FASAB issues standards for federal entities’ asset impairment

BY KEN TYSIAC

U.S. federal government entities will be required to report the effects of general property, plant, and equipment impairments under new standards issued Thursday by the Federal Accounting Standards Advisory Board (FASAB).

Statement of Federal Financial Accounting Standards (SFFAS) 44, Accounting for Impairment of General Property, Plant, and Equipment Remaining in Use, is designed to provide clarity for users of financial statements.

The standards will enable users to discover the cost of impairments when they occur, the financial impact on the reporting entity, and the cost of services provided following the impairment. Comparability of financial statements between federal government entities also should improve because the standards require those entities to account for impairments in a similar manner.

Administrative burdens are expected to be negligible because the standards do not require departments or agencies to specifically search for impaired assets, according to FASAB. Impairments are required to be considered in the context of entities’ existing practices, and the statement is required to be applied only when an indicator of significant impairment is present.

In developing the standards, the board reviewed the work of other public-sector standard setters as well as comments from the government and private sector, FASAB Chairman Tom Allen said in a statement.

“The resulting standards are intended to focus attention on significant impairments so that needed financial information is provided without undue effort,” Allen said.

The standards take effect for reporting periods beginning after Sept. 30, 2014, and FASAB encourages early implementation.

Ken Tysiac ( ktysiac@aicpa.org ) is a JofA senior editor.

SPONSORED REPORT

Click-through nexus: Pushing the boundaries of sales tax compliance

Sales and use tax compliance has been complicated by nexus expansion. In this report, we provide an overview of this issue and include a handy state-by-state summary of click-through nexus or notification requirements.

QUIZ

News quiz: Making allowances for the kids and the economy

Recent news gives CPAs insight into Americans’ attitudes about children and money and gauges outlook on the economy. 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.