FASAB Proposes Changes to Deferred Maintenance Reporting


The Federal Accounting Standards Advisory Board (FASAB) is seeking comment on an exposure draft that proposes amendments to Statement of Federal Financial Accounting Standards (SFFAS) 6, Accounting for Property, Plant, & Equipment (PP&E), specifically relating to deferred maintenance (DM).

 

The ED , Definitional Changes Related to Deferred Maintenance and Repairs: Amending Statement of Federal Financial Accounting Standards 6, Accounting for Property, Plant, and Equipment , proposes amendments to (1) clarify that deferred repairs are included, (2) revise the examples of maintenance and repair (M&R) activities, and (3) address the distinction between maintenance, repairs and new capital expenditures.

 

DM is maintenance that was not performed when it should have been or was scheduled to be and has been put off or delayed. Although DM is not sufficiently measurable to support recognition or disclosure as basic information, it is nonetheless a cost and has thereby been required to be reported as required supplementary information (RSI). DM reporting is important because the federal government is accountable to citizens for the proper stewardship and administration of federal assets. Reporting on DM assists financial statement users in ascertaining asset condition as well as evaluating the effectiveness of the asset maintenance practices that agencies employ in fulfilling their missions.

 

The board said in a press release that the proposed amendments represent a first step toward improving reporting on deferred maintenance. The board said two areas in need of improvement relate to (1) the lack of comparability when assessing asset condition both within and among agencies and (2) measurement and reporting practices that vary greatly among agencies. These issues arise—in part—because agencies have differing interpretations regarding the definition of “deferred maintenance” in SFFAS 6.

 

FASAB said the proposal does not alter financial reporting requirements but may result in changes in practice due to the enhanced definition.

 

Comments are due June 25. The ED is available at fasab.gov/exposure.html.

 

SPONSORED REPORT

Post-busy season checklist

Now that tax season is over, pause for some introspection to guarantee that next year’s busy season is even better. Bonus: “Dirty dozen” scams list to share with your clients. Sponsored by Thomson Reuters, Bloomberg BNA, Bloomberg BNA // Software and Wolters Kluwer.

QUIZ

News quiz: Risks are top of mind in finance

Americans are worried about risks to their financial security. Accountants also see risks to their organizations and their careers. See how much you know about recent news and reports with this quiz.

CHECKLIST

Auditing risks in culture

Cultural flaws can seriously damage an organization. Here’s how internal auditors can reduce risks by embedding culture audits into existing audit programs.