When researching a little more into the GABS, it is easy to see how crucial listening truly is for them in order to fully accomplish their mission, which is basically to fully, and carefully consider all issues in regards to the protection of their constituents. Now that the GABS has been explained a little which providing an understanding of the position of the GABS, it is, at this point, appropriate to explain the details and specifics of the of the aforementioned article.
The article discusses the apparent need for stricter regulations for state and local overspent in regards to reporting and estimating the treatment of pollution and its costs; the article stated that as of December 2006, there is not a specific set of guidance set up for governments to utilize, stating that is the source of a lot of issues (Para. 1). Since the need is quite indubitable, and the main concern for the GABS is to listen to the needs of its constituents and finding the absolute best solution, they have constructed and issued Statement No.
9, Accounting and Financial Reporting for Pollution Remediation Obligations, which offers audience to those governments which would be qualified as requiring it. There are five different events and circumstances in Statement No. 49 which help the government by providing specifics as to when they should comply with its requirements. These requirements are: 1) If the pollution poses a problem and they try very little, if at all, to fix it. ) If a pollution permit or license is violated. 3) If a regulator can, or does, identify a problem, or potential problem, which they are, or could be responsible for. 4) If there is a judgment against them to dress the pollution. 5) If the cleanup is started, or the government is forced to start, but, only reported to the amount of their legal responsibility. Once one of these issues has been provoked, estimates are begun to get the process going as quickly as possible (Para. ). This way, the government is fully aware of the projections for the cost of cleanup before they start, rather than blindsided, by amounts that no one expected; even if they were fully aware of the upcoming liability (Para. 1). The GABS does not expect the government entity to report an exact figure for he clean up because they are aware this information is not immediately known, they are simply asking the remediation costs to be reported sooner than previously done.
This will add pollution cleanup liabilities to the financial statements in a much earlier time frame, also, requiring a note disclosure about the liability and how they are reported and the amounts which are estimated (Para. 2). Even if only a small portion, if it is possible to estimate the cost outlays, then the government would utilize a probability-weighted procedure, also called he expected cash flow measurement technique, (Para. 7) for reporting the liabilities to its financial statement.
A piece of land being cleaned up for sale or equipment which would have another use after completion of cleanup would be recorded as a capital asset (Para. 4). When using this method, the government will layout potential cost outlays in order to determine their average. The article uses an example of this method listed below: “A government might estimate that there is a 10 percent chance that cleaning pupa polluted site would cost $1 million, a 60 percent chance of $2 million, and a 0 percent chance of $3 million. The expected cash flow would be calculated as follows: ($1 million x 0. ) + ($2 million x 0. 6) + ($3 million x 0. 3) = $2. 2 million. The $2. 2 million would be reported as the liability in the government’s financial statements. ” If only certain portions can be estimated, they are reported initially and as the process is completed, costs are reevaluated and reported in their current amount under liabilities. These expenses are reported in the government-wide financial statements under liabilities, as the work is completed, he liability is reduced for the dollar amount of which payments were made.
The article states, “For governments that also present financial statements for governmental funds, expenditures will be reported when clean up goods and services are received. ” (Para. 7). As stated earlier, a note disclosure is required for the liability, however, in the case insufficiently being able to properly foresee a reasonable estimated amount, since there are no numbers to report; but, there is still a disclosure submitted, except only ‘the nature of the pollution remediation activities” (Para. ) will be disclosed.
Cite this Regulations for state and local overspent
Regulations for state and local overspent. (2018, May 04). Retrieved from https://graduateway.com/week-assignment-7/