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The Federal Accounting Standards Advisory Board. A Call to Action How You Can Help to Advance Efficient and Effective Reporting on Federal Grant Programs National Grants Management Association March 10, 2010. Disclaimer.

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the federal accounting standards advisory board

The Federal AccountingStandards Advisory Board

A Call to Action

How You Can Help to Advance Efficient and Effective Reporting on Federal Grant Programs

National Grants Management Association

March 10, 2010



Views expressed are those of the speaker. The Board expresses its views in official publications.

learning objectives
Learning Objectives
  • Who are the FASAB and the AAPC?
  • How is the FASAB’s AAPC working to assist federal agencies on cost-effective methods for developing and validating reasonable estimates of amounts due to and from grantees?
  • What agencies and firms are working with the AAPC on this project?
  • Why do we need your help?
who are the fasab and the aapc
Who are the FASAB and the AAPC?

U.S. Federal Government Accounting Prior to FASAB:

Fragmented Approach

  • Department of the Treasury (Treasury)
    • Financial reporting
  • Office of Management and Budget (OMB)
    • Budgetary reporting
  • Government Accountability Office (GAO)
    • Accounting standards and principles
who are the fasab and the aapc1
Who are the FASAB and the AAPC?
  • FASAB Formed by Memorandum of Understanding (October 1990)
  • Chief Financial Officers Act of 1990 (November 1990)
    • Established Chief Financial Officer positions
    • Required audited financial statements for selected agencies
who are the fasab and the aapc2
Who are the FASAB and the AAPC?
  • Government Management Reform Act of 1994
    • Expanded the CFO Act to more agencies
    • Required governmentwide audited financial statements
  • Accountability of Tax Dollars Act of 2002
    • Extended the requirement for audited financial statements to most federal entities (low-dollar, low-risk exemptions)
organizations overseeing federal financial management

Federal Financial Management

Federal Accounting Standards

Advisory Board (FASAB)

Accounting and Auditing

Policy Committee (AAPC)

Organizations Overseeing Federal Financial Management
who is fasab
Who is FASAB?
  • 9 members
  • 1 member each from
    • Department of the Treasury
    • OMB
    • GAO
  • 6 non-Federal members
    • From the financial, accounting and auditing communities and academia
fasab roster of members
FASAB- Roster of Members

Tom Allen


(Former GASB Chair)

Nancy Fleetwood

Debra Bond



Hal Steinberg

Bob Dacey


Norwood Jackson

Alan Schumacher

Michael Granof

Scott Showalter

Bios available at

(Current as of March 10, 2010)

when does fasab meet
When does FASAB meet?
  • Generally six times a year
  • For 2010:
  • February 24 – 25
  • April 28 – 29
  • June 23 – 24
  • August 25 – 26
  • October 27 – 28
  • December 16 – 17
  • Open to the public
  • Agenda and briefing materials on
what is the aapc accounting and auditing policy committee
What is the AAPC(Accounting and Auditing Policy Committee)?
  • Permanent Committee of FASAB
  • Organized in May 1997 by:
    • Department of the Treasury
    • OMB
    • GAO
    • CFO Council
    • Council of the Inspectors General on Integrity and Efficiency (CIGIE)
what is the aapc
What is the AAPC?


  • To identify and recommend solutions to
  • Accounting and auditing issues
  • Relating to the specific application of existing authoritative guidance
who are the aapc members
Who are the AAPC members?
  • 11 members
  • 1 representative each from Treasury, OMB and GAO
  • 3 representatives from the CFO community
  • 3 representatives from the Inspector General Community
  • 1 “At-Large” member
  • 1 non-voting FASAB staff member
aapc roster of members
AAPCRoster of Members

Wendy Payne


(FASAB Executive Director)


Department of the Treasury

Regina Kearney

(Office of Management and Budget)

Luther Bragg

Naval Audit Service

Frank Synowiec, Jr.

(Government Accountability Office)

John Brewer

Department of Agriculture

Alice Carey




Daniel Fletcher

Department of the Interior

Donjette L. Gilmore

Department of Defense

Joseph Marchowsky


when does the aapc meet
When does the AAPC meet?
  • Generally six times a year
  • For 2010:
  • January 21
  • March 18
  • May 20
  • July 15
  • September 16
  • November 18
  • Open to the public
  • Agenda and briefing materials on
where do the fasab and the aapc meet
Where do the FASAB and the AAPC meet?

Government Accountability Office

441 G Street, NW

Washington, DC 20548

Room 7C13 (Staats Briefing Room)

how does fasab inform

FASAB E-Mail Service

  • Bi-monthly FASAB newsletter
  • Requests for comment
  • Press releases
  • Agendas
  • Invitations to serve on task forces
How does FASAB inform?
  • Public meetings
  • Federal Register Announcements
fasab community
FASAB Community
  • Preparers
  • Auditors
  • Users
    • Internal
    • External
community involvement
Community Involvement
  • Formal
    • Serving on the AAPC
    • Responding to Requests for Comment
    • Speaking at Public Hearings
community involvement contd
Community Involvement (contd.)
  • Informal
    • Serving on Task Forces
    • Responding to Surveys
    • Performing Field Testing
generally accepted accounting principles
“Generally Accepted Accounting Principles”
  • Significance of “GAAP”
  • In 1999, the AICPA designated FASAB as the authoritative source of GAAP for the Federal government
how does fasab issue authoritative gaap guidance
How does FASAB issue authoritative GAAP guidance?
  • FASAB Statements of Federal Financial Accounting Standards and Interpretations (Level A GAAP)
  • FASAB Technical Bulletins (Level B)
  • AAPC Technical Releases (Level C)
  • FASAB Staff Implementation Guidance (Level D)
  • FASAB Statements of Federal Financial Accounting Concepts (“Other Accounting Literature”)
what are grant accrual estimates
What are Grant Accrual Estimates?

Agencies must report amounts due to or from grantees based upon estimates of eligible expenses that grantees have incurred as of the reporting date.

what are grant accrual estimates1
What are Grant Accrual Estimates?
  • Advances: Amounts issued as advances must be adjusted, even if grantees have not yet reported expenses incurred.
  • Accounts Payable: Where there is no advance, agencies must estimate amounts payable to grantees.
why do we need accrual estimates for federal programs
Why do we need accrual estimates for federal programs?
  • Operating Performance—Information to evaluate:
    • The service efforts, costs and accomplishments of government
    • The manner in which these are financed
    • Management of the entity’s assets and liabilities
how do grant accrual estimates affect agency financial statements
How do grant accrual estimates affect agency financial statements?
  • Statement of Net Cost
    • Cost to the taxpayer by program and responsibility segment
  • Balance Sheet
    • Compares what is owned versus what is owed
grants project history
Grants Project History

Scope of this project:

  • Annual Federal grants to
    • State, local & tribal governments,
    • Colleges and universities
    • Other non-profit organizations
  • Over $500 billion annually, about 1/6 of the annual Federal budget
  • In 2009, ARRA added an additional $400 billion
grants project history1
Grants Project History
  • FASAB Staff held 3 roundtables in April 2009
    • Federal Agency Financial Statement Preparers
    • Federal Agency Auditors (OIGs)
    • Independent Public Accounting and Consulting Firms
  • Formed a volunteer Task Force to
    • Identify areas where guidance is needed
    • Help FASAB staff to develop guidance
grants project history2
Grants Project History

Primary Issue Identified:

Guidance to support cost-effective development of reasonable estimates for grant accruals for:

  • Advances
  • Accounts Payable
grant project history
Grant Project History


  • Agencies generally have to report grant-related accruals before grantee reports are due
  • Grantee reports are often cash-based, not accrual-based
  • New or revised grant programs have no historical data
grants project history3
Grants Project History

Task Force Working Group and FASAB staff developed draft Exposure Draft for a proposed AAAPC Technical Release (TR)

  • TR is authoritative GAAP (Level C GAAP)
  • Subject to “due process”
project milestones
Project Milestones

Project Milestones:

  • April 2009: Roundtables held
  • August 2009: Task Force Kickoff Meeting
  • December 2009: Proposed Draft ED to AAPC Agenda Committee
  • January 2010: AAPC approved project
project milestones1
Project Milestones

Planned Future Milestones:

  • March 2010: Issue Exposure Draft for Public Comments
  • April 2010: Comments Due
  • June 2010: Final TR to FASAB for review
  • July 2010: Issue TR
grants project goal
Grants Project Goal

Primary Goal for this project:

Authoritative guidance (formal FASAB/AAPC issuance) that supports:

  • Cost-effective methods
  • “Reasonable” estimates
grants project goal1
Grants Project Goal

Why do we need your help?

  • Sole purpose of this guidance is to help preparers and auditors
  • FASAB staff are acting as facilitators, not subject-matter experts on grants management
preview of exposure draft
Preview of Exposure Draft

Preview of Exposure Draft

  • Scope: grants (as defined in 31 USC 6304)
  • Effective Date: Would be effective immediately upon issuance
preview of exposure draft1
Preview of Exposure Draft

Topics addressed in the ED:

  • Preparing accrual estimates
  • Validating accrual estimates
  • Balance Sheet display of advances and payables
  • Internal controls
  • Training and monitoring of grantees
  • Materiality considerations
preview of exposure draft2
Preview of Exposure Draft

Preparing accrual estimates:

Proposed guidance for two different situations:

  • For established grant programs with sufficient relevant and reliable historical data, and
  • In the absence of sufficient relevant and reliable historical data
preview of exposure draft3
Preview of Exposure Draft

Preparing accrual estimates for grant programs

  • Illustrative Decision Tree (Figure 1, Appendix B)
  • The draft ED provides guidance listing specific documentation, including
    • Procedures used (including sampling process)
    • Assumptions used
    • Historical data used
    • Trend analysis
    • Procedures for error checking
    • Procedures for subsequent validation
  • Reason: facilitate both agency review and auditor validation of estimates
preview of exposure draft4
Preview of Exposure Draft

What can agencies do in the absence of sufficient reliable historical data?

Proposed guidance: Use the best available data at the time the estimates are made. Suggested sources include:

  • Relevant experience from other agencies
  • Extrapolation from programs with similar grantees
  • Information from program managers
  • Opinion of qualified expert(s)
preview of exposure draft5
Preview of Exposure Draft

Validating accrual estimates for grant programs (“look-back”)

  • Necessary part of internal control
  • Does not require data from 100% of grantees
  • Judgment is needed
  • Estimates are inherently uncertain)
  • Illustrative Decision Tree (Figure 2 of Appendix B) for validation process
preview of exposure draft6
Preview of Exposure Draft

Display: “to net or not to net”?

Proposal: When estimates are prepared on an aggregate (“top-down”) level,

  • Agencies may display a net amount on the balance sheet, but
  • Must report the breakout of advances and payables in a note
  • Illustrative example note in Appendix C
preview of exposure draft7
Preview of Exposure Draft

Internal Controls

Recommended procedures and documentation, for example:

  • What are the sources of data used?
  • What is the rationale for selecting the model(s) used in calculating the estimates?
  • Who is responsible for each step of calculation and review?
preview of exposure draft8
Preview of Exposure Draft

Training and Monitoring of Grantees

Suggested (not required) methods for training grantees such as:

  • Agency-sponsored conferences
  • Workshops and/or seminars
  • Customer service centers and help desks
  • Computer-based sources such as webcasts
preview of exposure draft9
Preview of Exposure Draft

Materiality Considerations

  • Materiality decisions require judgment
  • Materiality is not strictly defined in the accounting community
  • Proposal: Agencies should consider the materiality of the grant programs relative to the agency’s statement of net cost
how will you know when the exposure draft is released for public comment
How will you know when the Exposure Draft is Released for Public Comment?

Three possible options:

  • Check the FASAB website at
  • Sign up for FASAB’s e-mail notification, also at
  • Send an e-mail to me,

[email protected]

how do i know who at my federal agency private sector firm has been involved in this project
How do I know who at my federal agency/ private-sector firm has been involved in this project?
  • Look at the list of participating agencies and firms on pages 25 and 26 of the draft ED.
  • If your agency or firm is a member of the TF but not the Working Group, send me an e-mail and I will provide contact info for your agency/firm’s participants.
  • If your organization is not listed in the ED, your org. has not yet been involved, and your comments and suggestions are most welcome!
contact information
Contact Information

Eileen W. Parlow

Assistant Director


[email protected]