Accounting Treatment of Roadbed Costs
AIMD-99-48R, Jan 29, 1999
Pursuant to a congressional request, GAO reviewed the Forest Service's change in accounting for roadbed costs recorded in its Timber Sales Program Information Reporting System, focusing on: (1) how federal accounting standards are developed; (2) the rationale behind the treatment of stewardship land in federal accounting standards; (3) the rationale behind the Forest Service's accounting change; and (4) whether the Forest Service appropriately implemented the Statement of Federal Financial Accounting Standard (SFFAS) No. 6as it relates to timber roadbed costs.
GAO noted that: (1) federal accounting standards are developed under authority of 31 U.S.C. 3511(a) using a deliberative due process established in 1990 by the three agencies with responsibility for federal financial management; (2) to recommend an accounting standard to the three federal agencies requires a majority vote of the Federal Accounting Standards Advisory Board (FASAB); (3) FASAB has established detailed written rules of procedure to guide its deliberative process for considering and recommending federal accounting standards; (4) SFFAS No. 6 defines stewardship land as federally-owned land that is not used in providing goods and services; (5) according to SFFAS Nos. 6 and 8, the accounting treatment and reporting of stewardship land, including national forests and parks, is based on three related characteristics of federally-owned stewardship land; (6) since the cost of monetary value of stewardship land is often not determinable, FASAB believed that reporting nonfinancial information on the existence and the condition of stewardship land in a separate supplementary report had more relevance to decisionmakers and other users of federal financial statements than uncertain or not meaningful monetary amounts reported on the balance sheet; and (7) the Forest Service's decision to change its accounting treatment of roadbeds built to harvest timber is based primarily on paragraph 232 in appendix B of SFFAS No. 6, which states that for land subject to stewardship reporting, the cost of establishing the roadbed would be expensed in the year incurred since the land improved by the roadbed is not capitalized on the balance sheet; (8) based solely on the illustration in SFFAS No. 6, the Forest Service's accounting change would appear justified; (9) however, paragraph 24 of SFFAS No. 6 states that all property, plant and equipment (PP&E) shall be categorized as general PP&E whether or not it meets the definition of any other PP&E categories; and (10) FASAB staff believes that the body of authoritative literature taken as a whole would lead to capitalizing and depreciating the cost roadbeds which provide access to timber.