Investments and Other Equity Interests in Non-Federal Entities

FASAB Contact: FASAB Staff,, 202-512-7350

Project Objective:

Federal standards address only two types of investments – investments in federal securities (excluding those available for sale or early redemption) and direct loans.  Long-standing practice has been for agencies to rely on analogies to existing FASAB standards or to other literature to fill this void.  Currently, some such investments are accounted for by analogy to SFFAS 2, Accounting for Direct Loans and Loan Guarantees, but using a market risk adjusted discount rate and others at fair value in accordance with Office of Management and Budget (OMB) Circular A-136.  In addition to holding securities, a variety of transactions are entered into including exchanges of securities, extension of additional credit facilities, and modifications.  The objective of this project is to provide accounting standards for federal investments and other equity interests in non-federal entities, including various assets that can result from the federal government’s actions in stabilizing the economy.

April 25-26, 2012 Board Meeting

This project was not discussed at the April Board meeting; however, an update was provided on the project’s status. Background research and planning for task force efforts are ongoing.

Issue Paper for April

August 24-25, 2011 Board Meeting

At the August 2011 Board meeting, staff presented a draft project plan that included an in depth study of reporting requirements by other standard setters, for example, the current joint project by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).

The Board discussed the project plan and decided that due to the pending nature of the FASB/IASB requirements, the scope of this project should be narrowed to primarily address the federal government’s bailout activities, which are distinct from private sector investments because the unique purpose of such activities is to stabilize the economy rather than to earn a profit on the investment.

The planned task force for this approach would primarily include subject matter experts on the federal government’s bailout activities and credit reform accounting from Treasury, the Government Accountability Office and Office of Management and Budget. Staff will revise the project plan and timeline based upon the above changes.

Issue Paper for August 2011

Issue Paper – Appendix for August 2011