FASAB Committee’s Proposals Intended to Clarify Accounting for Asbestos Cleanup Costs

The Accounting and Auditing Policy Committee (AAPC), a permanent committee of the Federal Accounting Standards Advisory Board (FASAB), on Friday released two exposure drafts of new Federal Financial Accounting Technical Releases, Implementation Guidance on Asbestos Cleanup Costs Associated with Facilities and Installed Equipment and Implementation Guidance on Cleanup Costs Associated with Equipment.

The first proposed TR, Implementation Guidance on Asbestos Cleanup Costs Associated with Facilities and Installed Equipment, provides additional clarification of SFFAS 6, Accounting for Property, Plant, and Equipment, and Technical Bulletin 2006-1, Recognition and Measurement of Asbestos-Related Cleanup Costs, and a framework for identifying assets containing asbestos, assessing the asset to collect information and/or develop key assumptions in applying acceptable methodologies to estimate asbestos cleanup costs for federal facilities and installed equipment.

The proposed TR, Implementation Guidance on Cleanup Costs Associated with Equipment, addresses cleanup costs associated with equipment as it applies to SFFAS 1, Accounting for Selected Assets and Liabilities, SFFAS 5, Accounting for Liabilities, SFFAS 6 and TR 2, Determining Probable and Reasonably Estimable for Environmental Liabilities in the Federal Government. The guide focuses on cleanup of hazardous waste associated with equipment and when the cleanup should be recognized as an environmental liability and when it should be expensed as a routine operation. The guide includes two examples—one example is associated with equipment cleanup when a liability should be recognized, and one is associated with equipment cleanup when the costs should be expensed as routine operations.

This proposed TR provides steps federal entities can follow to ensure consistent, accurate and meaningful application of the standards. The proposed guidance will also help federal entities provide reasonable estimates of cleanup costs associated with the disposal of equipment assets.

Specific questions for respondents are included in the EDs. Comments for each ED are due Dec. 4. EDs are available on the FASAB Web site.