FASAB Modifies Definition of "Deferred Maintenance"


The Federal Accounting Standards Advisory Board (FASAB) issued a standard that it said is aimed at resolving problems created, in part, by agencies’ use of different interpretations of “deferred maintenance.” The board said that Statement of Federal Financial Accounting Standards (SFFAS) no. 40 , Definitional Changes Related to Deferred Maintenance and Repairs: Amending Statement of Federal Financial Accounting Standards 6, Accounting for Property, Plant, and Equipment , represents a first step toward improved reporting on deferred maintenance and repairs.

 

The new standard revises maintenance and repair (M&R) terminology in SFFAS no. 6 , Accounting for Property, Plant, and Equipment , as amended, by modifying the definition of maintenance and by replacing the term “deferred maintenance” with “deferred maintenance and repairs.”

 

The new standard incorporates the definitional changes in response to concerns raised by the financial and technical communities. The board said a review of SFFAS no. 6 by the Federal Facilities Council (FFC) Committee on Operations & Maintenance identified the following concerns: (a) different interpretations among agencies and auditors regarding what to report and how to report, (b) introduction of terms not used in the technical community, (c) terms in the maintenance definition loosely defined, and (d) terms in the maintenance definition not reflective of actual practice.

 

The board said in a press release that it will continue to work closely with stakeholders interested in improved reporting on deferred maintenance and repairs. By addressing definitional issues as a first step, the board will facilitate continued cooperation. 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.

 

“Redefining the term ‘maintenance’ to include repair activities and better reflect asset management practices is an initial step in resolving the problems noted,” FASAB Chairman Tom Allen said in a press release. “However, the board also plans to address measurement and reporting issues through continued consultation with stakeholders which could lead to the issuance of additional guidance and/or standards.”

 

SFFAS no. 40 is effective for periods beginning after Sept. 30, 2011. Earlier implementation is encouraged.

 

More from the JofA:

 

 Find us on Facebook  |   Follow us on Twitter  |   View JofA videos

SPONSORED REPORT

Time to prepare for overtime changes

As an employer, trusted business adviser, or HR professional, you will need to be aware of exemption guidance, record requirements, advice for clients, and typical problems in applying overtime pay.

QUIZ

News quiz: Good news on pay and benefits for accountants

CPAs can find much to like in recent reports, including news that their expertise and skills are in such demand that pay is expected to rise and that their employers value professional certifications.

CHECKLIST

Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.