Deferred Maintenance Reporting for Federal Facilities: Meeting the Requirements of Federal Accounting Standards Advisory Board Standard Number 6, as Amended (2001)

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APPENDIX C 57 federal financial statements. It does, however, modify the status of that information and thus the level of its review by financial statement auditors. II. When SFFAS No. 6 was issued, the Board indicated that deferred maintenance reporting would evolve as preparers gained experience. The Board provided maximum flexibility to preparers noting that management would determine “acceptable condition” against which deferred maintenance would be assessed. (see SFFAS No. 6, par. 78, footnote 58) In addition, the Board noted that acceptable condition might vary between entities and between sites within the same entity. To ensure that readers would understand the deferred maintenance disclosures, the Board required that management's method of measuring deferred maintenance and management's requirements for acceptable condition be disclosed with the estimated amounts. III. After the statement became effective, questions arose about whether this flexibility was appropriate given the status of the information as basic information (i.e., an integral part of the financial statements). The Board agreed that a change in status was warranted. IV. This statement amends SFFAS No. 6 and SFFAS No. 8 to define deferred maintenance information as required supplemental information (RSI) rather than within the financial statements and the notes thereto. V. As required supplementary information, the deferred maintenance information will be subject to the audit procedures prescribed in AU Section 558.07, Codification of Statements on Auditing Standards. These procedures include inquiries to management and comparisons of the information for consistency. In addition, the auditor should consider whether the RSI should be covered in management's representation letter. The auditor may need to apply additional procedures required by other guidance, and to make additional inquiries if necessary based on the outcome of the required procedures. Readers should refer to the most current auditing standards for relevant guidance. Statement of Recommended Accounting Standards No. 16, July 1999 Amendments to Accounting for Property, Plant, and Equipment Measurement and Reporting for Multi-Use Heritage Assets Amending SFFAS No. 6 and SFFAS No. 8 Accounting for Property, Plant, and Equipment And Supplementary Stewardship Reporting Executive Summary a The purpose of this Statement is to amend certain standards for heritage assets in Statement of Federal Financial Accounting Standards No. 6, Accounting for Property, Plant, and Equipment, (SFFAS No. 6), which was issued in November 1995; and, Statement of Federal Financial Accounting Standards No. 8, Supplementary Stewardship Reporting, (SFFAS No. 8), which was issued in June 1996. Specifically, the amendments affect accounting and reporting standards for heritage assets that serve a dual purpose; that is, heritage assets that 1) have a heritage characteristic, and 2) are used in general government operations. 

APPENDIX C 58 b In SFFAS No. 6 and SFFAS No. 8, these heritage assets were referred to as “multi-use heritage assets.” To clarify the meaning of the term “multi-use heritage assets,” the amendments define “multi-use heritage assets” as being heritage assets whose predominant use is general government operations. Heritage assets having incidental use in general government operations are not referred to as “multi-use heritage assets.” Rather, they are simply “heritage assets.” c In addition, the original standards required the cost of multi-use heritage assets that did not directly relate to operations be accounted for as an expense, while costs that directly support operations be accounted for as general property, plant, and equipment (PP&E). This treatment would have resulted in inconsistent cost measures between agencies using heritage office buildings and those using non- heritage office buildings. d To alleviate this inconsistency, the Board decided that the all acquisition, reconstruction, and betterment costs of multi-use heritage assets (i.e., heritage assets whose predominant use is general government operations) be capitalized as general PP&E and depreciated over their service life. This amendment should result in consistent accounting for the cost of PP&E predominantly used in general government operations.