ACCOUNTING AND AUDITING POLICY COMMITTEE MEETING
MINUTES
The meeting was convened at 1:13 PM in Room 4N30 of the GAO Building, 441 G St., N.W.
Washington, D.C.
ADMINISTRATIVE MATTERS
Attendance
Members Bloom, Payne, Dacey, David, Jordan, Lane, Longo, Pugh, Schaeffer, and Short attended.
Mr. Kull was absent.
Minutes
Ms. Payne noted that, in line with the consensus agreement from the October 9 meeting, the draft
minutes from that meeting had been sent electronically for review and comment by AAPC members.
Revisions requested were duly made and draft minutes again circulated for review. There being no
further changes, the minutes were finalized and posted to the AAPC home page before the
November meeting. After a brief discussion on this procedure, it was agreed to continue this process
for future meetings.
AGENDA ITEMS
Review of draft guidance on legal representation letters
Mr. Pugh reported on the status. He provided the revised guidance document which incorporated
additional comments from AAPC members and the Department of Justice. The AAPC members
approved the revised document. Ms. Payne requested AAPC members Pugh and Short to work with
OMB on issuing this approved document. OMB and GAO will review the recommendation. If
approved, OMB will issue a technical release to agencies. Meanwhile, the full text will be available on
the AAPC web page. It was noted that this action need not go to FASAB, since it is an auditing issue.
Only accounting issues need to go to FASAB.
There was a discussion on how due process should operate insofar as the dissemination of AAPC's
recommendations is concerned. The consensus among AAPC members was that dissemination should
be done through OMB, Financenet, and by having PCIE members inform their constituents. Ms. Payne
noted that FASAB Chairperson David Mosso could brief PCIE members on AAPC's role and function.
Also, AAPC's actions could be communicated via the Federal Audit Executives Council (FAEC).
Environmental Liabilities
Committee members reviewed draft guidance on environmental liabilities. Ms. Payne highlighted the
changes made to the document and members discussed the revision. After resolving one member's
question, the AAPC approved the document. Ms. Payne indicated that she will send it to FASAB
members for review and request a two week turnaround. If approved, it would then go to OMB for
issuance to the agencies.
Status Report on Property, Plant and Equipment Forum
Mr. David reviewed the plans made to date for the forum. It is tentatively scheduled to be held in the
Jefferson Auditorium of the Department of Agriculture. He presented a proposed agenda. For the first
day: a presentation by David Mosso, a panel discussion with representatives from GAO, OMB, and
Treasury, followed by a series of panels on various topics. Each panel would include two to three
panelists and be followed by questions and answers. For the second day: Gene Dodaro from GAO or
Ed DeSeve from OMB to speak on the issue of accounting and auditing communities working together,
followed by additional panels. Mr. David will continue to plan after getting feedback from AAPC
members.
There was some discussion on the capitalization threshold topic as presented in the proposed agenda.
It was agreed that the discussion topic should focus on the "art" of establishing thresholds at the entity
level rather than the current text which refers to establishing a government-wide threshold. Another
member commented that there are basic principles for establishing thresholds and that these should be
covered. Another member raised the issue of safeguarding of assets and that the inventory ought to
include at least a physical count of items even if a dollar value would not be assigned to each item.
Other members agreed that property accountability should be maintained and that this should be
addressed in the forum.
An issue was raised regarding applying the capitalization threshold to bulk purchases of small dollar
items and telecommunications equipment. It was suggested that these issues were generating a lot of
discussion at agencies. There is a great deal of diversity in practice and there would be value in
discussing 'best practices' related to these issues. Mr. David indicated that this topic might not fit with
the overall theme of 'valuing PP&E' for which you do not have historical cost information. The
Committee agreed and suggested that it may not be best to try to cover this additional topic.
Ms. Jordan asked if private accounting firms would be invited to the forum so they could inform their
clients on current practices and provide feedback on practices being considered 'best practices.' Private
firms might also contribute information about private sector practices.
Ms. Payne suggested that the group consider issues relating to systems to account for PP&E such as
the information elements to include. For example, should deferred maintenance be collected in the
system?
Mr. David requested feedback and comments on his planning for the forum. He asked for feedback on
topics, time allotted, potential speakers, and dates for the forum. Regarding the date, Mr. David
acknowledged that the current date in February would be difficult for agencies involved in issuing FY97
statements by March 1. The Committee suggested that the date be pushed back to April. Mr. David
indicated that he planned to ask speakers to put together a written document -- a proceedings paper.
The AAPC agreed on a one and a half day length for the forum.
Agenda Committee Recommendations
Mr. Longo, chair of the Agenda Committee, recommended adding to the AAPC agenda Issue # 12, related to Direct Loan and Loan Guarantee Subsidy Estimates. Specifically, the issue is what methods are acceptable for formulating and auditing direct loan and loan guarantee subsidy estimates.
The sub-issues addressed in the paper from the Agenda Committee include:
- procedures for preparing estimates and reestimates including acceptable interim alternatives
in the absence of the ideal data store and estimation methods,
- internal control and substantive procedures that may be used to audit credit subsidy estimates
and reestimates, and
-guidance on acceptable sources of documentation for subsidy estimates and reestimates.
The Agenda Committee did not believe that the paper could be divided up by topic. The Agenda
Committee asked that a group of AAPC members with expertise in credit reform issues carefully review
the document.
Mr. Longo indicated that this paper adds to the current audit literature on auditing estimates and that it
would lead to a consistent governmentwide approach to Credit Reform estimates. Ms. Jordan suggested
that specific questions that are answered by the document be listed with references to where the answer
appears. She believes this would make the document more user friendly and consistent with the AAPC
mission to answer specific questions (issues).
The AAPC agreed to the recommendation to add this issue to the AAPC agenda. Ms. Payne appointed
AAPC members Messrs. Short (Chair) (OMB), Bloom (Department of Education), Dacey (GAO), and
David (Department of Agriculture) as members of a task force to study this issue, add the questions
suggested by Ms. Jordan, and give a progress report at the December 11 AAPC meeting. Mr. David
suggested that the AAPC members seek views from their communities on this document.
Mr. David recommended that the two groups working on Credit Reform issues--the Government-wide
Group and the CFO Council's group--be represented on the AAPC Credit Reform Committee. An
AAPC member would chair the AAPC Committee with the chairs of the two other groups as vice-chairs.
This structure would provide a link to AAPC but preserve the CFO Council group as a separate entity
that might address operational issues that do not come to AAPC. Mr. Short will serve as the
Chairperson. The AAPC approved this plan.
Next Meeting
The next meeting is scheduled for Thursday, December 11, at 1:00, in Room 4N30.
Adjournment
The meeting was adjourned at 2:30 PM.