Deferred Maintenance:

Reporting Requirements and Identified Issues

AIMD-97-103R: Published: May 23, 1997. Publicly Released: Jun 23, 1997.

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Paul L. Posner
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Pursuant to a congressional request, GAO reviewed federal reporting requirements and GAO and Inspector General (IG) reports discussing deferred maintenance of government-owned assets.

GAO noted that: (1) historically, federal agencies routinely have not been required to report on deferred maintenance; (2) however, new federal accounting standards developed by the Federal Accounting Standards Advisory Board require the reporting of deferred maintenance in agency financial statements beginning with those for fiscal year (FY) 1998; (3) the standard provides that amounts disclosed for deferred maintenance may be measured using either condition assessment surveys or life-cycle cost forecasts; (4) agencies may also elect to categorize deferred maintenance into critical and noncritical amounts of maintenance needed to return each major class of asset to its acceptable operating condition; (5) implementation of the accounting standard for deferred maintenance will be most important for agencies with the greatest amount of property, plant, and equipment (PP&E) and those spending the most for the acquisition of physical assets controlled and owned by the federal government; (6) based on amounts of PP&E reported either in agency financial statements or to the Department of the Treasury for FY 1996, 11 federal agencies are responsible for about 99 percent of federal PP&E; (7) the Department of Defense controls by far the greatest amount of the total PP&E reported by federal agencies; (8) other agencies with large amounts of PP&E include the National Aeronautics and Space Administration, the Tennessee Valley Authority, and the Department of Transportation; (9) the separate reporting of operating and maintenance expenditures was discontinued beginning with the 1990 budget; (10) because this type of reporting was discontinued, there is no governmentwide estimate of how much is spent each year on maintenance of capital assets; (11) deferred maintenance reports by GAO and the IGs over the past 4 years generally address two topics, general backlogs of maintenance with resulting asset deterioration and the questionable validity of agency-reported measurements of backlogs and, or deferred maintenance; (12) improving the validity of information available to congressional and executive branch decisionmakers on maintenance, including deferred maintenance, can help improve the allocation of federal resources and ultimately, the condition of federal assets; and (13) the requirement to report deferred maintenance required by the Chief Financial Officers Act and the subsequent audit of the reported amounts will go a long way toward improving the information available to decisonmakers.

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