[CPEO-BIF] GASB standard for state and local governments

[Lenny Siegel <lsiegel@cpeo.org>]

Governmental Accounting Standards Board
NEWS RELEASE
December 1, 2006

GASB Issues Final Standard on Accounting for Pollution Remediation 
Obligations
New Standard Provides Guidance and Consistency on Environmental Clean-up

Norwalk, CT, December 1, 2006 - Reflecting its intention to ensure that 
costs and liabilities not specifically addressed by current governmental 
accounting standards are included in financial reports, the GASB today 
issued a standard that will require state and local governments to 
provide the public with better information about the financial impact of 
environmental cleanups.

To provide governments with better accounting guidance and consistency, 
GASB Statement 49, Accounting and Financial Reporting for Pollution 
Remediation Obligations, identifies the circumstances under which a 
governmental entity would be required to report a liability related to 
pollution remediation. According to the standard, a government would 
have to estimate its expected outlays for pollution remediation if it 
knows a site is polluted and any of the following recognition triggers 
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

* A regulator has identified (or evidence indicates it will identify) a 
government as responsible (or potentially responsible) for cleaning up 
pollution, or for paying all or some of the cost of the clean up

* A government is named (or evidence indicates that it will be named) in 
a lawsuit to compel it to address the pollution

* A government begins or legally obligates itself to begin cleanup or 
post-cleanup activities (limited to amounts the government is legally 
required to complete).

Liabilities and expenses would be estimated using an "expected cash 
flows" measurement technique, which is used by environmental 
professionals but will be employed for the first time by governments. 
Statement 49 also will require governments to disclose information about 
their pollution obligations associated with clean up efforts in the 
notes to the financial statements.

"This standard improves financial reporting by promoting better, more 
transparent and comparable information brought about by clearer and 
consistent accounting," said Robert Attmore, Chairman of the GASB. 
"Statement 49 enhances the ability of financial statement users to 
assess a government's obligations by requiring both earlier reporting of 
liabilities s and recognition of liabilities that may not have been 
reported before."

Statement 49 will be effective for financial statements for periods 
beginning after December 15, 2007, but liabilities should be measured at 
the beginning of that period so that beginning net assets can be restated.



For the original press release, as well as a link to a 
Question-and-Answer Fact Sheet, go to http://www.gasb.org.


--


Lenny Siegel
Director, Center for Public Environmental Oversight
c/o PSC, 278-A Hope St., Mountain View, CA 94041
Voice: 650/961-8918 or 650/969-1545
Fax: 650/961-8918
<lsiegel@cpeo.org>
http://www.cpeo.org


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