FASAB clarifies cleanup cost liabilities guidance

By Ken Tysiac

The Federal Accounting Standards Advisory Board (FASAB) issued an interpretation of Federal Financial Accounting Standards to assist in the application of cleanup cost liability standards at the component reporting entity level.

FASAB issued Interpretation 9, Cleanup Cost Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5 & 6. FASAB determined that the interpretation was needed for clarification purposes following the issuance of:

  • Statement of Federal Financial Accounting Standards (SFFAS) 47, Reporting Entity;
  • SFFAS 55, Amending Inter-entity Cost Provisions; and
  • Technical Bulletin 2017-2, Assigning Assets to Component Reporting Entities.

Interpretation 9 clarifies and provides guidance on cleanup cost liabilities when the component reporting entity responsible for reporting on an asset during its useful life is different from the component reporting entity that will eventually be responsible for settling the liability for that asset’s cleanup cost.

The interpretation is intended to facilitate reporting by component reporting entities by better aligning reporting with their operations.

“This interpretation provides needed clarifications of the cleanup cost liability standards and will assist when multiple component reporting entities are involved,” FASAB Chairman George Scott said in a news release.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

Where to find November’s flipbook issue

The Journal of Accountancy is now completely digital. 

 

 

 

SPONSORED REPORT

Get Clients Ready for Tax Season

This comprehensive report looks at the changes to the child tax credit, earned income tax credit, and child and dependent care credit caused by the expiration of provisions in the American Rescue Plan Act; the ability e-file more returns in the Form 1040 series; automobile mileage deductions; the alternative minimum tax; gift tax exemptions; strategies for accelerating or postponing income and deductions; and retirement and estate planning.