NORWALK, Conn., Jan. 31, 2006 (PRIMEZONE) -- The Governmental Accounting Standards Board (GASB) today issued an Exposure Draft intended to provide guidance and consistency with respect to the accounting and reporting of obligations and costs related to pollution remediation. The proposal reflects the Board's intention to ensure that certain costs and long-term obligations not specifically addressed by current governmental accounting standards will be included in financial reports.
The proposed standards build on a Preliminary Views draft that was released for public comment in March 2005.
Specifically, the proposal sets forth the key circumstances under which a government would be required to report a liability related 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:
1. Pollution poses an imminent danger to the public or environment
and a government has little or no discretion to avoid fixing
the problem
2. A government has violated a pollution prevention-related
permit or license
3. A regulator has identified (or evidence indicates a
regulator will do so) a government as responsible (or
potentially responsible) for cleaning up pollution, or
for paying all or some of the cost of the clean up
4. A government is named in a lawsuit (or evidence indicates
that it will be) to compel it to address the pollution
5. A government begins to clean up pollution or conducts
related remediation activities (or the government legally
obligates itself to do so).
In addition to the liabilities, expenses, and expenditures which would be estimated using an "expected cash flows" measurement technique and be reported in the financial statements, the proposed standard would require governments to disclose information about their pollution clean up efforts in the notes to the financial statements.
"Today's proposal intends to improve financial reporting by fostering more transparent and more consistent accounting that encourages comparability," said Robert Attmore, Chairman of the GASB. "The proposed standard also enhances the ability of users to assess a government's obligations by requiring both earlier reporting of obligations and recognition of obligations that may not have previously been reported."
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 the GASB's website at www.gasb.org.
The GASB encourages interested individual and organizations to comment on this Exposure Draft. The comment deadline is May 1, 2006. Comment letters should be submitted electronically to director@gasb.org or via regular mail to:
Director of Research Governmental Accounting Standards Board 401 Merritt 7 PO Box 5116 Norwalk, CT 06856-5116
About the Governmental Accounting Standards Board
The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board's diverse constituency, including preparers and auditors of government financial statements, users of those statements and members of the academic community. More information about the GASB can be found at its website www.gasb.org.