FASAB releases interpretation of cleanup cost liabilities standard
The Federal Accounting Standards Advisory Board has issued an interpretation of some recent standards involving cost provisions among multiple entities who are liable for cleanup costs.
Interpretation 9, "Cleanup Cost Liabilities Involving Multiple Component Reporting Entities: An Interpretation of SFFAS 5 & SFFAS 6," comes in response to 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." FASAB released the interpretation to provide some extra guidance on the application of cleanup cost liability standards at the component reporting entity level.
Interpretation 9 offers clarification and guidance on cleanup cost liabilities when the component reporting entity that’s 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 the cleanup cost of that asset. Interpretation 9 aims 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,” said FASAB Chairman George Scott in a statement.