The Governmental Accounting Standards Board issued an exposure draft that would require governments to account for all the obligations and costs related to pollution remediation.
The board said that certain costs and long-term obligations are not specifically addressed by current governmental accounting standards. The draft builds on public comments received last year.
The draft sets five key circumstances under which the state or federal government would be required to report liabilities to pollution remediation. According to the proposal, a government would have to estimate its expected outlays for pollution remediation if any of the following occur:
- Pollution poses an imminent danger to the public or environment and a government has little or no discretion to avoid fixing the problem.
- A government has violated a pollution prevention-related permit or license.
- A regulator has identified a government as responsible for cleaning up pollution, or for paying all or some of the clean-up cost.
- A government is named in a lawsuit to compel it to address the pollution.
- A government begins to clean up pollution or conducts related remediation activities.
The standard would also require governments to disclose information about their pollution clean-up efforts in the notes to financial statements.The requirements of this proposed statement would be effective for financial statements for periods beginning after June 15, 2007.
A copy of the proposal may be downloaded from GASB's Web site at www.gasb.org. The comment deadline for the draft is May 1, 2006.
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