The meeting was convened at 1:33 PM in Room 4N30 of the GAO Building, 441 G St., N.W., Washington, D.C.

• Attendance

Present: Ms. Payne, Messrs. Dacey, David, Kull, Lane, Lund, Pugh, Schaeffer, and Short.

Absent: Mr. Friedman and Ms. Jordan.

• Minutes

Copies of the draft November 12 minutes were at each member's place, having been E-Mailed previously to members for review. Hearing no changes, the minutes were approved.

• Commodity Credit Corporation (CCC) draft technical release

Ms. Payne reviewed the background of the CCC request. She said that Ms. Jordan had raised the point that CCC may not be permitted to use FASAB standards. This point needs to be pursued. Ms. Payne said that FASAB staff member Monica Valentine is continuing to research the issue and has redone the draft Technical Release (TR) with no reference to CCC. It will be posted to the AAPC Home Page for comment.

Mr. David said that CCC has always assumed that it was subject to FASAB standards and, as such, would have no requirement to book any imputed liability for annual leave and other similar costs. Mr. Short stated that, since no due process has been undertaken by FASAB on this issue, financial statement preparers should not be held responsible for including such imputed liabilities. Other members agreed.

Mr. Short noted that government corporations may choose whether to use commercial GAAP or to use government GAAP. He pointed out that many have chosen to use FASAB standards.

Ms. Payne introduced three representatives from USDA who were present to provide more information about the issue. They were: Tom Burke from the USDA IG staff, Pat Smith from the Department's CFO office, and Alan Levine from the Farm Service Agency of USDA.

Ms. Payne noted the draft TR prepared by FASAB staff to address this issue. Members expressed hesitation about issuing a TR on this specific issue because of the implication it would have for other agencies. It was suggested that a generic TR should be issued that would deal with issues of this sort. It was agreed that the draft TR would remain available for additional comment.

Ms. Payne said that the preponderance of evidence from FASAB Standards 5 and 7 leans toward not booking a liability at CCC. Mr. Short did not feel comfortable in issuing this proposed TR, because it would go beyond an Interpretation and has implications not yet addressed. Thus, there is no basis for holding statement preparers responsible for imputing these liabilities since there is no standard requiring that recognition.

Ms. Payne said that if an imputed expense and an imputed financing source are appropriate then the standards are pretty thorough and you move away from an imputed liability on the books. One question is if you allocate expenses to a unit, do you allocate all elements on the balance sheet? FASAB standards do not require this step and the notion of consistency was discussed. Members commented that it would be inconsistent to allocate liabilities among responsibility segments when this is not required between agencies.

Mr. David expressed the opinion that in both cases, inter-entity imputed expenses or intra-entity cost allocation, there is no liability to CCC. He indicated that CCC would never pay these amounts and thus they are not liabilities to CCC. In essence, the expense recognition is the only recognizable financial event--it captures the entire event for CCC.

Ms. Payne stated that the discussion was very helpful and she will use it in redoing the TR. It will be available for AAPC members to review. It was agreed that FASAB staff would meet with CCC and IG representatives to ensure that all views were captured.

• More Likely Than Not

Ms. Payne reported that the ED has been completed, voted on by the Board, and will be completely signed within a week or two. It will be issued as a Standard. The Board will have a follow-on project.

• Deferred Maintenance

Ms. Payne reported that this issue, which came up in November, was considered by the Board, which decided to propose moving it to the area of stewardship information. This proposal has been put out for exposure by the Board. As a follow-on, plans are to have the CFO Council participate very heavily in the development of facilities maintenance criteria for deferred maintenance; she expects that AAPC will play the role of liaison with the CFO community in some sort of joint project on criteria development.

• Status of Issues At OMB

Mr. Short reported that the Credit Reform Policy (TR 3) has been approved by the Board and is in the GPO que for printing. He also updated the AAPC on FASAB standards:

• Stewardship Land and Heritage Assets

Ms. Payne reported that the GAO working group on this subject has given AAPC a draft paper on determining materiality for non-federal physical property and is working on two additional papers. The draft paper is available on the AAPC web site. AAPC members indicated they would prefer to review the comments as a package rather than one by one.

Agenda Committee

Mr. Pugh presented the following report:

• Issue 17 - CCC request on imputed liability

Under consideration (See previous discussion.)

• Issue 18 - Should the AAPC develop a comprehensive technical release on lease accounting?

Ms. Payne has received a number of inquiries on lease accounting. For example, are GSA leases subject to the same accounting and disclosure requirements as non-GSA leases?

Recommendation: Since ample guidance on lease accounting already exists, it is not necessary to undertake a major project now. Therefore, an article citing the existing sources of guidance on lease accounting and include specific questions and answers on GSA lease-related topics could be provided. AAPC members accepted this recommendation. Ms. Payne will ask a FASAB staff member to undertake this task. With regard to the GSA lease issue, it was agreed that FASAB staff would review the FY98 note disclosures and work with GAO to determine the extent of inconsistencies. Also, Mr. Kull suggested GSA to assist.

• Issue 19 - Should a project be undertaken to provide guidance with respect to stewardship investments?

Several implementation questions and issues have been raised by agencies as they prepare financial reports for the first time under the new standards requiring stewardship investment information. Stewardship investments involve the Federal Government's financing of (1) assets owned by state and local governments, (2) human capital investments, and (3) research and development. FASAB staff has developed a draft document entitled "Frequently Asked Questions" which addresses certain stewardship investment issues.

Recommendation: AAPC should create a task force to review the FY 1998 reports and consult with preparers and auditors on implementation issues. Based on this review, the task force could consider building upon the document and develop a TR on stewardship investment. AAPC members accepted this recommendation.

Mr. Kull volunteered to work on long term stewardship issues.

The next meeting is currently scheduled for March 11, but may have to be changed. Ms. Payne will E-mail AAPC members the date of the next meeting.

The meeting was adjourned at 3:15.