DoD Implementation Guidance Request Project
FASAB Contact, Melissa Batchelor, batchelorm@fasab.gov, 202-512-5976
Project Summary:
The DoD Implementation Guidance Request Project has been closed and moved to the archived project page. Several key pronouncements were issued during work on the project such as SFFAS 48, Opening Balances for Inventory, Operating Materials and Supplies (OM&S) and Stockpile Materials and SFFAS 50, Establishing Opening Balances for General Property, Plant, and Equipment: Amending Statement of Federal Financial Accounting Standards (SFFAS) 6, SFFAS 10, SFFAS 23, and Rescinding SFFAS 35. In addition, the AAPC issued related implementation guidance: TR17, Conforming Amendments to Technical Releases for SFFAS 50, Establishing Opening Balances for General Property, Plant, and Equipment and TR 18, Implementation Guidance for Establishing Opening Balances.
Although SFFAS 48 and SFFAS 50 were developed under the DoD project, they are applicable to all reporting entities that meet the criteria established in the standards. Because pronouncements are applicable to all federal reporting entities, the Board believed it appropriate for potential issues identified by DoD for consideration to be placed under a new project that was more descriptive of the nature of items being reviewed.
The Board established a new project entitled the Evaluation of Existing Standards project in 2017 to consider existing FASAB requirements that should be reviewed or clarified, whether identified by DoD or other stakeholders. The Evaluation of Existing Standards was archived in 2020 when the Technical Clarification of Existing Standards project began and replaced it.
The Board recognizes the importance of working with DoD and relevant issues may be identified. Although the project may not be considered an active project, FASAB staff continues to liaison with DoD workgroups and assess issues as appropriate. Any issues that are identified will be assessed as discrete sub-projects under the Technical Clarification of Existing Standards.
Project Objective:
The DoD Implementation Guidance Request Project was initiated by FASAB because the Department of Defense (DoD) identified areas of concern for the FASAB’s consideration. FASAB will assist DoD by providing practical guidance to resolve long-standing issues identified by DoD. Specifically, the primary objectives will be to resolve the issues within the framework of existing accounting standards and where necessary provide the appropriate guidance to address remaining issues. The purpose of this project is to address areas the board believes may warrant FASAB action separate from ongoing projects. These areas are (1) use of reasonable baseline estimates of the cost of inventory and operating materials, (2) accounting treatment of deployed assets, and (3) timing of capitalization of research and development efforts given spiral development efforts.
HISTORY OF BOARD DELIBERATIONS (reverse chronology)
June 21-22, 2017 Board Meeting
At the June 2017 meeting, the Board request from the Department of Defense (DoD) related to DoD intragovernmental activities/costs. Staff proposed the following flexibilities for component reporting entities other than those conducting business-type activities that are consolidated in the DoD financial statements:
- Inter-entity, including intra-departmental, costs addressed in SFFAS 4, Managerial Cost Accounting Standards and Concepts (including Interpretation 6, Accounting for Imputed Intra-departmental Costs: An Interpretation of SFFAS 4), need not be imputed.
- Concepts state that an asset would be recognized by the component entity that has a comprehensive relationship to it. This may be different than the component reporting entity that has legal title to or funded the asset. Assets may be assigned to component reporting entities on any basis.
- With the exception of cleanup costs intended to be covered by rates charged in a business-type activity, DoD may assign cleanup cost liabilities to component reporting entities on any basis. For example, the cleanup cost liability may be assigned to the component reporting entity that reports the asset or to another entity.
- DoD has the option to classify intragovernmental transactions as transfers-out (SFFAS 7, par. 70) or as a cost. This flexibility is necessary because it can be difficult to determine whether an exchange has occurred between the federal components, departments, or agencies involved.
Some members questioned why the four flexibilities were proposed for DoD and why DoD is different than other reporting entities. Still other Board members recognized unique characteristics specific to DoD.
After discussion, the Board agreed that the provisions should be broadened to apply government-wide. The Board decided it would be best to handle each provision in separate, appropriate GAAP-level documents.
Issue Paper for June 2017 – Tab I (PDF)
October 19-20, 2016 Board Meeting
The DoD Implementation Guidance Request project was not discussed at the October 2016 meeting.
Statement of Federal Financial Accounting Standards (SFFAS) 50, Establishing Opening Balances for General Property, Plant, and Equipment, amended SFFAS 6, Accounting for Property, Plant, and Equipment, and SFFAS 10, Accounting for Internal Use Software, and rescinded SFFAS 35, Estimating the Historical Cost of General Property, Plant, and Equipment: Amending SFFAS 6 and 23.
In August, the Accounting and Auditing Policy Committee (AAPC) approved two projects related to SFFAS 50. At the upcoming November meeting, the AAPC will consider a draft Technical Release (TR) to amend previously issued TRs. Amendments would acknowledge the rescission of SFFAS 35. Other amendments would also clarify that all standards-level implementation guidance for general property, plant, and equipment (with the exception of certain provisions applicable to internal use software) now resides in SFFAS 6, as amended.
The AAPC also created the SFFAS 50 implementation task force, which will develop implementation guidance to assist with issues related to SFFAS 50. The task force is chaired by Mr. Mark Easton, who is deputy chief financial officer (DCFO) for the Office of the Under Secretary of Defense (Comptroller)/DCFO with the Department of Defense. The task force consists of representatives from the CFO and audit community. The first task force meeting will be held on December 7, 2016.
To ensure the implementation guidance addresses all areas, it is very important that issues be forwarded for consideration.
Issues for AAPC SFFAS 50 task force consideration should be submitted to Melissa Batchelor at batchelorm@fasab.gov by December 2, 2016, and include the following information:
- SFFAS 50 paragraph(s)
- The issue or requested clarification
- Conflicting views, if known
- For example, are there differing views among the agency and its components or auditors? Do other organizations have the same views?
- Examples and other comments that will assist the AAPC working group in considering the issue for inclusion in the guidance
- Contact information
- Pertinent information includes name, agency, email address, and phone number
August 24-25, 2016 Board Meeting
- Request for SFFAS 50 Interpretation: Internal Use Software
At the August 2016 meeting, the Board considered a letter from the Department of Defense (DoD) requesting an interpretation of the recently issued SFFAS 50. DoD questioned how future costs relating to IUS under development at the time the opening balance is established should be treated (specifically, paragraph 36.d.ii.a of SFFAS 10, as amended by SFFAS 50). The Board considered the matter but decided that no Board action was required. Members believe SFFAS 50 was clear that SFFAS 10 provisions would apply to future costs of IUS projects under development at the opening balance date. The FASAB chairman later sent a letter to DoD summarizing these views.
Issue Paper for August 2016 – Tab C
AAPC Approved Two Projects Related to SFFAS 50
The Accounting and Auditing Policy Committee (AAPC) approved two new projects related to SFFAS 50. The first project would result in a conforming amendment to existing technical releases (TRs) based on SFFAS 50’s rescission of SFFAS 35, Estimating the Historical Cost of General Property, Plant, and Equipment: Amending Statements of Federal Financial Accounting Standards 6 and 23. The TR would amend TR 13, Implementation Guide for Estimating the Historical Cost of General Property, Plant & Equipment, and TR 15, Implementation Guidance for General Property, Plant, and Equipment Cost Accumulation, Assignment and Allocation.
The AAPC’s second project is to develop timely implementation guidance to assist with any issues related to SFFAS 50. The AAPC will be seeking volunteers to work on a task force. The task force is being chaired by Mr. Mark Easton, Deputy Chief Financial Officer (DCFO), Office of the Under Secretary of Defense (Comptroller)/DCFO, Department of Defense.
Meeting this goal will be contingent upon identifying SFFAS 50 implementation issues for inclusion in the guidance. The AAPC plans to send out a call for data, but in the meantime, issues may be submitted directly to Melissa Batchelor at batchelorm@fasab.gov.
Issues for the SFFAS 50 Implementation Project should be submitted to Melissa Batchelor at batchelorm@fasab.gov by December 2, 2016 and include the following information:
- SFFAS 50 paragraph(s)
- What the issue or clarification pertains to
- Briefly state if there are conflicting views, if known.
- For example, are there differing views among the agency and its components or auditors? Do other organizations have the same views?
- Include any examples and other comments that will assist the AAPC working group in considering the issue for inclusion in the guidance
- Include contact information
- Pertinent information includes name, agency, email address, and phone number
Additional information regarding this effort will be forthcoming.
On August 4, 2016, FASAB issued Statement of Federal Financial Accounting Standards (SFFAS) 50, Establishing Opening Balances for General Property, Plant, and Equipment: Amending Statement of Federal Financial Accounting Standards (SFFAS) 6, SFFAS 10, SFFAS 23, and Rescinding SFFAS 35.
SFFAS 50 amends SFFAS 6, Accounting for Property, Plant, and Equipment, SFFAS 10, Accounting for Internal Use Software, and SFFAS 23, Eliminating the Category National Defense Property, Plant, and Equipment, and rescinds SFFAS 35, Estimating the Historical Cost of General Property, Plant, and Equipment: Amending Statements of Federal Financial Accounting Standards 6 and 23 by providing implementation guidance to allow a reporting entity, under specific conditions, to apply alternative methods in establishing opening balances for general property, plant, and equipment (PP&E). (SFFAS 50 is available at http://www.fasab.gov/document-by-chapter/.)
The alternative methods include (1) using deemed cost to establish opening balances of general PP&E, (2) selecting between deemed cost and prospective capitalization of internal use software (IUS), and (3) allowing an exclusion of land and land rights from opening balances with disclosure of acreage information and expensing of future acquisitions.
The Statement is effective for fiscal periods beginning after September 30, 2016, with earlier implementation encouraged.
June 29-30, 2016 Board Meeting
The DoD Implementation Guidance project was not discussed at the June 2016 meeting.
April 27-28, 2016 Board Meeting
The Board approved proposed Statement of Federal Financial Accounting Standards 50, Establishing Opening Balances for General Property, Plant, and Equipment: Amending Statement of Federal Financial Accounting Standards (SFFAS) 6, SFFAS 10, SFFAS 23, and Rescinding SFFAS 35. The Statement allows a reporting entity, under specific conditions, to apply alternative methods in establishing opening balances for general property, plant, and equipment (PP&E).
The alternative methods include (1) using deemed cost to establish opening balances of general PP&E, (2) selecting between deemed cost and prospective capitalization of internal use software, and (3) allowing an exclusion of land and land rights from opening balances with disclosure of acreage information and expensing of future acquisitions.
The alternative methods are intended to reduce the barriers to and cost of adopting generally accepted accounting principles (GAAP). The alternative methods are permitted when presenting financial statements following GAAP either (1) for the first time or (2) after a period during which existing systems could not provide the information necessary for producing such GAAP-based financial statements without use of the alternative methods.
FASAB submitted the proposed Statement to the sponsors for the 90-day review period and also reported the proposed Statement to the Congress for a concurrent review. FASAB will issue the final Statement after the expiration of both review periods unless otherwise informed. The Statement will be effective for fiscal periods beginning after September 30, 2016, with earlier implementation encouraged.
Issue Paper for April 2016 – Tab E
February 24-25, 2016 Board Meeting
At the February Board meeting, the Board made decisions on issues regarding the draft Statement, Establishing Opening Balances for General Property, Plant, and Equipment: Amending Statement of Federal Financial Accounting Standards (SFFAS) 6, SFFAS 10, SFFAS 23, and Rescinding SFFAS 35. The Board considered the comment letters received in response to the exposure draft (ED), a summary of the issues, and recommendations proposed by FASAB staff.
The majority of respondents agreed with the proposals to
- permit opening balances of general property, plant, and equipment (PP&E) to be valued based on deemed cost and to require the related disclosures;
- allow a reporting entity to choose among alternatives in establishing an opening balance for internal use software (IUS) and to require the related disclosures; and
- rescind SFFAS 35 and to permit reasonable estimates in the preparation of financial statements, with or without the existence of SFFAS 35.
One area in which respondents disagreed with the proposal was land value. Based on the comments, the majority of respondents disagreed with the proposal to allow exclusion of land from the opening balances of general PP&E. Reporting entities electing to exclude land from general PP&E opening balances also would exclude future land acquisition amounts.
The Board agreed to several changes to the draft Statement, Establishing Opening Balances for General Property, Plant, and Equipment: Amending Statement of Federal Financial Accounting Standards (SFFAS) 6, SFFAS 10, SFFAS 23, and Rescinding SFFAS. The Board approved staff recommendations, with the exception of land. On this topic, the Board agreed to an approach consistent with the provisions provided for in the ED, as exposed.
In addition, the Board also requested that staff make the following changes to the ED:
- Government-wide disclosures regarding land should be added to provide for a narrative discussion listing consolidated entities that opted to exclude land.
- The basis for conclusions should be updated to include the Board’s reasoning for maintaining the ED’s position regarding land.
- Technical Releases (TRs) that reference SFFAS 35 should be amended to reflect the rescission of SFFAS 35. (This will be accomplished as part of an administrative update through an amended TR.)
- The Statement should be reviewed to ensure the language regarding line item is consistent so that it may be on the face of the financial statement or in a note disclosure.
The Board agreed to proceed to a preballot draft of the Statement at the April 2016 meeting and further due process to issue the Statement. The Board expects to vote on the Statement at the April meeting or shortly thereafter.
Issue Paper for February 2016 – Tab C
December 16-17, 2015 Board Meeting
On December 22, 2015, FASAB requested comments on a proposed Statement of Federal Financial Accounting Standards entitled Establishing Opening Balances for General Property, Plant, and Equipment: Amending Statement of Federal Financial Accounting Standards (SFFAS) 6, SFFAS 10, SFFAS 23, and Rescinding SFFAS 35. Comments are due by February 4, 2016.
The proposal is in response to a Department of Defense (DoD) request for guidance on establishing opening balances for general property, plant, and equipment (PP&E). The proposal would allow a reporting entity to apply alternative methods in establishing opening balances for general PP&E. The alternative methods include:
- use of deemed cost to establish opening balances of general PP&E,
- selecting between deemed cost and prospective treatment of internal use software, and
- exclusion of land from opening balances with disclosure of acreage information.
The alternative methods are available only when presenting information following generally accepted accounting principles (GAAP) either (1) for the first-time or (2) after a period during which existing systems could not provide the information necessary for producing such GAAP-based financial statements without use of the alternative valuation method. The application of this Statement based on the second condition is available to each reporting entity only once per line item addressed in this Statement.
The exposure draft also solicits input regarding a new FASAB project to review existing standards on the reporting of land and to consider a consistent approach for all component reporting entities. Suggestions from respondents regarding options for improving current reporting on land are encouraged as we deliberate this topic.
The exposure draft can be found at /documents-for-comment/.
Issue Paper for December 2015
Tab C
Tab C2
October 21-22, 2015 Board Meeting
The Board approved Statement of Federal Financial Accounting Standards 48, Opening Balances for Inventory, Operating Materials and Supplies, and Stockpile Materials. It was submitted to the sponsors for the 90-day review period. After successful completion of the review, it will be issued on January 27, 2016.
The Board considered the draft exposure draft, Establishing Opening Balances for General Property, Plant and Equipment: Amending Statement of Federal Financial Accounting Standards (SFFAS) 6, SFFAS 10, SFFAS 23, and Rescinding SFFAS 35. The Board agreed to:
- The general approach to provide implementation guidance in SFFAS 6 to allow a reporting entity to apply alternative valuation methods in establishing opening balances for general PP&E.
- For internal use software, to provide two opening balance alternatives (an alternative valuation method consistent with that provided for all general PP&E or prospective application) and related disclosures.
- Propose rescinding SFFAS 35, Estimating the Historical Cost of General Property, Plant and Equipment: Amending Statements of Federal Accounting Standards 6 and 23, because the proposed Statement would incorporate the relevant portions and would provide comprehensive guidance in SFFAS 6 for establishing opening balances.
While the Board did not make a final decision regarding land, they agreed staff should focus efforts on further developing recommendations that would allow for a zero balance or an assigned value per acre. Staff was directed to research available reports to determine if there is information available by state or for the country. In conjunction with this, staff should provide analysis to assist the Board in determining if this approach should be applied government-wide. Alternatively, it could be deferred for a broader government-wide land project.
The Board did not make a decision regarding government property in the hands of contactors. Instead, they requested that staff consider other options (such as prospective treatment) and rationale based on information DoD may make available.
Issue Paper for October 2015
Tab B1
Tab B2
Tab B2 Memo
August 26-27, 2015 Board Meeting
At the August Board meeting, the Board made decisions on issues regarding the Draft Statement, Opening Balances for Inventory, Operating Materials and Supplies and Stockpile Materials. The Board considered the comment letters received in response to the exposure draft, a summary of the issues, and recommendations proposed by FASAB staff. In addition, the Board discussed and agreed to several changes to the Draft Statement, Opening Balances for Inventory, Operating Materials and Supplies and Stockpile Materials. The Board will review editorial changes and expects to vote on the Statement before the next meeting.
In a separate request from DoD, the Board considered options regarding baseline estimates for all categories of general property, plant, and equipment (GPP&E). After considering the options regarding baseline estimates prepared by FASAB staff and also submitted by DoD, the Board tentatively agreed to the following:
- Allow deemed cost (estimated historical cost, fair value, or replacement cost) for all GPP&E.
- Provide prospective treatment for internal use software and land.
- Acres of land would be disclosed.
The Board directed staff to develop standards based on these tentative decisions for consideration at the October Board meeting. The Board also requested staff research the broader issue of land and potential implications for future standards.
NOTE: The FASAB staff member for this project has updated contact information due to a name change. (Her name was previously Melissa L. Loughan.) Please update your address books and other contact listings accordingly.
Issue Paper for August 2015
Tab I
Tab I-2
Tab J
June 24-25, 2015 Board Meeting
The Federal Accounting Standards Advisory Board (FASAB) released a proposed Statement of Federal Financial Accounting Standards on June 2, 2015 entitled Opening Balances for Inventory, Operating Materials and Supplies (OM&S) and Stockpile Material. The Department of Defense (DoD) requested FASAB’s guidance on the use of reasonable baseline estimates for the valuation of legacy inventory, operating materials and supplies (OM&S), and stockpile materials because SFFAS 3, Accounting for Inventory and Related Property, requires valuation at historical cost (initial amounts).
The proposed Statement would allow a reporting entity to apply an alternative valuation method in establishing opening balances for inventory, OM&S, and stockpile materials. The alternative valuation method is available only when presenting information following generally accepted accounting principles (GAAP) either (1) for the first-time or (2) after a period during which existing systems could not provide the information necessary for producing such GAAP- based financial statements without use of the alternative valuation method.
This Statement is effective for periods beginning after September 30, 2016. Earlier implementation is encouraged. The exposure draft requests written comments by July 20, 2015. The exposure draft can be found at /documents-for-comment/.
At the June 2015 Board meeting, the Board discussed DoD’s request to clarify the treatment of capital improvements when estimating the historical cost of GPP&E. They indicated that separately identifying the cost of capital improvements would be costly and time consuming.
The Board agreed that issuing a Statement and making the appropriate amendments to standards may provide a cost effective approach for DoD regarding baseline estimates of general property, plant, and equipment (GPP&E). While the Board did not decide on a particular approach, many options were discussed at the meeting and detailed in the minutes.
The Board suggested that DoD come back with what they believe the best approach is for the Board’s consideration. It was agreed that FASAB staff would work with DoD and facilitate meetings to gather input from their auditors to discuss the approaches further. Staff will also consider the issues related to all general property plant and equipment, including real property, military equipment and land so all items can be addressed in one Statement.
Issue Paper for June 2015 – Tab F
April 29-30, 2015 Board Meeting
At the April Board meeting, the Board considered an exposure draft of a proposed Statement of Federal Financial Accounting Standards entitled Opening Balances for Inventory, Operating Materials and Supplies (OM&S) and Stockpile Materials. The proposal would permit the use of alternative methods in establishing opening balances for inventory, operating materials and supplies, and stockpile materials under SFFAS 3, Accounting for Inventory and Related Property. After reviewing and discussing the draft proposed standards the Board agreed to the proposal with primarily editorial changes. The exposure draft is being finalized and is expected to be released for comment in early June.
The Board discussed another draft document, exposure draft of an Interpretation of a Statement of Federal Financial Accounting Standards entitled Interpretation of Statement of Federal Financial Accounting Standards (SFFAS) 6, Accounting for Property, Plant, and Equipment as amended by SFFAS 35, Estimating the Historical Cost of General Property, Plant, and Equipment: Amending Statements of Federal Financial Accounting Standards 6 and 23. The objective is to clarify whether capital improvements are included when estimating the historical cost of general property plant and equipment (G-PP&E) and whether estimates are permitted to capture the historical cost of construction in progress. The Board generally agreed but requested clarification of the treatment of new capital improvements. The Board will discuss revisions at its June meeting.
Issue Paper for April 2105 – Tab F
Tab G
February 25-26, 2015 Board Meeting
At the February 2015 meeting, staff discussed progress on the Department of Defense (DoD) Implementation Guidance Request project. Staff also obtained Board member views regarding acceptable valuation methodologies for Inventory and Operating Materials & Supplies at transition to systems capable of accounting in accordance with SFFAS 3. It was agreed staff would consider the Board member comments and develop a draft proposal for the Board’s consideration at the April 2015 Board meeting. The Board agreed that the notion of deemed cost as used in the International Public Sector Accounting Standards No. 33, First Time Adoption of Accrual Basis International Public Sector Accounting Standards, should be explored but written broadly so that it could be adapted to DoD. Staff will also consider broadening the scope of the proposed standard so that it may address other areas such as a first-time adopter and/or other assets reported at historical cost.
Issue Paper for February 2105 – Tab F
Tab F – Table
December 17-18, 2014 Board Meeting
The objective at the December meeting was to provide the Board with the project plan for the Department of Defense (DoD) Implementation Guidance Request project and an update. Important items discussed that are detailed in the minutes include the following:
- Staff progress in the Research and Development area in the coming months is contingent upon DoD contacts describing the issues in more detail.
- The issue of a definition of “end user” (SFFAS 3) will be researched further to determine how best to address it.
- Follow-up with the branches (as well with the Marines) will be needed to confirm results to date on the deployed assets issue. A final recommendation will be presented to the board for approval, vote and recorded in the minutes.
- FASAB staff (with contractor assistance) plans to continue research and gain more information in various areas as it relates to inventory—including reparables, principal items, and confirming our understanding of inventory accounting and valuation processes at each branch.
- FASAB staff (with contractor assistance) plans to research various areas discussed by board members at the meeting, further analysis and consideration of turnover rates, etc. The members also suggested meeting with the DoD inspector general staff at an appropriate time.
Issue Paper for December 2014 – Tab D