This Land is Your Land on the Balance Sheet. FASAB Research and Findings of the Accounting and Reporting of Government Land Project

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1 This Land is Your Land on the Balance Sheet. FASAB Research and Findings of the Accounting and Reporting of Government Land Project American Society of Military Comptrollers (ASMC) San Diego, PDI 2 June 2017 Presenters: Domenic Savini and Bobby Hart

2 Disclaimer Views expressed are those of the speakers. The Board expresses its views in official publications. Roles on Task Force Dom FASAB Representative Bobby Industry Representative 1

3 What is Land? Grand Canyon, All Rights Reserved - 2

4 What is Land? Intangible IUS Immobile Land Mobile (x) Tangible (y) Real Property Building Structures Linear Structures Personal Property Watercraft Electronic Systems Helicopters Tanks Servers Manufacturing Equipment IT Equipment Office Furniture Operating Materials & Consumable Supplies Inventory Held for Sale Stockpile Pre-positioned Stock Raw Materials or work in process Paper Towels Pens Printer Toner x Axis y Axis Portability Tangibility 3

5 How Does FASAB Define Land? Land is the solid part of the surface of the earth Currently, we have 2 buckets to categorize land: SFFAS 6: General Property, Plant, and Equipment (GPP&E) Land, and SFFAS 29: Stewardship Land What assets are excluded from the land : Natural resources that are depletable such as mineral deposits and petroleum; Renewable resources such as timber, and the outer-continental shelf resources related to land. 4

6 How Do We Account for Land Now? 2 Buckets SFFAS 6 requires that land and land rights acquired for or in connection with other general PP&E are to be capitalized at the cost incurred to bring the assets to a form and condition suitable for use. SFFAS 29 defines stewardship land as land other than land acquired for or in connection with other general PP&E. It requires note disclosures regarding policies for managing land, categories of land, and physical quantity information. It is important to note that stewardship land is expensed when acquired; that is, no asset dollar amount shown on balance sheet. 5

7 How Much Land Do We Manage? 6

8 Where is Bulk of Land Located? 7

9 How Did We Acquire Land? Source: GAO Speaker Series, Public Lands Foundation, America s Public Lands, Origins, History, and Future. April 7, 2016 Acquisition Era 1780s-1860s Native American Cession (1763 French & Indian War) Relinquishments by Colonies Ceded by other Countries Purchases 8

10 How Did We Acquire Land? Acquisition Area Land Water Total Acres Acres Acres Percentage of U.S. Land State Cessions ( ) 233,415,680 3,409, ,825, % $ 6,200,000 (c) Louisiana Purchase (1803) (d) 523,446,400 6,465, ,911, % $23,213,568 Red River Basin ( ) 29,066, ,040 29,601, % $ - Cession from Spain (1819) 43,342,720 2,801,920 46,144, % $ 6,674,057 Oregon Compromise (1846) 180,644,480 2,741, ,386, % $ - Mexican Cession (1848) 334,479,360 4,201, ,680, % $16,295,149 Purchase from Texas (1850) 78,842,880 83,840 78,926, % $15,496,448 Gadsden Purchase (1853) 18,961,920 26,880 18,988, % $10,000,000 Alaska Purchase (1867) 365,333,120 12,909, ,242, % $ 7,200,000 Total Public Domain 1,807,533,440 33,175,680 1,840,709, % $85,079,222 (a) Cost (b) 9

11 FASAB Land Projects Goal Our Goal - To improve the accounting and reporting for land so that information needed to meet the reporting objectives and qualitative characteristics is provided while meeting the costbenefit constraints. 10

12 FASAB Ground Rules SFFAC 1 Objectives of Federal Financial Reporting Uncle Sam is the BOSS!! Budgetary Integrity support of budget process; linking accounting and budgeting Operating Performance more meaningful data; cost/benefit and performance data Stewardship improved accountability of resources Systems and Control cost effective systems and controls Note: 64% of Task Force said we needed to enhance Land reporting relative to the BOSS. 11

13 FASAB Ground Rules SFFAC 1 Qualitative Characteristics Uncle Sam requires proper attire!! To be effective, communicating financial information in financial reports must have these 6 basic characteristics: 1. Understandability 2. Reliability 3. Relevance 4. Timeliness 5. Consistency 6. Comparability Note: 67% of Task Force said we needed to enhance Land reporting relative to the qualitative characteristics. 12

14 Land Task Force Role To serve as expert advisors that: Provide information Identify issues & alternative solutions Validate options Consensus is not required Open, intellectually-honest dialogue, and balanced viewpoints will guide our work 13

15 Project History & Timeline Staff expects that the Board will develop and expose guidance in calendar year 2017, finalizing the Statement during the early part of calendar year 2018 as follows: July 2016 Task force to reviewed results of agency one-on-on meetings and land-use categories developed by staff August 2016 April 2017 Further developed nonfinancial (for example, acreage) reporting recommendations Identified most appropriate reporting venue for nonfinancial information (for example, Basic, RSI, or OAI) Further developed measurement and recognition recommendations Began developing draft exposure draft May 2017 August 2017 Finalize and issue exposure draft December 2017 April 2018 Finalize guidance or standards 14

16 Is Land Really an Asset? SFFAC 5, Par. 22 To be an asset of the federal government, a resource must possess two characteristics: First, it embodies economic benefits or services that can be used in the future. Second, the government controls access to the economic benefits or services and, therefore, can obtain them and deny or regulate the access of other entities. 15

17 Is Land Really an Asset? Assets are expected to provide benefits that outweigh costs. SFFAC 1, Par. 64. Expected benefits often are not cash inflows but rather are the services provided by the asset. Assets & liabilities are allocations of the cost of past transactions based on assumptions about future benefit and sacrifice. SFFAC 1, Par An asset is a resource that embodies economic benefits or services that the federal government controls. Meeting the basic recognition criteria is a necessary but not a sufficient condition for recognition. Additional considerations for a recognition decision are measurement of the candidate for recognition and assessments of the materiality and benefit versus cost of the amount measured. SFFAC 5 16

18 Government-Wide Reporting 17

19 What Does GPP&E Land Look Like Government-Wide? page

20 2015 GSA FRPP* Profile for GPP&E Land = 49.6M Acres Total DOE 4% DOI 13% % of Total Acres DoD 81% DoD USDA Commerce DOE HHS DHS DOJ Labor State DOI Treasury DOT VA EPA GSA NASA NSF DoD 81.26% DOI 12.66% DOE 4.44% NASA 0.38% DOT 0.31% USDA 0.28% State 0.24% DHS 0.15% DOJ 0.10% VA 0.08% Commerce 0.04% Labor % HHS % GSA % NSF % EPA % Treasury % *GSA FRPP General Service Administration s Federal Real Property Profile 19

21 Stewardship vs. GPP&E Federal Land by Acreage (in Millions) Stewardship G-PP&E 20

22 What Does Stewardship Land Look Like Government-Wide? pages 71 and

23 Stewardship Land Comparison of Same Departments/Agencies What Do They Count? DOI (Selected) Federal Water and Related Projects National Wildlife Refuges National Fish Hatcheries National Parks USDA (Selected) National Grasslands National Forests National Preserves VA Cemeteries Archaeological Sites DoD Archaeological Sites HHS Indian Trust Land EPA Superfund Sites None or None Listed Separately By Type DOE NASA State DHS DOJ Commerce Labor GSA NSF Treasury 22

24 Agency financial reporting Illustrative Examples From FY 2014 Excerpts 23

25 What Does GPP&E Land Look Like at an Agency? Source: U.S. Army Corps of Engineers, AFR 2014, page

26 What Does GPP&E Land Look Like at an Agency? Source: U.S. Department of Energy, AFR2104, pages 49 and

27 What Does GPP&E Land Look Like at an Agency? Source: U.S. Department of the Interior, AFR 2014, page

28 What Does Stewardship Land Look Like at an Agency? Source: U.S. Department of Agriculture, AFR 2014, pages 105 and 107, respectively. 27

29 What Does Stewardship Land Look Like at an Agency? Source: U.S. Department of the Interior, AFR 2014, Stewardship Assets Note 9 on page

30 What Does Stewardship Land Look Like at an Agency? Source: U.S. Department of the Interior, AFR 2014, RSI on page

31 What Does Stewardship Land Look Like at an Agency? 30

32 Staff Round-Tables & Task Force Results 31

33 Round-Table Agencies Executive Agency Department of Defense Department of Energy Department of the Interior 32

34 Round-Table Results Topics Discussed Common Themes Land Background Accounting System General Land Policy Land Rights Land Improvements Uniform Accounting Data Integrity and Reliability Audit Challenges Assigning Fair Value Estimating Values (i.e., to include other methods besides formal appraisals) Impairment Other Notable mission differences Systems not all integrated Stabilization mode Immaterial Immaterial & SFFAS 6 OK Current distinctions = clarity Questionable Exist: RSI/OAI can mitigate Use sparingly; cost vs. benefit Debatable in-house estimates shift burden to back-end audit Immaterial & SFFAS 44 OK Avoid reporting as Basic 33

35 Some Task Force Results Deeper Dive 34

36 Q1. Do you believe that the cost of land putting aside for the moment the type of cost measurement technique used is essential for the reporting of all types of federal land managed by the government? 35

37 Exploring the Use of Non-Financial Information 36

38 Uniform Accounting for All Land 37

39 User Needs and Preparer Burden 38

40 Data Reliability and Integrity 39

41 Data Reliability and Integrity 40

42 Stewardship 41

43 Stewardship 42

44 Land Use 43

45 Tribal Land 44

46 Contact and Website Information General inquiries can be directed to Phone: Listserv Exposure Drafts Active Projects Dom Savini, CPA, CMA, MSA Bobby Hart, CPA, CMA, CFM, PMP, CGFM, CICA