ACCOUNTING AND AUDITING POLICY COMMITTEE

MINUTES --July 30, 1997

The meeting was called to order at 1:10 p.m.

ADMINISTRATIVE MATTERS

• Attendance
  
  

  The following members were present: Chairperson Payne, Ms. Jordan, and Messrs. Bloom, Dacey, David, Kull, Longo, Pugh, and Short. Mr. Tom Gimbel attended for Mr. Lane. Mr. Schaeffer was unable to attend due to jury duty.
  
  

• Minutes
  
  

  The minutes of the July 16 meeting were discussed. One sentence stating that AAPC will actually set standards caused concern. Ms. Payne is to review the tapes of the July 16 meeting and talk to Mr. Mosso to determine if the sentence should stand, be rewritten, or deleted. The members decided the minutes should be briefer in the future and not specifically identify members making a point. Ms. Payne will correct the minutes of July 16, circulate them for members' fatal flaw review, and have them posted to Financenet before the next meeting.
  
  

• Charter and Operating Procedures
  
  

  Chairperson Payne stated that changes were made to the Charter and Operating Procedures to recognize GAO's role in the audit process and guidance to which the Principals agreed. The members discussed the Charter and Operating Procedures and made additional changes. Ms. Payne will check with the lawyers concerning a possible wording change in the documents concerning task force versus committee, make changes, and finalize. Members decided the documents did not need to be circulated for comments to be finalized.
  
  

• Letter to CFO Council and PCIE
  
  

  Chairperson Payne drafted a letter to the members of the CFO Council and the President's Council on Integrity and Efficiency (PCIE) to report on the status of the AAPC and to forward the AAPC Charter and Operating Procedures and the guidance and format for the submission of issues along with an illustration. Ms. Payne asked for comments from AAPC members by Wednesday, August 6, 1997, so the letter may be distributed Friday, August 8, 1997.
  
  
  
  

  AGENDA ITEMS
  
  

  Mr. Longo stated that the Agenda Committee distributed a memorandum of AAPC agenda issues and recommendations as well as descriptions and copies of related documents on Friday, July 24, 1997, for the meeting today. The credit reform paper was not included because the group is circulating it for additional comments. The Agenda Committee asked for comments about the format of the presentation of the issues to the AAPC. There were seven issues for consideration. The Agenda Committee recommended the AAPC accept issues 1 through 3, consider issues 4 and 5 for non-binding illustrative guidance, and not accept issues 6 and 7.
  
  

• Issue No. 1 - Who should be the source of legal representations for matters involving the Treasury Judgement Fund and litigated by the Department of Justice on behalf of other Federal agencies?
  
  

  The Agenda Committee recommended that the AAPC accept the issue. The AAPC members discussed in detail the issue, reason for the issue, related issues, scope of the issue, whether to accept the issue as is or change it. The members also discussed whether issues should be changed. They decided that issues presented should be addressed, but the responses may have more context. One member suggested rewording the issue to read, "Who is responsible for preparing or providing . . ." After the wording change, the members decided to accept the issue.
  
  

• Issue No. 2 - What criteria should be used for determining when it is probable and reasonably estimable that a liability exists for environmental cleanup costs for past transactions or events?
  
  

  The Agenda Committee recommended that the AAPC accept the issue. The Agenda Committee noted that FASAB had reviewed the paper and stated that part of the paper was inconsistent with existing SFFASs. The AAPC members decided to accept the issue and prepare the paper for review at the September 12th meeting.
  
  

• Issue No. 3 - Is guidance needed to ensure that audit assurance is provided in a timely and consistent manner in connection with data or services provided by one agency to one or more other agencies?
  
  

  The Agenda Committee recommended that the AAPC accept the issue. The AAPC members discussed the scope of the issue, the importance of the issue, setting a precedent about mandating dates, and AAPC's role in advising OMB. The AAPC members decided to accept the issue and not worry about setting precedent since each case would be dealt with individually. However, the committee agreed that the issue should be altered by replacing "ensure that audit assurance is provided" with "ensure that preparation and audit requirements are provided..."
  
  

• Issue No. 4 - Is existing guidance sufficient to enable agencies to comply with the reporting and disclosure requirements related to an agencies' environmental liabilities?
  
  

  The Agenda Committee felt the paper addressing the issue is illustrative guidance and suggested the AAPC consider developing a mechanism for the issuance of non-binding, illustrative guidance if the AAPC chose to do so. The question was asked if the AAPC should issue illustrative, non-binding guidance. The members discussed the question and decided not to issue illustrative guidance. The question was asked about the dispensation of issues and papers addressing illustrative guidance. One member suggested sending them to the CFO Council or PCIE for them to handle and issue if they believed they should be. A member suggested sending letters to the Chairpersons of the subgroups and suggest they send their products to another group such as the CFO Council or PCIE for consideration. The members agreed. The members decided not to accept the issue since it is illustrative guidance and to return the paper to the subgroup with a letter.
  
  

• Issue No. 5 - Would preparers and auditors of Federal agency financial statements benefit from guidance to assist in evaluating the costs and benefits associated with the estimation of certain values not determinable by hard objective information or evidence?
  
  

  The Agenda Committee recommended the AAPC not accept the issue since the paper is illustrative guidance and asked whether it should be dispensed in the same manner as Issue No. 4. There was a lengthy discussion about whether or not the paper was illustrative guidance; what would need to be done to rework the paper; the impact of the paper; and whether it should be issued by the AAPC. Many members felt the paper was good guidance to prompt thinking and discussions, but that it should not be issued as authoritative guidance. One member suggested using the information to address other issues such as PP&E that may come before the AAPC. The consensus was to consider the ideas presented in the paper for actual issues, but not to accept the issue as separate guidance.
  
  

• Issue No. 6 - Is existing guidance sufficient to enable agencies to determine when it is necessary to accrue and/or disclose information related to government related environmental liabilities?
  
  

  The Agenda Committee recommended that the AAPC not accept the issue because the data was available in many places, and the paper did not resolve any ambiguities. The AAPC members decided not to accept the issue and refer it back to the submitting organization.
  
  

• Issue No. 7 - Is existing guidance sufficient to enable agencies to record environmental cleanup costs for active sites classified as general and stewardship PP&E?
  
  

  The Agenda Committee recommended that the AAPC not accept the issue because the data was available, and the paper did not resolve any ambiguities. The AAPC members decided not to accept the issue and refer it back to the submitting organization.
  
  

  Bill Pugh volunteered to prepare the response to Issue No. 1. He will circulate a draft response to the AAPC members before the next meeting on September 12. The response to Issue No. 2 requires reformatting of chapters 1 and 2 of the presented document. Issue No. 2 was assigned to Jay Lane since he was the chairman of the task force that prepared the environmental cleanup paper, and he had expressed an interest. Bob Dacey volunteered to prepare the response to Issue No. 3. These three people will do everything they can to communicate with the committee members before the September 12th meeting and have drafts of the responses at the meeting.
  
  

  Chairperson Payne mentioned that no guidance had been distributed for the format of the responses to the issues. Ms. Payne encouraged members to model the responses after the FASB's Emerging Issues Task Force (EITF) format for brief responses and for longer responses to adjust the format as needed. Ms. Payne will provide a copy of the EITF format to those interested.
  
  

  NEXT MEETING
  
  

  At the next meeting, the AAPC members will discuss the three issues on the agenda. The Agenda Committee will have more issues to recommend, which are PP&E, environmental liabilities, and lease costs. The list of government-wide task forces was reviewed for other possible issues to be presented to the AAPC. From the list of task forces, the Agenda Committee expects credit reform, PP&E, and elimination entries to be presented to the AAPC. A member asked who was addressing grants to which another member replied that the CFO Council was. A member asked about the Single Audit Act issues to which members replied that the area was being worked extensively by others.
  
  

  The meeting adjourned at 3:45 p.m.