 15, 2023 | Word Version of Questions for Respondents (Download) | Comment Letters | N/A – No pronouncement will result |
Project Objective:
The objective of the reexamination project is to reexamine FASAB’s existing standards to assess their current relevance and to identify opportunities to streamline authoritative guidance. The Board believes that the accounting standards should be periodically reexamined to assess their current applicability and to eliminate or revise unnecessary requirements. In this project, the Board is exploring opportunities to review and reexamine existing SFFASs and other pronouncements, as appropriate, and identify areas where clarification or amendments may be needed. The Board also agreed to research both the benefits of and concerns with FASAB’s current GAAP hierarchy. The reexamination project is expected to address issues related to (1) inconsistencies with current practice, (2) confusion or difficulties applying requirements, (3) the need for clarifications, and (4) the usefulness of disclosures and other required information.
History of Board Deliberations
November 2024
Staff are in the process of preparing project plans and other information for each discrete project. Going forward, each reexamination project will be presented with specific project information and details.
August 20-21, 2024
At the August 2024 meeting, the Board determined the prioritization of the reexamination issue areas. The prioritized issue areas were also considered in the technical agenda session.
Along with the prioritization, the Board also considered additional information related to the revenue topic. The briefing materials included a listing and analysis of revenue issue areas with respondent feedback and staff research. Most members agreed that the core revenue issue area should be placed on the research agenda. Certain members had questions about some of the issue areas and the separability of certain issues. The Board acknowledged that once the core revenue project is placed on the research agenda, the scope may be tweaked based on information in the research phase.
The Board provided additional direction and thoughts on the core revenue research. Members explained that they do not want a lengthy research phase that would result in one massive project. Considering the priority approach, the Board would like to address narrow scope areas within core revenue. The Board would like staff to brief the Board during research and suggest focused, short-term projects because it is important to address issue areas in an expeditious manner.
The Board determined that taking a priority approach to address the issues would be most beneficial to stakeholders and be most responsive to critical issues. At the June 2024 meeting, the Board generally agreed on the following four factors in prioritization of reexamination issues:
- Clarifying the standards (including addressing gaps in standards)
- Streamlining and burden reduction
- Critical nature of the issue
- Pervasiveness
To assist the Board with prioritization, staff prepared a Reexamination Prioritization Matrix. The matrix includes the reexamination issue areas with an assessment against each of the four prioritization factors, along with staff notes. Staff also provided a recommended prioritization for the Board’s consideration. Members found the matrix to be helpful in determining their priority order.
The Board notes that the prioritization is for the order in which the projects will be addressed, and the Board plans to continue going through the specific issue areas in a prioritized manner until all issues identified through the ITC have been addressed. Each year the Board will continue to reassess and determine priorities.
Board members explained their top five priorities and reasoning during the Board discussion. Through robust Board discussion, the Board determined the following as the top five reexamination issue areas to be considered in the technical agenda session (in alphabetical order)
- Core revenue (to be placed on research agenda)
- Commitments
- GAAP hierarchy
- Loan disclosures
- Subtopic environmental liabilities and legal claims when there are multiple parties involved
Purchases versus consumption method and environmental Liabilities broadly were the next two areas receiving support from more than one member and will be considered in the project queue. As noted, the Board plans to address all issue areas and will prioritize remaining issues annually. The Board will consider these areas in the technical agenda session.
Briefing Materials – Topic A
June 11-12, 2024
At the June 2024 Board meeting, the Board considered staff’s preliminary research on the remaining issue areas for reexamination. This included the remaining top tier and second tier issue areas identified through the Invitation to Comment (ITC) and results from the round table on SFFAS 2, Accounting for Direct Loans and Loan Guarantees. The purpose of this research is to assist the Board with prioritizing issue areas.
The briefing materials included the following preliminary research:
- Preliminary Revenue (SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting) Research-Expanded
- Preliminary Research on Loan (SFFAS 2) Note Disclosures
- Preliminary Research on Remaining Issue Areas
It is important that the Board prioritize the reexamination issue areas at the August 2024 Board meeting because the prioritization is needed for the technical agenda session.
The majority of members agreed that the preliminary research was thorough and provided the necessary information for prioritization.
Certain members noted the preliminary research on the SFFAS 2 note disclosures was extremely helpful and suggested that there may be issues that could be readily addressed in loan disclosures.
A member expressed concern with the notion that SFFAS 7 should be reviewed in its entirety versus considering options for discrete issue areas. The Board agreed that staff would provide information about the discrete issues within the overall revenue area so that members would have the option of addressing revenue in its entirety or by discrete area.
A member explained that certain issues may be most appropriately dealt with through lower-level generally accepted accounting principles or other avenues, such as training. The member explained the importance of considering all potential remedies, especially with FASAB’s resource limitations.
Staff suggested the following four factors for the prioritization of reexamination issues:
- Clarifying the standards (including addressing areas where the standards are difficult to apply)
- Cost-benefit (includes streamlining and burden reduction)
- Critical nature of the issue
- Pervasiveness
The Board generally agreed that the prioritization factors were appropriate, and it is natural for there to be some overlap.
The Board generally agreed with the concepts and ideas behind the four established factors. A member suggested and the Board generally agreed that elevating “filling gaps in the standards” to the title and headline of the factor for clarifying the standards would highlight that it is included.
Certain members suggested that the cost-benefit factor may not be as clear as intended because the members are not doing cost-benefit analysis. A member suggested and the Board generally agreed that revising the title and headline to “streamlining and burden reduction” is more reflective of what the Board will be considering.
The Board generally agreed with the factors along with the suggested edits.
A member noted the importance of FASAB’s resources, as this will ultimately determine what projects the Board can add to its technical agenda. When considering which issue areas to add to the technical agenda, the Board may have to adjust due to resources. For example, based on resources, the Board will need to consider whether to add one large issue versus three smaller issues.
Staff plans to provide a schedule and analysis of the reexamination issue areas against the prioritization factors in the August briefing materials. Staff will provide general comments about how each of the issue areas may meet the factor, so there will be a range of how the issue areas meet each factor along with other considerations and staff notes. The schedule will also include a section for other considerations, such as resources and other potential remedies. Staff will also include a suggested prioritization of the issues for the Board’s consideration.
Briefing Materials – Topic A
April 16-17, 2024
At the April 2024 Board meeting, the Board considered staff’s preliminary research on the reexamination of existing standards priority topics: SFFS 5, Accounting for Liabilities of the Federal Government; SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting; and SFFAS 34, The Hierarchy of Generally Accepted Accounting Principles, Including the Application of Standards Issued by the Financial Accounting Standards Board. Preliminary research of SFFAS 5, 7 and 34 consisted of outreach and communication with stakeholders who had responded to the ITC. Staff also reviewed FASAB’s history to gather more information and specifics about the issues presented. The preliminary research continued to support the reexamination of SFFAS 5, 7, and 34.
The Board generally agreed that developing a core reexamination methodology is important so it can be incorporated into each reexamination project plan. While it does not mean that all projects will follow the same detailed steps, it will help ensure consistent processes and procedures are considered as part of the reexamination project plans. Staff will consider other standard setters’ post implementation reviews as part of developing a core methodology.
The members agreed that the ITC was an excellent tool to accumulate an inventory of the specific issues for reexamination. The Board is taking a priority approach to addressing the ITC issues, but it will eventually address all issues. The members agreed that the prioritization is for the order in which the projects will be addressed and the Board will continue going through the specific issues in a prioritized manner. The critical nature of the specific issue should be key in determining the order of prioritization.
The Board discussed the importance of determining the priority order of specific issues or narrow scope projects that should be added to the agenda. The briefing materials contained suggested factors for the Board’s consideration. Members noted that the suggested factors are like the factors that the Board uses to prioritize projects in its technical agenda setting. Certain members believed that determining which specific issue(s) were critically urgent should be the most important factor in prioritization.
Certain members recognized that resource requirements based on the degree of difficulty or complexity is a very important consideration. For example, the Board will need to consider that some of the projects can be done with relatively few resources and less time compared to others. There should be a balance FASAB’s resources and its projects. The Board must consider its resources, even if it is not a deciding factor.
Certain members suggested the factors be streamlined and combined. One member suggested that there be no more than five factors. Several members noted that the approach and order of prioritization is subjective to some extent as it involves the judgments of each member.
FASAB staff discussed that respondents had provided numerous comments about streamlining guidance and improving the FASAB Handbook as part of their responses to the ITC. As the number of standards increases and the standards are subjected to numerous layers of amendments, it is much more complex for users to follow. The Board generally agreed that staff should continue working on FASAB Handbook improvements as time permits.
Staff plans to provide research on the remaining ITC areas at the June 2024 Board meeting.
Briefing Materials – Topic B
January-March 2024
Staff is currently researching the priority topics identified by the Board—SFFAS 5, SFFAS 7, and SFFAS 34—so the Board may have a better understanding of the underlying issues and how to prioritize them. Staff also plans to reach out to credit reform agencies for feedback on SFFAS 2. Research and outreach into other areas identified by individual members, which would include all topics on the top tier and second tier, will be done after research into SFFAS 5, SFFAS 7, and SFFAS 34 is complete. The additional information gained through staff research on the issues will help with further reexamination prioritization.
December 12-13, 2023
At the December 2023 meeting, the Board discussed the comment letters, staff’s initial analysis, and staff’s recommendations based on the responses to the Invitation to Comment (ITC), Reexamination of Existing Standards.
The majority of the Board agreed that the hierarchy of generally accepted accounting principles (GAAP) should be one of the first priorities in the reexamination. Based on the responses to the ITC, staff identified top tier topics as topic 7 (SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting), topic 6 (SFFAS 6, Accounting for Property, Plant, and Equipment), topic 15 (SFFAS 34, The Hierarchy of Generally Accepted Accounting Principles, Including the Application of Standards Issued by the Financial Accounting Standards Board), topic 8 (SFFAS 10, Accounting for Internal Use Software), and topic 5 (SFFAS 5, Accounting for Liabilities of the Federal Government). The Board had already agreed that SFFAS 34 should be a priority. Based on staff’s initial analysis, staff recommended that SFFAS 7 and SFFAS 5 also be priority topics for reexamination. Staff did not suggest topic 8 (SFFAS 10) because there is an active project on the Board’s technical agenda to update software-related guidance in SFFAS 10. Staff also believed topic 6 (SFFAS 6) did not warrant immediate reexamination and suggested environmental liabilities from SFFAS 6 be addressed with SFFAS 5. In summary, staff recommended topic 7 (SFFAS 7), topic 5 (SFFAS 5), and topic 15 (SFFAS 34) be priority topics for reexamination and research.
A majority of members agreed that topic 7 (SFFAS 7), topic 5 (SFFAS 5), topic 15 (SFFAS 34) should be priority topics for reexamination and research. Some members also suggested considering SFFAS 17, Accounting for Social Insurance; SFFAS 2, Accounting for Direct Loans and Loan Guarantees; and SFFAS 49, Public-Private Partnerships. Meanwhile, other members suggested considering SFFAS 24, Selected Standards for the Consolidated Financial Report of the United States Government, and SFFAS 32, Consolidated Financial Report of the United States Government Requirements, in tandem with topics to ensure government-wide consideration throughout the reexamination. A member also suggested that all top tier and second tier topics be researched. The member suggested that more information is needed to prioritize issues that are in need of reexamination.
In its discussion of SFFAS 2, the Board acknowledged that there were no responses from agencies with material loans and loan guarantees. The Board agreed that staff should reach out to the credit reform agencies to assess their concerns.
The majority of the Board agreed the priority topics are SFFAS 5, SFFAS 7, and SFFAS 34. Due to the magnitude of the standards and limited staff resources, the Board would like to consider the related issues. Staff will research the issues in SFFAS 5, SFFAS 7, and SFFAS 34 so the Board will have the information it needs to prioritize the issue areas. Staff will conduct research and outreach into other areas identified by individual members, including all topics on the top tier and second tier, after researching SFFAS 5, SFFAS 7, and SFFAS 34.
Briefing Materials – Topic A
October-November 2023
Staff is preparing an analysis of the comments received to assist the Board in prioritizing issues and an approach at the December 2023 meeting.
May-September 2023
FASAB staff is promoting awareness and the importance of responding to the ITC by discussing it with our stakeholders during the spring and summer. For example, the ITC will be a focus topic for presentations during the next few months to encourage respondents and answer questions.
May 15, 2023
On May 15, 2023, FASAB issued an Invitation to Comment, Reexamination of Existing Standards.
FASAB is seeking input from stakeholders on the Board’s project to reexamine existing standards. The objective of the reexamination project is to improve the standards and ensure that they are effective in providing financial information that supports public accountability and meets user needs.
It is important that respondents support their answers with a detailed explanation, including specific sections or paragraph references within pronouncements where appropriate. This will enable the Board to better understand stakeholder issues and concerns. The information provided through the ITC (and additional outreach and analysis that follows) will assist the Board in prioritizing issues and developing an approach to the reexamination project.
The Board requests responses to the ITC by September 15, 2023. The ITC is available on the FASAB website. Respondents should use the Microsoft Word file available at https://www.fasab.gov/documents-for-comment/ to provide comments on this ITC. Additional information may be attached.
(ITCs are used to request feedback but no specific Board guidance will result.)
April 18-19, 2023
At the April 2023 meeting, the Board provided feedback on the updated draft Invitation to Comment (ITC.) The Board had agreed to release the ITC for comment in early spring due to stakeholder availability during the year-end reporting cycle.
The Board had reviewed a draft of the ITC during March 2023 that incorporated the edits approved at the February 2023 meeting and other streamlining edits. Certain members noted sections of the March draft to streamline further because there were fewer topics in the reexamination portion of the ITC after removing the discussion of the approaches. Bullet points replaced certain narrative, providing a succinct way to summarize key points for respondents. In addition, the detail regarding FASAB agenda setting was placed in an appendix.
Member comments were favorable, and the majority of members indicated they were ready for ballot. All Board members had provided their minor comments and editorial suggestions so the Board agreed to go through the edits at the meeting for Board approval. The majority of the Board agreed with all changes in the ITC.
The Board then agreed with proceeding to ballot the ITC.
Briefing materials – Topic B
February 22-23, 2023
At the February 2023 meeting, the Board provided feedback on the updated draft Invitation to Comment (ITC), Topics Related to the FASAB Reexamination Project. The Board had reviewed a first draft of the ITC at the December 2022 meeting. Staff had streamlined the updated draft significantly but noted there is the possibility to further streamline based on Board feedback and consensus on matters.
The generally accepted accounting principles (GAAP) hierarchy section was revised to provide proper context for asking respondents about whether and where administrative directives should be considered in the hierarchy and the clarity of the term “practices that are widely recognized and prevalent in the federal government” in level D. The Board generally agreed with the revised GAAP hierarchy section and related questions.
The Board agreed to add a clarifying sentence to paragraph 3 to explain that FASB and GASB had a GAAP hierarchy of several levels prior to their reexamination (that is, all standard setters had a four-level hierarchy at one time).
Although not discussed at the December meeting, staff wanted to confirm if the majority of the Board preferred to maintain the question regarding training in the GAAP hierarchy section. The Board agreed that question 1.3 regarding training on the GAAP hierarchy should be removed from the ITC.
At the December meeting, the Board had agreed to remove the discussion and questions on ranking reexamination approaches because it would be difficult for respondents to conceptualize (especially without knowing all the topics that have been identified). Staff updated the narrative to remove the discussion about the different approaches and the related question where respondents were asked to rank the approaches and made other streamlining revisions to the narrative and questions.
A member suggested combining questions 2.1a and 2.1b by allowing respondents no more than five “high priority” items. The Board agreed to streamline the questions in this manner.
A member suggested that the “medium/low priority” category be changed to “medium priority” as it may be important to distinguish between medium and low priority and that “no priority” be replaced with “low priority / no priority.” The Board agreed to change the categories.
A member suggested adding references for Interpretations and Technical Bulletins to the chart included with question 2.1 and Appendix A, Matrix of Individual SFFASs, to assist users with fully understanding the guidance related to the topics. The Board was agreed. With the changes, the Board generally agreed with the reexamination portion of the ITC.
The Board discussed time burden on respondents and that additional education and outreach may be required for the Codification of FASAB Standards and FASAB Handbook Improvements topic. After discussion, the Board generally agreed the section should be issued as a separate ITC at a later time.
The Board discussed the length of time the ITC should be available for comment. Staff recommended the ITC be available for four months. A member suggested that a key consideration would be when the ITC is released for comment because the Board should be cognizant of the end of the fiscal year. With the Board on track to release in April or May, a four-month comment period is reasonable. A member noted that if the Board does not meet targets, then the time period could be adjusted. The Board agreed to a comment period of three to four months depending on when the ITC is completed.
Staff will incorporate agreed upon changes into the ITC. The Board anticipates releasing the ITC in the spring.
Briefing materials – Topic B
December 13-14, 2022
At the December Board meeting, the Board provided feedback on the first draft of the Invitation to Comment (ITC), Topics and Approaches Related to the FASAB Reexamination Project. The Board had previously agreed that soliciting feedback through an ITC would be the first step to the reexamination project.
Staff had shared a draft with the Chief Financial Officer Council, Financial Statement Audit Network, certain independent public accounting representatives, sponsor Board member representatives, staff from other standard setters, and FASAB staff. This target audience gave feedback to staff that the draft ITC provided an understanding of the topics as well as how the three categories were related. The target audience also provided feedback that was very helpful and improved the document.
The Board had previously agreed that the generally accepted accounting principles (GAAP) hierarchy should be included in the ITC. Based on the draft, there were mixed views regarding the placement and the level of detail and specificity of questions regarding level D GAAP. After discussion, the majority of the Board members generally agreed that the GAAP hierarchy should be included first. The members agreed that any decisions regarding level D detail should wait until they consider additional information at the next Board meeting. The Board also agreed to delay any decisions regarding releasing a narrow ITC on the GAAP hierarchy in the spring.
The Board had previously agreed to solicit feedback on the various approaches to the reexamination project. Based on feedback from the target audience, staff determined that conceptualizing this might be difficult for respondents (especially without knowing all the topics that have been identified). Staff recommended not including the discussion and questions on ranking approaches. The majority of members generally agreed that question 2.5 and the majority of the detailed discussion regarding the approaches should be removed from the narrative. Questions that would assist with identifying particular topics and prioritization should stay.
The Board also discussed general clarifications regarding the ITC and the proposed questions. For example, the Board agreed that the ITC questions should be clarified to ensure that responses include the appropriate detail regarding the area of a particular Statement (paragraph reference) that is of concern. The majority of the Board agreed that Statements that have not been implemented should be excluded from the ITC but an explanation should be provided.
The Board did not have an opportunity to discuss the last portion of the ITC: Codification of FASAB Standards and FASAB Handbook Improvements. Some members were concerned regarding the length and burden to stakeholders. The Board discussed the possibility of issuing more than one ITC but made no decision at the meeting.
Briefing materials – Topic E
November 2022
Staff is in the final stages of drafting the Invitation to Comment (ITC). Next, the Draft ITC will be provided to targeted organizations, such as the CFO Council and Financial Statement Audit Network, to gain preliminary feedback on the ITC. The feedback will help ensure the ITC is clear, focused, and does not overlook key questions that may assist the Board with the project. Staff anticipates providing the Board the Draft ITC at the December 2022 meeting.
September 2022
Staff continues drafting the Invitation to Comment (ITC). Staff plans to gain preliminary feedback on the ITC by conducting outreach to targeted organizations, such as the CFO Council and Financial Statement Audit Network, to help ensure the ITC is clear, focused and does not overlook key questions that may assist the Board with the project. Staff is also focused on drafted a brief “Q & A” to provide the respondents with an understanding of ITCs and how the Board would use the information.
April 2022
Staff resumed work on the reexamination of existing standards project by beginning to draft the Invitation to Comment (ITC). Once drafted, staff will gain preliminary feedback on the ITC by conducting outreach to targeted organizations, such as the CFO Council and Financial Statement Audit Network, to ensure the ITC is clear and focused. Most importantly, it would help ensure the ITC does not overlook key questions that may assist stakeholders in providing the information the Board is requesting for the reexamination project. Staff believes conducting targeted outreach will be a valuable tool prior to returning the draft ITC to the Board.
December 2021
Due to competing demands with FASAB’s limited staff, work on the reexamination project will resume spring 2022. At the October 2021 meeting, the Board members generally agreed with the framework and topics of potential questions but provided staff feedback and comments to consider when drafting the Invitation to Comment (ITC.) Staff will draft the ITC based upon the feedback of the Board. As agreed to at the October meeting, staff will also seek input from the public on the draft ITC through outreach to specific organizations.
October 26, 2021
At the October meeting, staff presented a proposed plan to the Board on the initial steps for the reexamination of existing standards project. Staff was seeking the Board’s feedback on potential approaches to effectively manage a comprehensive reexamination project. The proposed steps included seeking input from the public, determining the general organization of an invitation to comment, and drafting a preliminary list of potential questions.
Seeking Input from the Public
The Board agreed that gaining widespread feedback on potential approaches would be integral to the project’s success. Staff plans to solicit input from the public by holding round tables, forming a task force, conducting outreach to various organizations, and seeking feedback in an ITC.
Staff identified the following high-level steps receive input from the public:
- Staff drafts ITC questions.
- Staff conducts outreach to organizations for feedback on draft ITC questions.
- Staff finalizes the ITC.
- The Board reviews the ITC.
- The Board releases the ITC for public comment.
- The Board analyzes the public’s response to the ITC.
The Board was in general agreement with staff’s recommended plan to seek input from the public.
Potential ITC Questions to Seek Feedback on the Reexamination Project
Staff provided the Board with a suggested framework/organization of the ITC along with a preliminary list of potential questions.
Staff presented eight potential ITC questions in the following three categories for the Board to consider.
- FASAB GAAP hierarchy
- Reexamination of FASAB standards
- Codification of FASAB standards and/or Handbook improvement
After discussing the reasoning for including the GAAP hierarchy and codification/Handbook topics in the ITC, the Board was in general agreement with the suggested framework. The three topics are interrelated and should provide the Board with a comprehensive approach to reexamine the existing standards.
The Board members generally agreed with the direction and topics of the questions. The Board provided staff general feedback and comments to consider when drafting the ITC, as well as additional questions for consideration.
Briefing Materials – Topic D
August 24-25, 2021
At the August Board meeting’s technical agenda setting session, the members approved moving the reexamination project from the Board’s research agenda to an active technical project.
June 22-23, 2021
At the June 2021 meeting, staff requested the Board’s feedback on potential approaches to advance the reexamination of existing standards research topic and consider the project during the August technical agenda deliberations.
Ms. Roberta Reese, GASB senior project manager, provided the Board with an overview of GASB’s process for selecting topics for reexamination.
A majority of members agreed with staff’s recommendation to further research both the benefits of and concerns with FASAB’s current GAAP hierarchy.
The members also agreed that the community’s input on the project’s approach will be important and agreed with staff’s recommendation to consider soliciting feedback through an invitation to comment as a first step to the reexamination project.
Briefing materials – Topic C
December 15-16, 2020
At the December 2020 meeting, the Board discussed and approved the technical plan for the reexamination of existing standards project. The research project’s objective is to reexamine FASAB’s existing standards to assess their current relevance and to identify opportunities to streamline Board guidance. The Board has previously stated that the accounting standards should be periodically reexamined to assess their current applicability and to eliminate or revise unnecessary requirements. The research topic will address issues related to (1) inconsistencies with current practice, (2) confusion or difficulties applying requirements, (3) need for clarifications, and (4) usefulness of disclosures and other required information. During the initial research phase, staff will perform an assessment of existing standards and develop options for Board consideration.
During the meeting, staff discussed that extensive project planning will need to be developed and approved by the Board before any project work begins. The project plan itself will take several months and will require the input of the full staff. It took thirty years to create the full portfolio of pronouncements and there has never been an effort to reexamine that portfolio. The reexamination project will better prepare FASAB for codification of the guidance, which is a goal of the Board’s. Several potential approaches and factors are being considered for the reexamination project, including looking at reexamination topically, reviewing terminology used throughout the guidance, and considering user needs, as well as assessing the cost/benefits of the guidance. Staff agreed to return to the Board in the coming months to provide a more detailed project plan and options for tackling the reexamination project.
Briefing materials – TAB D