Social Insurance, Historical Cost Exposure Drafts Available for Comment

The Federal Accounting Standards Advisory Board (FASAB) is seeking comment on two exposure drafts, Social Insurance Accounting, Revised and Estimating the Historical Cost of General Property, Plant, and Equipment—Amending Statements of Federal Financial Accounting Standards 6 and 23.

The Social Insurance proposal addresses challenges associated with incorporating estimates of future cash flows of massive federal programs such as Social Security and Medicare into financial statements. All FASAB board members have supported new reporting on fiscal sustainability in the consolidated Financial Report of the United States Government. However, they have had different views about the timing of the recognition of expense and liability for social insurance programs.

“This exposure draft represents a compromise,” FASAB Chairman Tom Allen said in a press release. “It proposes enhanced reporting but does not resolve the two strongly held views regarding when the obligating event occurs for social insurance programs and, thus, when the liability and expense definitions are met within those programs. However, the proposed standard will provide additional key information not currently provided and links information from the statement of social insurance to other basic financial statements.”

The ED on Historical Cost proposes amendments to clarify that reasonable estimates of original transaction data historical costs may be used to value general property, plant and equipment. It permits continued application of the initial capitalization guidance in SFFAS 23, Eliminating the Category National Defense Property, Plant, and Equipment, that provides for estimating historical cost and accumulated depreciation consistent with SFFAS 6, Accounting for Property, Plant and Equipment, but offers more detail about permissible documentation and methods. The statement’s primary objective is to establish a cost-effective method for attaining compliance with SFFAS 6 as amended.

Comments on the Social Insurance proposal are due Feb. 9, and the statement would be effective for periods beginning after Sept. 30, 2009. A public hearing is tentatively scheduled for April 22. Comments on the Historical Cost proposal are due Jan. 30, and the statement would be effective immediately upon issuance. A public hearing has not been scheduled on this proposal. Each ED is available at


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