Evaluation of Existing Standards
FASAB Contact: Melissa Batchelor, Assistant Director, batchelorm@fasab.gov, 202-512-5976
Project Summary
In 2020, the Board agreed that the Evaluation of Existing Standards was to be replaced by the Technical Clarification of Existing Standards project. The change was made in conjunction with the addition of a new project—Reexamination project that will focus on fully reexamining existing SFFASs or chapters of SFFASs, and other pronouncements as appropriate.
As a result, the Evaluation of Existing Standards project has been closed and moved to the archived project page.
Several key pronouncements were issued during the Evaluation of Existing Standards Project:
- SFFAS 55, Amending Inter-entity Cost Provisions
- Interpretation 9, Cleanup Cost Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5 & SFFAS 6
- Technical Bulletin 2017-1, Intragovernmental Exchange Transactions
- Technical Bulletin 2017-2, Assigning Assets to Component Reporting Entities
- Technical Bulletin 2020-1: Loss Allowance for Intragovenrnmental Receivables (PDF)
- Staff Implementation Guidance 6.1, Clarification of Paragraphs 40-41 of SFFAS 6, Accounting for Property, Plant, and Equipment, as amended
Project Objective:
Because of competing demands in the federal financial management community, some believe existing requirements should be evaluated and any unnecessary requirements eliminated. When appropriate, the Board explores opportunities for burden reduction by considering feedback from the community on changes to existing standards and areas where clarification may be needed to existing standards.
The goal is to be responsive to requests for guidance, especially for requests that meet the above purpose and benefits clearly exceed costs. Requests that clarify existing standards and changes to existing standards that reduce taxpayer burden without negative consequences will fulfill objectives. To accomplish these goals, ongoing efforts may include providing additional forums for preparers, auditors, and users to identify requirements they believe are unnecessary (this could be done through an open-ended written request for input or roundtable discussions). All requests should be assessed against the reporting objectives. Requests may be addressed through the appropriate level of GAAP guidance.
Specific areas to be considered initially:
- Imputed cost – Amending SFFAS 4 to rescind the existing requirement to impute costs that are under reimbursed (inter-entity costs) except for business-type activities.
- Intragovernmental Exchange Transactions – Guidance to aid in classifying certain transactions between government agencies as transfers (recognized on the statement of changes in net position) or as revenue/expense (recognized on the statement of net cost).
- Assigning assets – Assets may be owned by one component of a large department but used and/or funded by another component. There is presently no authoritative guidance to aid management in deciding which component should report each asset.
- Assigning liabilities – Liabilities arising from government-related events may be caused by one component of a large department but paid for by another component. There is presently no authoritative guidance to aid management in deciding which component should report each liability.
HISTORY OF BOARD DELIBERATIONS
February 26-27, 2020
Debt Cancellation
At the February 2020 Board meeting, the Board considered an initial staff draft, Debt Cancellation: An Interpretation of SFFAS 7 paragraph 313. The Board first discussed paragraph 313 of Statement of Federal Financial Accounting Standards (SFFAS) 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, at the October 2019 Board meeting and agreed that an Interpretation would be used at the December 2019 meeting.
The Board agreed to allow time for additional research request by the two members and requested that staff consult with the reporting entities affected by the recent debt cancellation to determine whether staff’s draft Interpretation would have resolved the issues.
The Board agreed to delay further consideration of the debt cancellation exposure draft (ED) pending research into prior debt cancellations and other historical circumstances.
February 26-27, 2020 – Tab G (PDF)
Intragovernmental Allowances for Losses
On February 20, 2020, FASAB staff issued Technical Bulletin (TB) 2020-1, Loss Allowance for Intragovernmental Receivables. TB 2020-1 clarifies that the recognition of losses, provided in paragraphs 40-52 of SFFAS 1, Accounting for Selected Assets and Liabilities, applies to both intragovernmental receivables and receivables from nonfederal entities. The TB also clarifies SFFAS 1 by explaining the allowance approach is not a “write-off” of a receivable. Rather, it is a method for reporting an amount that the entity believes is realizable by requiring only accounts receivable, net of an allowance, to be reported on the financial statements. An allowance recognized in a reporting entity’s financial statements does not alter the underlying statutory authority to collect the receivable or the legal obligation of the other intragovernmental entity to pay.
TB 2020-1 is available at https://fasab.gov/accounting-standards/document-by-chapter/.
December 17-18, 2019
At the December 2019 meeting, the Board considered two potential Interpretation topics under the evaluation of existing standards project.
At the October 2019 meeting, the Board had agreed that paragraph 313 of SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, which pertains to debt cancellation, needed clarification.
The Board agreed that the terms “gain and loss” as used in paragraph 313 need clarification or an explanation that those terms are not required for presentation. It is important to clarify that debt cancellation activity is reported on the statement of changes in net position. An Interpretation will be used to clarify these items. A member requested that a question be included in the exposure draft (ED) that requests feedback on whether the proposed Interpretation resolves ambiguity that may exist in paragraph 313 and provides the necessary clarification.
The Board also agreed that SFFAS 1, Accounting for Selected Assets and Liabilities, paragraph 31, which pertains to non-entity fund balance with Treasury (FBWT), required clarification. The issue relates to how monies received in deposit funds from non-federal sources in anticipation of an order should be reported and presented on the financial statements. The Board agreed that an Interpretation would be the appropriate generally accepted accounting principles vehicle to address the SFFAS 1, paragraph 31 non-entity FBWT issue.
Issue Paper for December 17-18, 2019 – Tab B (PDF)
October 23-24, 2019
Loss Allowance for Intragovernmental Receivables
At the October 2019 meeting, the Board considered the comment letters, staff analysis, and staff’s proposed Technical Bulletin (TB) 2019-1, Loss Allowance for Intragovernmental Receivables. FASAB received 14 comment letters from preparers, auditors, professional associations, and users of federal financial information. Respondents generally agreed with the proposed guidance.
The Board discussed two edits to the proposed TB during the Board meeting. The Board agreed that the excerpt from paragraph 131 of SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, should be removed because it is not necessary. The Board agreed that the paragraph provides the pertinent information that an allowance for intragovernmental receivables may be appropriate, but it may not always be needed.
The Board discussed the issue of effective date and agreed that the TB should be effective upon issuance because it is a clarification of existing standards. However, two component reporting entities are expected to have a delay in submitting their annual financial report. Therefore, the Board agreed the issuance should be held until all component reports are submitted. FASAB anticipates issuing the proposed TB in February 2020.
No FASAB member objected to issuing the proposed TB 2019-1, Loss Allowance for Intragovernmental Receivables.
The exposure draft and the specific questions raised are available on the FASAB website in PDF and Microsoft Word format, respectively. (https://www.fasab.gov/documents-for-comment/).
Issue Paper for October 23-24, 2019 – Tab C (PDF)
SFFAS 7 – Debt Cancellation
The Board considered whether paragraph 313 of SFFAS 7, which pertains to debt cancellation, needs to be revised. Messrs. Soltis and Bell requested that FASAB review paragraph 313 of SFFAS 7 because they believed there may be a disconnect in requirements related to debt cancellation. This is based on an issue raised during the FY 2018 audit cycle.
The Board agreed that fundamentally paragraph 313 is accurate, but it may be the imprecision of the terms “gain/loss” that is the issue. The Board also discussed that a presentation issue may exist and may be related to how U.S. Standard General Ledger accounts roll up to the statement of changes in net position. The Board believed it may be important to clarify that the categorization or captioning is not important as long as it is on the statement of changes in net position.
The Board agreed that the issue regarding debt cancellation required generally accepted accounting principles (GAAP) clarification. Specifically, the guidance would clarify that debt cancellation is reported on the statement of changes in net position but need not be presented as a specific “gain/loss” line item. The guidance would also provide for enhanced disclosures as appropriate.
Most Board members agreed that the issue should be resolved with the lowest level of GAAP guidance afforded. The Board will consider options at the next Board meeting.
Issue Paper for October 23-24, 2019 – Tab H (PDF)
August 28-29, 2019
Assigning Liabilities
On August 16, 2019, FASAB issued Interpretation 9, Cleanup Cost Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5 & SFFAS 6.
With the issuance of SFFAS 47, Reporting Entity, SFFAS 55, Amending Inter-entity Cost Provisions, and Technical Bulletin (TB) 2017-2, Assigning Assets to Component Reporting Entities, there was a need for additional guidance to assist in the application of cleanup cost liability standards at the component reporting entity level.
Interpretation 9 provides clarification and guidance regarding cleanup cost liabilities when the component reporting entity responsible for reporting on an asset during its useful life is different from the component reporting entity that will eventually be responsible for settling the liability for the cleanup cost of that asset.
Intragovernmental Allowances for Losses
On August 30, 2019, FASAB released for comment a proposed TB titled Loss Allowance for Intragovernmental Receivables. The proposed TB would clarify that the recognition of losses, provided in paragraphs 41-51 of SFFAS 1, Accounting for Selected Assets and Liabilities, applies to both intragovernmental receivables and receivables from nonfederal entities. The proposed TB would also clarify that an allowance recognized in a reporting entity’s financial statements does not alter the underlying statutory authority to collect the receivable or legal obligation of the other intragovernmental entity to pay.
The exposure draft and the specific questions raised are available on the FASAB website in PDF and Microsoft Word format, respectively (https://www.fasab.gov/documents-for-comment/). While FASAB encourages that all comments be submitted by October 1, 2019, late submissions are also reviewed by the Board.
June 26-27, 2019
Assigning Liabilities
At the June 2019 Board meeting, FASAB unanimously approved Interpretation of Federal Financial Accounting Standards 9, Cleanup Cost Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5 & SFFAS 6. The Interpretation has been submitted to members representing the Department of the Treasury (Treasury), OMB, and GAO for review. If none of these members object within 45 days after its submission, then FASAB will issue the document. This is anticipated to be August 16, 2019.
The Interpretation provides clarification and guidance regarding cleanup cost liabilities when the component reporting entity responsible for reporting on an asset during its useful life is different from the component reporting entity that will eventually be responsible for settling the liability for the cleanup cost of that asset.
Intragovernmental Allowances for Losses
At the June 2019 Board meeting, the Board considered a draft Technical Bulletin (TB), Loss Allowance for Intragovernmental Receivables, to address a request for guidance from Treasury regarding intragovernmental allowances for losses.
The draft TB would provide clarity and resolve the perceived uncertainty related to intragovernmental allowances for losses. This TB would clarify SFFAS 1, Accounting for Selected Assets and Liabilities, by establishing that even though SFFAS 1 identifies the two types of receivables, the absence of explicit guidance distinguishing between the accounting of intragovernmental receivables and receivables from nonfederal entities does not mean the standards only apply to receivables from nonfederal entities. This TB would also clarify that recognition of losses, provided in paragraphs 41-51 of SFFAS 1, apply to both intragovernmental receivables and receivables from nonfederal entities.
The majority of the Board expressed support for the TB. However, one member disagreed with the guidance in the document. After discussing the member’s concerns, the Board confirmed its majority position that there is no differentiation in the standards as it applies to both receivables. Members agreed to certain edits to the draft TB based on the member’s concerns. Staff will add language to be more specific that, although there is an allowance, monies owed can still be collected.
The Board will review an updated TB, Loss Allowance for Intragovernmental Receivables, that incorporates the agreed upon changes for a 15-day review. If a majority of the members do not object, the TB will be exposed to the public for comment.
Issue Paper for June 26-27, 2019 – Tab A and I (PDF)
April 24-25, 2019
Assigning Liabilities
At the April 2019 meeting, the Board discussed responses to the ED, Guidance on Recognizing Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5, and considered the staff analysis and recommendations.
The majority of respondents generally disagreed with the proposal that the sub-component reporting entity responsible for managing litigation would have the information needed to recognize contingent liabilities and should report information in accordance with SFFAS 5, Accounting for Liabilities of the Federal Government. In addition, the agency that requested guidance in this area determined that the impact of not including guidance would be immaterial or minimal. No other contingent liability examples have been provided for consideration.
The Board agreed with staff’s recommendation to remove guidance for contingent liabilities from the proposed interpretation because there does not appear to be a need for guidance in the contingent liability area.
The majority of respondents generally agreed that the SFFAS 5 liability recognition criterion that “[a] future outflow or other sacrifice of resources is probable” should be considered met by the component reporting entity that recognizes the general property, plant, and equipment (PP&E) during its useful life. In that case, the liability should be reported on the balance sheet of the component reporting entity recognizing the general PP&E until the general PP&E and the associated liability are transferred to another entity for cleanup.
The Board agreed with staff’s recommendation to move forward with the proposed Interpretation that addressed the cleanup costs. Staff will provide a draft proposed Interpretation before the June 2019 Board meeting for member comments. Staff will incorporate Board member comments with the goal of providing a pre-ballot proposed Interpretation at the June 2019 meeting.
Intragovernmental Allowances for Losses
At the April 2019 Board meeting, Treasury’s Bureau of the Fiscal Service representatives provided the Board their perspective on the intragovernmental allowances for losses issue. Treasury had previously raised the concern regarding the recognition of losses against intragovernmental receivables among federal entities. Treasury does not believe it is appropriate for an agency to record a loss allowance for intragovernmental receivables, particularly in cases where the balances are required by statute to be repaid.
The Treasury representatives presented an overview of the intragovernmental allowances for losses, focusing on the history and composition of the intragovernmental differences. The presentation also provided detail regarding the Treasury Judgement Fund, one of the largest material allowances.
Treasury also discussed that it issued policy and made system changes to require no allowance for losses of intragovernmental receivables and to ensure consistent treatment government-wide. However, Treasury’s Deputy Chief Financial Officer did not believe there was adequate justification to change the accounting for the Treasury Judgment Fund as suggested by the policy. Treasury believes SFFAS 1, Accounting for Selected Assets and Liabilities, paragraph 44 is not clear on whether it applies to intragovernmental receivables, implying that there could be delineation in the application of doubtful accounts against “public” and “intragovernmental” receivables.
The Board discussed whether the intragovernmental allowances for losses issue needed to be addressed. Certain members believed that the issues were bookkeeping or not within FASAB’s purview. In addition, some believed it could be resolved without FASAB actions, either through the closing package, top level journal vouchers, or simply through judgment. The Board also noted that the allowance approach is not actually a “write-off” of a receivable; it is an adjustment to estimate the amount that is realizable.
However, the Board agreed that there appeared to be uncertainty regarding the language related to intragovernmental allowances for losses in SFFAS 1. The Board will determine how to clarify in the appropriate document according to the generally accepting accounting principles (GAAP) hierarchy.
Issue Paper for April 24-25, 2019 – Tab A (PDF)
February 27, 2019
The Board did not discuss the evaluation of existing standards project during the February 2019 Board meeting.
December 19-20, 2018
Assigning Liabilities
In light of the partial government shutdown, FASAB has extended the comment deadline for the ED Guidance on Recognizing Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5 to March 11, 2019.)
FASAB is seeking comments on the proposed Interpretation, Guidance on Recognizing Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5. The Interpretation would provide clarification for contingent liabilities when one or more sub-component reporting entities within a single component reporting entity are designated to manage litigation and/or pay any resulting liabilities on behalf of one or more other sub-component reporting entities. The Interpretation would also provide guidance regarding cleanup cost liabilities when the component reporting entity responsible for reporting on an asset during its useful life is different from the component reporting entity that will eventually be responsible for environmental remediation upon disposal of that asset.
The ED and the specific questions raised are available on the FASAB website in PDF and Microsoft Word format, respectively (http://www.fasab.gov/documents-for-comment/).
Intragovernmental Allowances
In June 2018, the Department of the Treasury (Treasury) raised a concern regarding the recognition of losses against intragovernmental receivables among federal entities. Treasury does not believe it is appropriate for an agency to record a loss allowance for intragovernmental receivables, particularly in cases where the balances are required by statute to be repaid.
The educational session at the December 2018 meeting provided the Board with a perspective from an agency with significant intragovernmental receivables. A representative from the General Services Administration (GSA) provided a brief overview of GSA’s types of receivables and reporting. No specific decisions were made at the meeting. An additional educational session is planned as the Board considers the topic.
Issue Paper for December 19-20, 2018 – Tab E (PDF)
October 24-25, 2018
Assigning Liabilities
On October 17, 2018, FASAB requested comments on a proposed Interpretation, Guidance on Recognizing Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5. The proposed Interpretation would provide guidance to assist in the application of identified general liability standards and principles at the component reporting entity level. Comments are due by January 17, 2019.
The Interpretation would provide clarification for contingent liabilities when one or more sub-component reporting entities within a single component reporting entity are designated to manage litigation and/or pay any resulting liabilities on behalf of one or more other sub-component reporting entities. The Interpretation would also provide guidance regarding cleanup cost liabilities when the component reporting entity responsible for reporting on an asset during its useful life is different from the component reporting entity that will eventually be responsible for environmental remediation upon disposal of that asset.
The ED and the specific questions raised are available on the FASAB website (http://www.fasab.gov/documents-for-comment/).
August 29-30, 2018
Assigning Liabilities
The Board reviewed a draft of an ED Interpretation titled Guidance on Identified Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5. The document is available in the Board briefing materials at tab A.
The draft ED Interpretation is intended to provide clarification and guidance regarding contingent liabilities and cleanup costs when multiple component reporting entities are involved. The draft ED Interpretation would provide clarification for contingent liabilities where a sub-component reporting entity or different sub-component reporting entities within a single component reporting entity may be designated to manage litigation and/or pay any resulting liabilities on behalf of other sub-component reporting entities. It would also provide guidance regarding cleanup cost liabilities where the component reporting entity responsible for reporting the asset is different from the component reporting entity that will eventually be responsible for environmental remediation upon disposal of that asset.
The Board did not have any open technical issues pertaining to the draft ED Interpretation and agreed with staff’s recommendation to move to a pre-ballot draft after the August meeting. The ED Interpretation is anticipated to be released in October 2018.
Issue Paper for August 29-30, 2018 – Tab A (PDF)
June 27-28, 2018
Assigning Liabilities
At the June 2018 meeting, the Board considered options for guidance on selected liabilities. Due to recent pronouncements (SFFAS 47, Reporting Entity; SFFAS 55; and Technical Bulletin [TB] 2017-2, Assigning Assets to Component Reporting Entities), there may be a need for additional guidance to assist in the application of the general liability standards and principles. This new guidance could address issues that may not have been considered when the pronouncements were originally written. Specifically, guidance may be needed for clean-up costs and contingent liabilities.
Because guidance regarding the application of the general liability standards has been provided through pronouncements at a lower level of generally accepted accounting principles (GAAP), such as TBs and Technical Releases, they may require updating to ensure conformance and consistency with new pronouncements. Necessary updates will be made to the affected GAAP documents.
Issue Paper for June 27-28, 2018 – Tab A (PDF)
Proposed Staff Implementation Guidance 6.1
At the June 2018 meeting, the Board considered the comment letters on staff’s proposed Staff Implementation Guidance (SIG) 6.1: Clarification of Paragraphs 40-41 of SFFAS 6, Accounting for Property, Plant, and Equipment, as amended. SIG 6.1 answers the question regarding use of both the alternative methods for establishing opening balances (as allowed by SFFAS 50, Establishing Opening Balances for General Property, Plant, and Equipment: Amending Statement of Federal Financial Accounting Standards (SFFAS) 6, SFFAS 10, SFFAS 23, and Rescinding SFFAS 35) and the alternative for estimated net remaining cost per the second sentence in paragraph 41 of SFFAS 6, as amended.
A majority of members did not object to issuing the SIG. FASAB staff issued SIG 6.1 on July 17, 2018.
April 25-26, 2018
Assigning Liabilities
At the April 2018 meeting, the Federal Accounting Standards Advisory Board (FASAB or “the Board”) considered the issue of assigning liabilities and whether additional flexibilities or guidance should be provided in a generally accepted accounting principles (GAAP) document.
This topic of “assigning liabilities” addresses the last issue area presented at the June 2017 meeting that related to the Department of Defense (DoD) request for guidance regarding the need for certain flexibilities.
The Board considered specific examples of liability issues at DoD along with staff’s recommendation for each (see the April 2018 briefing materials at tab A). Much of the Board’s discussion focused on whether there was a general liability principle that could be established to address the issues.
The Board requested staff determine if there was a general liability principle that could be applied. In determining if a general principle can be developed, staff should consider unintended consequences, including effects on other agencies and consistency with current GAAP pronouncements. The Board also directed staff to identify GAAP literature that may need to be updated as a result of the general liability principal.
Proposed Staff Implementation Guidance 6.1
FASAB staff released proposed Staff Implementation Guidance (SIG) 6.1, Clarification of Paragraphs 40-41 of SFFAS 6, Accounting for Property, Plant, and Equipment, as amended. The proposed SIG is intended to assist preparers in the application of FASAB literature. SIG does not establish new requirements.
After the issuance of Statement of Federal Financial Accounting Standards (SFFAS) 50, Establishing Opening Balances for General Property, Plant, and Equipment: Amending Statement of Federal Financial Accounting Standards (SFFAS) 6, SFFAS 10, SFFAS 23, and Rescinding SFFAS 35, a question regarding use of both the alternative methods for establishing opening balances and the alternative for estimated net remaining cost per the second sentence in paragraph 41 of SFFAS 6, as amended, was raised. The SIG answers the question and provides additional explanation.
FASAB staff requests comments on the proposal by May 31, 2018. The proposed SIG is available at the FASAB website at http://www.fasab.gov/documents-for-comment/.
Issue Paper for April 25-26, 2018 – Tab A (PDF)
February 21-22, 2018
The Board approved Statement of Federal Financial Accounting Standards (SFFAS) 55, Amending Inter-entity Cost Provisions. It was submitted to the sponsors for the 90-day review period.
This Statement will revise SFFAS 4, Managerial Cost Accounting Standards and Concepts, to provide for the continued recognition of significant inter-entity costs by business-type activities and will rescind the following:
- SFFAS 30, Inter-Entity Cost Implementation: Amending SFFAS 4, Managerial Cost Accounting Standards and Concepts
- Interpretation 6, Accounting for Imputed Intra-departmental Costs: An Interpretation of SFFAS No. 4
With the rescission of SFFAS 30, paragraphs 110 and 111 of SFFAS 4, as amended, will be restored to their original language prior to the issuance of SFFAS 30. However, the Board amended the standards to require business-type activities to recognize inter-entity costs. Recognition of inter-entity costs by activities that are not business-type activities will not be required with the exception of inter-entity costs for personnel benefits and the Treasury Judgment Fund settlements unless otherwise directed by the Office of Management and Budget (OMB). Notwithstanding the absence of a requirement, non-business-type activities may elect to recognize imputed cost and corresponding imputed financing for other types of inter-entity costs.
The Statement will be effective for periods beginning after September 30, 2018, with earlier implementation permitted.
Issue Paper for February 2018 – Tab D (PDF)
December 20, 2017
Amending Inter-entity Cost Provisions
At the December 2017 meeting, the Board considered responses to the exposure draft (ED) titled Amending Inter-entity Cost Provisions. The Board also reviewed staff’s analysis and an updated proposed Statement. A majority of respondents generally agreed with the proposal to revise Statement of Federal Financial Accounting Standards (SFFAS) 4, Managerial Cost Accounting Standards and Concepts, to provide for recognition of inter-entity costs by business-type activities and to rescind SFFAS 30, Inter-entity Cost Implementation: Amending SFFAS 4, Managerial Cost Accounting Standards and Concepts, and Interpretation 6, Accounting for Imputed Intra-departmental Costs: An Interpretation of SFFAS No. 4.
The Board discussed edits to clarify that entities may elect to recognize imputed cost. Members agreed to move to a pre-ballot draft after the meeting and a ballot draft for the February 2018 meeting.
Issue Paper for December 20, 2017 – Tab A (PDF)
October 25-26, 2017
Intragovernmental Exchange Transactions
At the October 2017 meeting, the Board considered the comment letters and staff’s proposed Technical Bulletin (TB) 2017-1, Intragovernmental Exchange Transactions. The majority of respondents generally agreed with the proposed guidance. Specifically, respondents believed the TB provided guidance to aid in determining whether intragovernmental arrangements were exchange transactions. One respondent neither agreed nor disagreed with the proposal. One respondent disagreed with the proposal.
Respondents provided minor suggestions and editorial comments that were incorporated into the final guidance or addressed in the basis for conclusions. In the proposed Intragovernmental Exchange Transactions TB, staff clarified the following:
- Recognition and measurement of exchange transactions is excluded from the scope of the TB.
- Revenue recognition is based on amounts billed by the providing entity to the receiving entity.
- SFFAS 4, Managerial Cost Accounting Standards and Concepts, as amended, is the basis for determining full cost.
A majority of members did not object to issuing the TB. FASAB staff issued TB 2017-1, Intragovernmental Exchange Transactions, on November 1, 2017.
Assigning Assets to Component Entities
At the October 2017 meeting, the Board considered the comment letters and staff’s proposed TB 2017-2, Assigning Assets to Component Reporting Entities. The majority of respondents generally agreed with the proposed guidance. Specifically, respondents believed the TB provided guidance to address areas not directly covered in existing Statements and clarified that assets may be assigned by a reporting entity to its component reporting entities on a rational and consistent basis. The majority of respondents also agreed that reporting entities should describe the policies used to assign significant assets.
Respondents provided minor suggestions and editorial comments that were incorporated into the final guidance or addressed in the basis for conclusions. In the proposed Assigning Assets to Component Reporting Entities TB, staff clarified the following:
- In the year of implementation, assets assigned to another component reporting entity should be treated as transfers of assets per SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting.
- This guidance is permissive and does not require any agency to change accounting practices.
A majority of members did not object to issuing the TB. FASAB staff issued TB 2017-2, Assigning Assets to Component Reporting Entities on November 1, 2017.
August 30-31, 2017
A new project was added to accommodate requests for guidance, especially when benefits clearly exceed costs. When appropriate, the Board explores opportunities for burden reduction by considering feedback from the community on changes and clarification to existing standards and areas.
Amending Inter-entity Cost Provisions
SFFAS 4, Managerial Cost Accounting Standards and Concepts, and Interpretation 6, Accounting for Imputed Intra-departmental Costs: An Interpretation of SFFAS No. 4, require reporting entities to recognize the full costs of services received from other federal reporting entities, even if there is no requirement to reimburse the providing reporting entity for the full cost of such services. Consideration of the implementation challenges faced by the Department of Defense (DoD) and the experiences of other federal reporting entities led FASAB to reconsider certain inter-entity cost provisions for all federal reporting entities.
The Board approved an ED at the August 2017 meeting, and the proposed SFFAS entitled Amending Inter-entity Cost Provisions was released. This Statement would revise SFFAS 4 to provide for recognition of inter-entity costs by business-type activities and rescind the following:
- SFFAS 30, Inter-entity Cost Implementation: Amending SFFAS 4, Managerial Cost Accounting Standards and Concepts
- Interpretation 6, Accounting for Imputed Intra-departmental Costs: An Interpretation of SFFAS No. 4
The Board requests comments on the ED by November 30, 2017.
Assigning Assets to Component Reporting Entities
Assets may be owned by one component of a larger reporting entity, such as a department, but used and/or funded by another component of the same entity. Individual standards addressing asset recognition and related reporting do not provide detailed guidance to resolve the question of which component reporting entity should report an asset. This is especially challenging for large, complex departments, such as DoD, that have numerous components and sub-components.
A proposed Technical Bulletin (TB), entitled Assigning Assets to Component Reporting Entities, was released for comments. The TB would provide that assets may be assigned by a reporting entity to its component reporting entities on a rational and consistent basis. For example, an asset would be assigned to the component reporting entity holding legal title, funding the asset, using the asset in its operations, or on another rational and consistent basis. There should be a process in place to ensure all assets within a reporting entity are assigned to a component reporting entity.
Comments are requested by October 13, 2017.
Intragovernmental Exchange Transactions
A proposed TB, entitled Intragovernmental Exchange Transactions, was released for comment on September 5, 2017. Comments were requested by September 29, 2017. The TB would provide guidance for determining when an intragovernmental transaction is an exchange transaction.
Issue Papers for August 30-31, 2017 – Tab B1, B2, and G (PDF)