Financial Accounting Principles and Standards

AGENCY: Office of Management and Budget.

ACTION: Final New OMB Circular A-134.

SUMMARY: New Office of Management and Budget (OMB) Circular A-134, "Financial Accounting Principles and Standards," establishes the policies and procedures for approving and publishing financial accounting principles and standards.

FOR FURTHER INFORMATION CONTACT: Ronald Longo, Financial Standards and Reporting Branch, Office of Federal Financial Management, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503 (telephone 202- 395-3993).

SUPPLEMENTARY INFORMATION: On January 21, 1993, OMB published (58 FR 5440) a proposed new circular for public and agency comments. OMB proposed to issue Statements of Federal Financial Accounting Standards (SFFAS), that would be considered generally accepted accounting principles for Federal agencies, and described the process OMB would follow. Only two comments were received; both were from Federal agencies. OMB made three changes in response to these comments. A discussion of the comments and changes made follows.

Regarding Section 4, Definitions, one commenter recommended that a definition of "accounting principles" be added for clarity. Instead, OMB changed definition 4b, "Accounting standards," to read "Accounting standards or principles." A second commenter believes that accounting standards should provide broad guidelines of general application, not detailed practices and procedures. In response, OMB changed the last sentence in definition 4b to read "Accounting standards include broad guidelines of general application and may also include detailed practices and procedures."

Regarding definition 4c, "Interpretation of Federal Financial Accounting Standards," one commenter suggested that OMB may wish to create a separate series of guidance for OMB interpretations prior to the adoption of standards recommended by the Federal Accounting Standards Advisory Board (FASAB). OMB will not be creating a separate series but will continue to use existing vehicles to communicate OMB guidance. One commenter questioned if FASAB or other Principals were to be involved in OMB's issuance of interpretations. OMB plans to consult, as needed, with others before issuing an interpretation.

Regarding Section 5, Policy, one commenter, concerned about due process, recommended that SFFAS be issued only for FASAB recommended standards. In response, in paragraph 5a, OMB agrees and deleted "or any other statement" after "recommended statement" in the second sentence. Also, for clarity, OMB further revised the opening clause in that sentence to read "If a recommended statement of accounting principles or standards." This commenter also was concerned about the form of any interim OMB guidance prior to the adoption of FASAB recommended standards. OMB will continue to use existing vehicles to communicate OMB guidance, such as OMB bulletins on form and content of annual financial statements.

One commenter questioned if technical assistance responses would be published. OMB intends from time to time to publish those of general applicability but not those limited to a particular case or circumstance. This commenter, concerned about due process, also questioned the standing of such technical assistance. In the hierarchy of authoritative guidance, technical assistance guidance does not have the same standing as standards.

One commenter posed various questions about FASAB, including the process for initiating areas for its development of standards, its procedures, and the approval process for its standards. These questions are addressed in the October 1990 Memorandum of Understanding that established FASAB, FASAB's Mission Statement, and FASAB's Rules of Procedure. This commenter suggested the inclusion of some of this information and other information, such as a listing of FASAB members, in the OMB circular. OMB will not be adding any of this information but it is available from FASAB. FASAB also lists members involved in each of its recommended standards.

One commenter questioned if OMB will forward to the other Principals FASAB recommended standards with which it disagrees. Consistent with the October 1990 Memorandum of Understanding that established FASAB, OMB will not.

One commenter questioned the applicability of SFFAS to federally-owned corporations. This commenter also questioned if financial statements from federally-owned corporations will be consolidated into the statements of executive agencies. OMB is unable to answer either question at this time. At present, OMB is focusing on standards for executive agencies and FASAB is studying the consolidation question.

Lastly, one commenter asked if there were established timeframes for approval or disapproval of FASAB recommended standards or OMB issuance of interpretations. There are none.

Jack Arthur,
Assistant Director for Administration.