ACCOUNTING AND AUDITING POLICY COMMITTEE MEETING
MINUTES - September 12, 1997
The meeting was convened at 1:08 PM by Wendy Payne, Chairperson.
ADMINISTRATIVE MATTERS
Attendance
Chairperson Payne, Messrs. Bloom, Dacey, David, Kull, Lane, Longo, Pugh, Schaeffer (arrived
after the break), and Short. Ms. Jordan was absent.
Minutes
The minutes of the July 30 meeting were approved after discussion about the intended wording
regarding Issue No. 3 on page 2., specifically whether guidance should ensure that "preparation and
audit requirements," are provided. Some members felt that this wording should be substituted for
"audit assurance" currently in the minutes. It was decided that the minutes should indicate that the
issue statement had been changed (consistent with the treatment of Issue 1).
AAPC Facts
Chairperson Payne asked Committee members to review the newly produced AAPC Facts and
recommend any desired changes; she noted that a similar document has been prepared about
FASAB. This fact sheet summarizes the background and purpose of AAPC.
AGENDA ITEMS
Review of draft guidance on legal representation letters
Mr. Pugh asked for feedback on what the appropriate position of the Committee should be. He
summarized and discussed the issues as presented in the revised guidance drafted on this issue. He
then invited representatives from the Department of Justice to come to the table to give their views
on the issue of who should take the lead in providing legal representation letters. These
representatives were: Jim Williams, Director, Finance Staff, Justice Management Division; Linda
Liner, Budget Officer, Civil Division; and Marcia Johnson, Legal Counsel, Executive Office, U. S.
Attorneys. They discussed whether claims involving the Treasury Judgment Fund go to a non-Justice agency before going to the Justice Department. Justice wants the agency involved with the
claim to coordinate seeking additional information for the evaluation letter with Justice attorneys.
They also asserted that agencies have an obligation to know which cases Justice is litigating and to
be aware of how complete the information is which the auditor is provided on a particular case.
The Committee members discussed issues of completeness and internal controls associated with
providing legal representation letters. The primary concerns were that current systems (databases) to
track litigation handled by Justice were not adequate. (Certain Committee members were also
working directly with Justice to resolve some of the problems associated with completeness.) In
addition, internal controls at each agency might not result in reliable and complete legal
representation letters. In general, the Committee members were in agreement that there is a problem
in this area. However, many members stated that there is no need for additional guidance on
completeness and that the draft guidance goes beyond the stated issue (responsibility for providing
legal representation letters).
Chairperson Payne asked Mr. Pugh to draft a revised paper in line with the issue Justice requested guidance on and to provide separate pieces on the completeness issue brought out in the Committee's discussion today. His paper will be distributed to Committee members before the next meeting of the Committee.
Review of draft guidance on environmental liabilities
Chairperson Payne began the discussion, noting that the document provided to the Committee
(which included all four chapters rather than the two agreed to at the last meeting) has been revised
by FASAB staff, mainly by Monica Valentine, to present only the first two chapters. Ms. Payne
will circulate the revised document to AAPC members for a fatal flaw review, then to the FASAB
Board for approval, and ultimately to OMB.
Report on Intra-Agency Confirmations
Mr. Dacey reported on the progress made. He is working with the Office of Personnel Management
and the Social Security Administration. Procedures for audit assurance should be obtained on
pension expense. Agency consensus should be obtained. Mr. Longo stated that there should be some
way to institutionalize changes so that the same kind of discussion need not take place year after
year. The Committee decided to leave this item on the agenda as a long range issue and obtain
interim reports. In addition, Mr. Dacey will work with individual agencies to resolve issues related
to intra-agency confirmations.
Agenda Committee Recommendations
Mr. Longo presented the three issues for consideration by the AAPC:
-Issue #8: When documentation to support the cost of general PP&E is not available, what
acceptable alternatives are available to arrive at a value for financial reporting purposes?
-Issue #9: Should the footnotes to the Department of Labor's statements disclose, for the Black
Lung Disability Trust Fund (BLDTF ) (part C of the Black Lung Program ), the present value of
estimated future benefit payments for existing claims?
-Issue #10: Should costs incurred by the Drug Enforcement Administration (DEA) to alter or
modify space prior to DEA occupying the space be accounted for as leasehold improvements or as
expenses in the period incurred?
Discussion of Issues
Issue #8
Ms. Payne cited SSFAS 6, Property, Plant, and Equipment. Many Committee members agreed that
SFFAS No. 6 provided sufficient implementation guidance. Ms. Payne stated that, while additional
authoritative standards may not be needed, "best practices" may be useful to agencies in
implementing the standards. Mr. David observed that many people have looked at the standard and
still have problems in applying it. Members agreed that implementation problems are widespread.
There was a consensus that AAPC would have to devote much effort to dealing with this issue. The
AAPC agreed to add this issue to its agenda and study ways to offer assistance/guidance to the
community.
Issue #9
Some members felt that perhaps FASAB should resolve this issue - under Social Insurance. Ms. Payne indicated that FASAB staff had researched the issue and that neither FASAB standards nor
private practice literature requires the disclosures that the Labor IG proposes. It was noted that an
auditor could add a statement to the auditor's report emphasizing a matter (while still providing an
unqualified opinion). As far as existing standards go, it was observed that a standard is only the
minimum that is required; that is, an agency is free to disclose more information than is required by
the standard. The AAPC decided not to add this issue to its agenda. However, the AAPC will write
back to the Department of Labor to point out what options are available
The Committee requested Ms. Payne to include with the monthly minutes copies of any reply letters
she sends back to agencies who have submitted issue questions.
Issue #10
It was noted that a great deal of literature already exists on this point and that there is nothing new to
add. The APPC decided not to add this issue to its agenda. The Committee asked the Chairperson to
reply to the requesting agency, DEA, informing DEA of the Committee's decision and encouraging
the agency to consider the existing literature on the subject.
Summary and Issue Assignments
Ms. Payne summarized the discussion of issues by noting that Issue #8, PP&E, has been added to
the agenda. Mr. David volunteered to take the lead in developing the recommended response; also,
Messrs. Lane, Bloom, and Longo agreed to work with him on it.
There was brief discussion on possible other issues to add to the agenda in the future. Credit reform was one suggestion.
The meeting adjourned at 3:55 p.m.