ACCOUNTING AND AUDITING POLICY COMMITTEE MEETING

FINAL MINUTES

The meeting was convened at 1:30 PM in Room 4N30 of the GAO Building, 441 G St., N.W. Washington, D.C.

ADMINISTRATIVE MATTERS

Attendance

Members Payne, Dacey, David, Jordan, Kull, Lane, Longo, Pugh, and Short attended. Mr. Schaeffer was not present. Ms. Payne announced that Gregory Friedman, Acting Inspector General of the Department of Energy (who could not attend today), has been appointed to take the place of Mr. Bloom.

Mr. Longo announced his resignation from the AAPC, effective June 1, due to his acceptance of a position outside the federal government.

Minutes

Ms. Payne noted that January 8 minutes, posted on the AAPC Home Page for review by AAPC members, have been amended to reflect the changes requested by members and are now final.

AGENDA ITEMS

Property, Plant and Equipment Forum Report

Mr. David gave a status report on the planning for the PP&E forum on April 27 and 28. The topics and speakers are set. He noted that about 400 registrations have been received so far. He distributed copies of the final agenda.

Credit Reform Discussion

Mr. Short noted that task force members' schedules have not made it possible to have a meeting yet but should in a week or so. At the task force meeting Mr. Short anticipates members will be able to finalize the paper they have been reviewing and then have it ready for review by AAPC members.

Ms. Payne noted that the AICPA has formed a new federal accounting and auditing subcommittee of the already established committee addressing primarily state and local accounting and auditing--the Governmental Accounting and Auditing Committee (GAAC). Mr. Pugh , a member of the new subcommittee, distributed a document giving highlights of the first meeting and the objectives of the subcommittee. He had agreed to serve as the liaison between the AAPC and the subcommittee. He noted that:

--the subcommittee will provide a forum for AICPA to weigh in on pending legislation, FASAB and AAPC issues;

--Phil Calder, Chief Accountant of GAO and GAO's member of the FASAB, and Mitch Laine of the CFO community are the other Federal members of the subcommittee and the remaining members are from various CPA firms; and

--the subcommittee plans to meet every two months.

Agenda Committee

Mr. Longo, chair of the Agenda Committee, recommended the following two issues be addressed by the AAPC:

- Provide assistance to OMB in its efforts in identifying inter-entity costs. This issue is rooted in Statement of Federal Financial Accounting Standards No. 4, Managerial Cost Accounting, which suggests that OMB, with assistance from the FASAB staff, identify specific inter-entity costs for entities to begin recognizing. He distributed a letter from Ed DeSeve, the Controller and acting Deputy Director for Management at OMB, and one from the Executive Director of FASAB which provide background information on this issue. In his memo, Ed DeSeve states that AAPC will assist in developing guidance on specific inter-agency costs. He identifies the following specific costs that current accounting standards require agencies to include in their financial statements for fiscal years 1998 and 1999: (1) employees' pension benefits, (2) health, life insurance , and other benefits for retired employees, (3) other post-employment benefits for retired, terminated, and inactive employees, and (4) losses in litigation proceedings.

An AAPC task force, chaired by James Short, will develop the guidance. Other members of the task force will include AAPC members Dacey, Jordan, Lane, Longo (until May 29); FASAB staff member Richard Mayo; and OMB's Justine Rodriguez. Mr. Short will add more members to the task force. Publicizing the task force was also briefly discussed. Mr. Short said he will put an announcement in the Federal Register and Ms. Jordan said she will tell the PCIE.

- Guidance on the classification of interest on Treasury securities held by the Civil service retirement and Disability Fund was requested by the Office of Personnel Management (OPM). Since the issue affects only one agency and requires clarification of an apparent conflict between the general and specific guidance in SFFAS No. 7, Ms. Payne proposed and the agenda committee agreed that FASAB could more appropriately take up the issue.

The AAPC agreed to add the inter-entity issue to their agenda and to have FASAB address the request from OPM.

Nest Meeting

The next scheduled meeting will be Thursday, May 14 at 1:30 P.M. in Room 4N30.

Adjournment

The meeting was adjourned at 3:20 PM.