ACCOUNTING AND AUDITING POLICY COMMITTEE MEETING

 

FINAL MINUTES

 

November 9, 2000

 

The meeting was convened at 1:36 p.m. in room 4N30 of the GAO Building, 441 G St., N.W., Washington, D.C.

   

Administrative Matters

    

· Attendance

    

Present:  Ms. Payne, Messrs. Dacey, Doggett (for Mr. Friedman), Ms. Jordan, Messrs. Pugh, Stout, Taylor, Ms. Karen Wolff (for Mr. Ritchie) and Mr. Zavada

 

Absent:  Messrs. Eisenhart, Friedman, Lane, and Ritchie

    

· Minutes

 

The minutes of September 14, 2000 were previously approved as final, having been circulated by

e-mail to members.

    

· AAPC Member Vacancy

 

Ms. Payne introduced Mr. James L. Taylor as the newest AAPC member representing the Chief Financial Officer’s (CFO) Council.  Mr. Taylor is the Deputy Chief Financial Officer at the Department of Commerce.

 

· AACP Revised Charter and Operating Procedures

 

The latest draft of the AAPC Charter was distributed to the members for review. Ms Payne noted that approval of the revised Charter and Operating Procedures is expected at the December FASAB meeting.  At the last FASAB meeting the FASAB members had concerns about the clearance process for AAPC technical releases that contained audit guidance.  She noted that the members asked staff to present options that would provide two separate tracks for clearance of technical releases.  One track for the accounting issues and another track for the audit issues.  However, ultimately the FASAB would give its approval on all AAPC documents.

 

Agenda Status

 

· Open Project Updates

           

Issue #21 Liabilities Covered and Not Covered by Budgetary Resources

 

This ongoing project of the AAPC deals with the disclosure of liabilities as either “liabilities covered by budgetary resources” or “liabilities not covered by budgetary resources,” in accordance with SFFAS 1, Accounting for Selected Assets and Liabilities.   Mr. Zavada noted that OMB plans to address this issue in the new Form & Content Bulletin, which will be applicable for Fiscal Years (FY) beginning 2001.  He noted that the draft Bulletin is expected to be released in December 2000.

 

Mr. Zavada noted that OMB is currently reviewing three issues in relation to this topic.  The first is the definitional issue of a “budgetary resource.”  Mr. Zavada noted that “budgetary resources” would have to be clearly defined as two separated defintions, one in the context of the budget and the other in the context of the financial statements.

 

Mr. Zavada then noted that the second issue is a policy issue, that is, in the context of financial statement purposes, determining what liabilities are covered and not covered by budgetary resources.   His proposal on that issue would be contingent upon further congressional actions. That is, if no additional congressional action is required in reference to a particular “budgetary resource,” then the resource should be viewed as “covered” by budgetary resources.  For example, in the case of an appropriated entitlement where Congress has to act in order to fund the liability, this entitlement would not be considered a liability covered by budgetary resources.  On the other hand, in the case of a credit program re-estimate that is done as of Balance Sheet date and the authority to fund the re-estimate is not provided until the beginning of the next fiscal year by an OMB apportionment, this re-estimate would be considered a liability covered by budgetary resources. 

 

The last issued noted by Mr. Zavada, as it relates to this topic, is the presentation issue.  This issue will follow the resolution of which transactions are considered covered or not covered by budgetary resources.  Mr. Zavada stated that the presentation of these liabilities on the Statement of Financing is an issue that OMB is also dealing with.

           

Issue #11 Inter-entity Costs

 

Ms. Payne noted that the Inter-Entity Costs survey had been mailed to the members of the Federal CFO and IG communities and that comments were due back October 30, 2000.  The survey is made up of a series of questions directed to inter-entity costs that are not fully reimbursed by the receiving entity or are not reimbursed at all. The survey will assist the AAPC in identifying specific inter-entity costs that are being incurred by agencies, study their nature, and determine whether they meet the recognition criteria specified in SFFAS 4. 

 

Ms. Payne noted that to-date, 6 - 7 responses had been received and others are expected.  At least half of those responding to the survey stated that their entities had no inter-entity costs.  She also noted that staff was preparing a list of non-responding agencies.  She asked the CFO Council members to remind the full CFO Council Membership of the importance of responding to the survey.

 

Mr. Zavada agreed to continue as the AAPC Chair of the Inter-entity Cost Task force; Ms. Jordan and Mr. Dacey agreed to continue as members of the task force.  Mr. Stout also agreed to join the taskforce due to the interest by the Financial Management Services (FMS) in inter-entity costs.  Ms. Payne also suggested that – at some point -- a working group of operational staffers be organized to assist in some of the staff work related to this project.

 

Ms. Payne and Mr. Zavada agreed to further plan the task force structure and the next steps based on the results of the survey.

 Issue #24 Supplemental Guidance to SFFAS 10, “Accounting for Internal Use Software”

 

In June 2000 the Chief Financial Officers Council (CFOC) requested that the AAPC consider issuance of an implementation guide, SFFAS 10 Implementation Topics/Issues, that was developed by a CFO Council task force.  The guide provides supplemental guidance to agencies implementing SFFAS 10.

 

Ms. Payne noted that the Bulk Purchases (Question #6) issue still has not yet been resolved, but expected resolution shortly.  Once the issues were resolved and the AAPC members had the opportunity to review the document it would be posted on the AAPC website for 3 – 4 weeks for an informal comment period.

 

Issue #25 Federal Aviation Administration’s request for guidance on Grant Accounting

 

At the May AAPC meeting, the Committee agreed to accept a grant accounting issue from the Federal Aviation Administration (FAA).  The FAA requested policy guidance on a grant accounting issue that deals with the liability recognition by FAA (the grantor) for expenses incurred by a grantee when the grantee incurs costs after a letter of intent has been issued by the FAA but prior to the execution of the grant agreement.

 

Luise Jordan, task force Chair, gave an update on the group’s latest work.  The task force met most recently on November 7, 2000. The task force noted the following:

 

nIt appears that SFFAS is applicable to FAA’s request.

nFAA’s questions and our discussions with representatives of FAA’s Office of the CFO and the Office of the Inspector General have raised interesting questions for which there may be a need for specific guidance.

nThe next step is to gather additional information from other Federal agencies and to consider FAA’s matters against a broader spectrum of information on current liability and cost recognition accounting practices.

 

Ms. Payne mentioned the possibility of an open forum sponsored by the AAPC to help identify other Federal entities that may have grant practices similar to FAA’s letters of intent.  Further it was agreed to make brief presentations to the CFOC and the PCIE for the same purpose of identifying entities that may have similar practices.

 

Next Meeting

 

The next meeting will be on Thursday, January 11, 2001, at 1:30 p.m. in Room 6846 (6th Floor).

 

Adjournment

 

The meeting was adjourned at 2:10 p.m.