Government Accounting

  The Governmental Accounting Standards Board (GASB) issued Statement no. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues ( ; also see Official Releases, page 97). The statement establishes criteria for governments to determine whether the proceeds from certain transactions—such as the sale of delinquent taxes, some mortgages, future revenues and student loans—should be reported as revenue from a sale or as collateralized borrowing resulting in a liability. It also stipulates that governments should not revalue assets when they are transferred between components of a financial reporting entity.

Statement no. 48 also requires enhanced disclosures about future revenues that have been pledged or sold, which would allow the public to be better informed about their fiscal availability, said GASB Chairman Robert H. Attmore. In addition, it supersedes guidance provided in GASB Technical Bulletin 2004-1 concerning sales of future revenue from tobacco lawsuit settlements. The new requirements become effective for financial statement periods beginning after December 15, 2006.

The Federal Accounting Standards Advisory Board (FASAB) issued a technical bulletin to clarify reporting requirements relating to liabilities for cleanup costs of asbestos-contaminated sites. Technical Bulletin 2006-1, Recognition and Measurement of Asbestos-Related Cleanup Costs, clarifies that federal entities must estimate all asbestos-related cleanup costs, not just those for immediate cleanup. The bulletin is available on the FASAB Web site at .

The GAO ( ) said it had continuing concerns about the number of restatements to federal agencies’ financial statements and the insufficient disclosures about the reasons for the restatements. In a report issued in October, “Financial Audit: Restated Financial Statements,” the GAO said nine agencies of the 11 that restated financial statements for fiscal year 2003 did so without adequate explanation. Among the shortcomings it listed were restatements that were not labeled as such and footnote disclosures that were unclear or lacked sufficient detail about the nature of the restatements as well as their effect on balances previously reported.

More complete guidance from the Office of Management and Budget on restatement disclosure could have prevented some of the lapses, the GAO said, and it called on the OMB to provide additional guidance.

The FASAB ( ) issued a statement amending requirements for disclosures in the consolidated financial report (CFR) of the U.S. government. FASAB Statement no. 32 (see Official Releases, page 97) is intended to align earlier CFR standards with the 2003 Statement of Federal Financial Accounting Concepts no. 4, which directed the CFR to tell users where to find information in other formats, including reports by individual government agencies. The new amendments cover disclosure requirements concerning assets such as inventories and direct loans, as well as liabilities such as loan guarantees and those relating to whole life insurance and cleanup costs.


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