This is the final approved Statement of Federal Financial

Accounting Standards (SFFAS) 8, Supplementary Stewardship

Reporting.

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FASAB -- Federal Accounting Standards Advisory

Board

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Supplementary Stewardship Reporting,

Statement of Federal Financial Accounting Standards 8

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[From Inside Front Cover]

THE FEDERAL ACCOUNTING STANDARDS ADVISORY BOARD

(FASAB)

 The Federal Accounting Standards Advisory

Board (FASAB or "the Board") was established in

October 1990 by the Secretary of the Treasury, the

Director of the Office of Management and Budget

(OMB), and the Comptroller General. The ninemember Board was created to consider and recommend

accounting principles for the Federal Government.

 The Board communicates its recommendations by

publishing recommended accounting standards after

considering the financial and budgetary

information needs of congressional oversight

groups, executive agencies, and other users of

Federal financial information. The Board also

considers comments from the public on its proposed

recommendations, which are published for comments

as "exposure drafts." The Board's sponsors then

decide whether to adopt the recommendations. If

they do, the standard is published by OMB and GAO

and then becomes effective.

 The following documents related to the

establishment and mission of the Board are

available from the FASAB:
 -- "Memorandum of Understanding among the

General Accounting Office, the Department of the

Treasury, and the Office of Management and Budget,

on Federal Government Accounting Standards and a

Federal Accounting Standards Advisory Board"

 -- "Mission Statement: Federal Accounting

Standards Advisory Board"

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a The purpose of this Statement is to establish standards for

reporting on the Federal Government's stewardship over 1) certain

resources entrusted to it, identified as stewardship property,

plant, and equipment and stewardship investments, and 2) certain

responsibilities assumed by it, identified as the current service

assessment. The resources and responsibilities do not meet the

criteria for assets and liabilities that are required to be

reported in the financial statements but are, nonetheless,

important to an understanding of the operations and financial

condition of the Federal Government at the date of the financial

statements and in subsequent periods. Because the Government has

been entrusted with, and made accountable for, these resources

and responsibilities, they should be recognized in the financial

reports of the Federal Government and of its component entities.

This determination was made to more fully satisfy the stewardship

objective defined in the concepts statement, Objectives of

Federal Financial Reporting.[FN1-Objectives of Federal Financial

Reporting, SFFAC No. 1, September 1993.]

b The stewardship objective requires that the Federal

Government "report on the broad outcomes of its actions." Such

reporting will provide information that could help report users

assess the impact of the Government's operations and activities

for the period on its financial condition.[FN2-Ibid., pp. 41-42.]

c Stewardship resources involve substantial investment by the

Federal Government for the benefit of the Nation. When made, they

are treated as expenses in the financial statements. These

expenses, however, are intended to provide long-term benefits to

the public. Therefore, this Statement requires that information

on these resources be reported to highlight their long-termbenefit nature and to demonstrate accountability over them.

Depending on the nature of the resources, stewardship reporting

could consist of financial and nonfinancial data.

d This Statement also establishes a standard for reporting
projections that will aid in assessing the sufficiency of future

budgetary resources to sustain public services and meet

obligations as they come due.

e Given the above purpose, this Statement establishes

standards for supplementary stewardship reporting that are on the

basis of categories defined in the paragraphs that follow.

f Stewardship Property, Plant, and Equipment (PP&E) -

property

owned by the Federal Government and meeting the definition of one

of the following three categories:

 -- Heritage Assets - property, plant, and equipment

of

historical, natural, cultural, educational, or artistic

significance.

 -- Federal Mission PP&E - property, plant, and

equipment

integral to certain unique Federal missions.

 -- Stewardship Land - land other than that acquired

for or

in connection with general PP&E.

g Stewardship Investments - items treated as expenses in

calculating net cost but meriting special treatment to highlight

their substantial investment and long-term-benefit nature. This

includes:

 -- Nonfederal Physical Property - grants provided for

properties financed by the Federal Government, but owned by the

state and local governments.

 -- Costs incurred for education and training programs

that

are designed to increase or maintain national economic productive

capacity and research efforts to provide future benefits or

returns. These include:

 - Human Capital - education and training

programs

financed by the Federal Government for the benefit of the public.

 - Research and Development - basic and
applied

research and development.

h Stewardship Responsibilities - the projected financial

impact on the Government of sustaining current services that it

provides. Projections of current services provided by the

Government aid in assessing the sufficiency of future budgetary

resources to sustain public services and meet obligations as they

come due. This assessment, termed a Current Services Assessment,

provides receipt and outlay data on the basis of projections of

future activities.

j All stewardship information is deemed "required

supplemental

stewardship information" (RSSI). Audit requirements for RSSI will

be established in a collaborative effort by the Office of

Management and Budget (OMB) and the General Accounting Office

(GAO).

k The introduction and background chapter of this standard

provides information on the approaches used to develop the

standards for supplementary stewardship reporting. Appendices

include a basis for the Board's conclusions, sample stewardship

reports, and a glossary of terms used in the Statement. Firsttime use of glossary terms within the body of this document

appear in boldface.

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Executive Summary - para. i

Chapter 1: Introduction and Background - para.1

Chapter 2: Standard - Heritage Assets - para. 43

Chapter 3: Standard - Federal Mission Property, Plant, and

Equipment - para. 52

Chapter 4: Standard - Stewardship Land - para. 71

Chapter 5: Standard - Nonfederal Physical Property - para. 83

Chapter 6: Standard - Human Capital - para. 89

Chapter 7: Standard - Research and Development - para. 96

Chapter 8: Standard - Current Services Assessment - para. 102
Appendix A: Basis for Conclusions - para. 109

Appendix B: Sample Stewardship Reporting - not included

Appendix C: Glossary - follows para. 135

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Purpose

1 The purpose of this Statement is to establish standards for

reporting on the Federal Government's stewardship over certain

resources entrusted to it, and certain responsibilities assumed

by it. The resources and responsibilities relate to those which

do not meet the criteria for assets and liabilities that are

required to be reported in the financial statements but that are

important to an understanding of the operations and financial

condition of the Federal Government at the date of the financial

statements and in subsequent periods. Costs of these stewardshiptype resources are treated as expenses in the financial

statements in the year the costs are incurred. However, these

costs and resultant resources are intended to provide long-term

benefits to the public and are included in stewardship reporting

to highlight for the reader their long-term-benefit nature and to

demonstrate accountability over them.

2 Specific descriptions of these stewardship-type resources

are addressed later in this chapter and in the individual

standards (chapters 2-7) in this Statement. Generally,

stewardship reporting on these resources includes:

 -- Information on investment in physical capital

other

than that used to support Federal operations to provide goods and

services to the public, that is, investment in other than general

property, plant, and equipment (PP&E)[FN3-Physical assets

supporting Federal operations to provide goods and services to

the public, referred to as general property, plant and equipment

(PP&E), are addressed in Accounting for Property, Plant and

Equipment, SFFAS No. 6.].

 -- Information on investment in other than physical

capital. Such information, as well as the information called for

in the paragraph above, will be reported for stewardship purposes

on an investment basis (that is, as benefitting more than the
current reporting period) rather than a consumption basis (that

is, as benefitting only the current reporting period). Such a

presentation could help users analyze all Federal investment on

an equal basis, and make decisions among competing investments,

such as when allocating Federal resources or deciding whether to

authorize new programs or modify ongoing programs.

 -- Information that could assist in measuring the

success

of certain programs. The measurement of the benefits received for

the dollars invested and the evaluation of program performance

could appear with other stewardship information as part of the

financial statements, or in other financial reports, for example,

in a report on program performance.

3 This Statement also establishes standards for providing

information on stewardship responsibilities (chapter 8) through

projections for the Government as a whole. The projections will

aid in assessing the Government's financial condition and the

sufficiency of future budgetary resources to sustain public

services and meet obligations as they come due.

4 Each standard is summarized briefly in a box followed by a

detailed explanation of the standard. However, the standards

comprise the summaries in the boxes and the entire text of the

explanations.

Background and

Rationale

5 The Concepts Statement, Objectives of Federal Financial

Reporting was developed on the basis of an in-depth assessment of

user needs and is used to guide the Board in developing Federal

accounting and reporting standards. The objectives cover four

areas: budgetary integrity, operating performance, stewardship,

and systems and control.

6 This Statement of accounting standards addresses the

objective of reporting on stewardship over certain resources

entrusted to the Federal Government and responsibilities assumed

by it. The need for a report on the Federal Government's

stewardship over the resources entrusted to it and the

responsibilities it has assumed, arises because of the unique

nature of the Federal Government, as described in the following

section.
Stewardship and

the Reporting

Objectives

7 "Financial position" is a representation of an entity's

economic resources and the claims on those resources as of a

particular date. In the private sector, the principal objective

of reporting on financial position is to assess the viability of

the entity, the business firm, and its potential profitability.

8 Assessing the overall performance of the Federal Government

is not exclusively a matter of comparing revenue and expense, or

its accumulated assets and liabilities.

9 The Federal Government's viability and perpetuity are

assumed. It has unique access to financial resources and

financing, and the power to tax, to borrow, and to create money.

For the Federal Government, financial performance is a vital

issue, but traditional financial measures provide data that are

appropriate for assessing only some, not all, of the

responsibilities for which the Government should be held

accountable. Since it exists not to make a profit but to serve

the needs of the citizens and to promote the general welfare of

the Nation, other measures of accountability need to be used.

Measures of accountability are to be reported for elements that

are defined as stewardship property, plant, and equipment (PP&E);

stewardship investments; and stewardship responsibilities. These

elements of stewardship exist because the Federal Government is

dissimilar to industrial and commercial entities.

Financial

Condition

10 The measures of accountability mentioned above help to

portray the Government's "financial condition." Financial

condition is a broader and more forward-looking concept than is

financial position. Financial condition allows an assessment of

an entity on the basis of additional data that could include

financial and nonfinancial information about current conditions.

These additional data provide a more complete indication of

performance. In some cases, it may be necessary to present and

characterize financial data in ways that differ from traditional

financial reporting and to supplement traditional data with

nonfinancial data. In other cases, it may be necessary to rely

almost entirely on nonfinancial data to provide a more complete
presentation of entity performance. Moreover, assessment of

financial condition could include analysis of trends, demands,

commitments, events, and uncertainties.[FN4-Chapter 7 of the

Objectives of Federal Financial Reporting provides a full

discussion of financial position and financial condition.]

Stewardship PP&E

11 "Stewardship PP&E" consists of items whose physical

properties resemble those of general PP&E traditionally

capitalized in financial statements. However, the nature of these

Federal physical assets that are classified as stewardship PP&E

differ from general PP&E in that their values may be

indeterminable or may have little meaning (for example, museum

collections, monuments, assets acquired in the formation of the

nation) or that allocating the cost of such assets (for example,

military weapons systems and space exploration hardware) to

accounting periods that benefit from the ownership of such assets

is meaningless. However, the Federal Government should be able to

demonstrate accountability for stewardship PP&E by reporting on

its existence and on its condition by a reference to deferred

maintenance reported in the financial statements. Stewardship

PP&E would include stewardship land (that is, land not acquired

for or in connection with general property, plant, and

equipment); heritage assets (for example, Federal monuments and

memorials and historically or culturally significant property);

and Federal mission property, plant, and equipment (for example,

space exploration and military weapons systems).

Stewardship

Investments

12 "Stewardship investments" are substantial investments made

by the Federal Government for the benefit of the nation. When

incurred, they are treated as expenses in determining the net

costs of operations. However, these items merit special treatment

so that readers of Government financial reports know the extent

of these investments that are made for long-term benefit. Such

investments will be measured in terms of expenses incurred for

certain education and training programs; federally financed

research and development; and federally financed but not

federally owned property, such as bridges and roads.

13 Because the Government has been entrusted with and made

accountable for these resources, they should be reported in the

financial reports of the Government and of its component
entities. This will help satisfy the stewardship objective

defined in the concepts statement, Objectives of Federal

Financial Reporting, SFFAC No. 1. The goal of the stewardship

objective is that the Federal Government "report on the broad

outcomes of its actions." Such reporting may provide information

that could help report users assess the impact of the

Government's operations and investments for the period.[FN5-See

SFFAC No. 1, pp. 41-42.]

Stewardship

Responsibilities

14 A key aspect of the stewardship objective requires that

Federal reporting provide information that helps users determine

(1) whether the Government's financial condition improved or

deteriorated over the period and (2) whether future budgetary

resources will likely be sufficient to sustain public services

and to meet obligations as they come due.[FN6-Ibid., pp. 42-44.]

15 Information on "stewardship responsibilities" will aid in

these determinations. It will provide an essential perspective on

the Government's commitment to discretionary and mandatory

programs.

16 Reporting on this stewardship responsibility may be

accomplished in a stewardship section in the consolidated

financial report of the Federal Government.

Stewardship Categories

or Elements

17 In defining the specific categories of items, or elements,

that would appear as stewardship information, the Board decided

on the following:

 -- Property owned by the Federal Government and

meeting

the definition of one of the following three categories:

 - Property, plant, and equipment of

historical,

natural, cultural, educational or artistic significance, referred

to as heritage assets, for example, the Washington Monument and

the Lincoln Memorial;
 - Property, plant, and equipment that are

integral

to meeting a unique Federal mission, referred to as Federal

mission[FN7-The term "Federal mission" refers to activities that

are typically Federal, such as National defense. In addition,

Federal mission PP&E is limited to PP&E that would not typically

be used by non-federal entities. Clearly, any functions performed

by a Federal entity could be broadly labeled "Federal mission."

The definition of this category, however, clarifies the

characteristics of PP&E appropriately included in this category--

a much narrower group than inferred by the category's title.]

property, plant, and equipment (PP&E), and

 - Investments in stewardship land,[FN8-The

Board is

including only surface land as supplementary stewardship

information because the issues associated with other than surface

land, i.e., the natural resources on and under that land, are

complex. The Board is researching these complex issues and will

publish a separate exposure draft on a proposed accounting

standard for natural resources at a later date.] that is, land

not acquired for or in connection with general property, plant,

and equipment, for example, national forests, parks, and historic

sites. Some investments in stewardship land, for example national

parks, will be reported by both 1) the number of acres used as a

park or an historic site in the stewardship land category, and 2)

by the number of physical units identified as national parks in

the heritage assets category. Such reporting would not be

considered duplication, as the type of information reported on an

item would be different for each category of stewardship asset.

 -- Properties financed by the Federal Government but

owned

by state and local governments, referred to as nonfederal

physical property, for example, highways and bridges.

 -- Expenses that are incurred for education and

training

that are intended to increase national economic productive

capacity or for research and development that are intended to

provide future benefits or returns. This includes:

 - Investments in human capital, that is,

education

and training programs provided by the Federal Government, for

example, job training programs, and grants for higher education.
 - Investments in research and development,

for

example, research on the effects of early medical intervention in

delaying the onset of AIDs symptoms in HIV-positive individuals,

and Federal investment in genetic code research to advance

national medical research.

 -- Information on the projected financial impact on

the

Government of providing current services, assuming a continuation

of current programs. This information will be in the form of a

current services assessment providing future receipt and outlay

data on the basis of projections of future activities for the

Government as a whole and will include both discretionary and

mandatory programs and interest on debt.

18 The previous categories of items or elements result from or

exist largely because of the Federal Government's role as a

sovereign power. The components that they include are defined and

discussed in detail in their respective chapters of this

standard.

The Nature of

Stewardship Reporting

19 The Board, recognizing the Federal Government's size,

complexity, diversity, and impact on others, has determined that

the aforementioned information is needed in addition to that

included in financial statements.

20 Such information may not link directly with the basic

financial statements because the data to be reported may be other

than financial, for example, physical units or projections. It

will supplement the basic financial statements.

21 This information, as indicated in each of the standards,

will be designated as required supplementary stewardship

information (RSSI) for the consolidated financial statements of

the Federal Government and of the entities who have stewardship

responsibilities over resources identified earlier in this

document. The Board has chosen to call this RSSI to distinguish

it from "required supplementary information" (RSI), for which

audit responsibilities are prescribed in existing professional

literature. The Board believes that OMB and GAO should establish

and cause the implementation of the audit responsibilities for
RSSI.

Stewardship

Information

22 Stewardship information may be presented in varying formats

depending on the nature of the Federal investments or claims to

Federal resources controlled by an entity. Such information is

required for those entities (1) that control stewardship

resources and (2) whose financial statements purport to be in

accordance with Federal accounting principles as recommended by

FASAB, and approved by the Secretary of the Treasury, the

Director of OMB and the Comptroller General.

23 Examples of selected portions of stewardship report

sections

are included at Appendix B.

Measurement

24 The separate standards for each stewardship element contain

specific guidance for that element. In general, however,

stewardship investments shall be measured on the same basis of

accounting as used for financial statements, including

appropriate accrual adjustments, general and administrative

overhead, and a share of the cost of facilities (for example,

depreciation).[FN9-See Managerial Cost Accounting Standards for

the Federal Government, SFFAS No. 4, for a discussion of Federal

cost accounting principles and standards.]

25 For investments that are intended to maintain or increase

the economic productive capacity of the Nation, that is,

investments in human capital, research and development, and

nonfederal physical property, trend data shall be presented.

Trend data should reflect the full cost (including allocation of

facility and administrative costs) of the investment.

26 For stewardship land and heritage assets, measurement will

be done on other than a financial basis. For example, measurement

may be on the basis of physical units, such as acres of land.

Specific data requirements are addressed in the individual

stewardship standards.

27 Generally, amounts shall be reported in nominal dollars. If

trend data that span many years are reported and the entity
believes that constant dollar information would be meaningful for

data interpretation, constant dollar data may be provided in

addition to nominal dollar data.

28 Split Grants. Frequently, stewardship elements are financed

by grants. In some cases, the grants may have more than one

purpose.[FN10-An example of a grant with a split purpose is a

grant issued to a teaching hospital to perform both medical

education and medical research.] For such grants, the investment

shall be allocated among stewardship elements on the basis of an

estimate of the proportionate funding of the various grant

objectives. If allocation is not feasible, the investment shall

be reported on the basis of the predominant use of the grant.

29 Performance Indicators. For some stewardship elements,

categorization of these elements as investments is predicated on

producing outputs and outcomes. The specific procedures,

including a phasing-in process for requiring such justification,

is contained in the individual respective standards.

30 Reporting Program Expenses. Trend data reported on

stewardship investment elements should reflect the full

cost[FN11-See Managerial Cost Accounting Standards for the

Federal Government, SFFAS No. 4, for a discussion of Federal cost

accounting principles and standards.] of the investment for the

year being reported upon and the preceding 4 years. Additional

years' data also may be reported if such data would better

indicate the investment nature of an item.

31 In some cases, before the issuance of Federal accounting

standards, entities have maintained records on the basis of

outlays rather than expenses. It may be impracticable for such

entities to reconstruct their accounts on the basis of expense.

In such cases, entities may report data on an outlay basis for

any years for which expense data are not available. At the end of

5 years, entities should have sufficient expense data to be able

to report expenses rather than outlays.

32 Reporting Deferred Maintenance. Many state and local

governments, members of Congressional oversight committees, and

national groups, have raised the issue of the deteriorating

condition of federally-owned PP&E because of deferred maintenance

associated with these assets. The issue was addressed in

association with PP&E. As a result, a deferred maintenance

standard in Accounting for Property, Plant, and Equipment, SFFAS

No. 6, establishes reporting requirements related to the
condition and future maintenance requirements for PP&E.

33 These requirements are flexible since different conditions

may be considered acceptable by different entities, as well as

for different items of PP&E held by the same entity. The deferred

maintenance standard is applicable to all PP&E whether the PP&E

is reported as general PP&E or stewardship PP&E.

Reporting

Requirements

34 Within each of the standards, minimum required and, in some

cases, recommended reporting is described. These requirements and

recommendations, including a phasing-in process for entities who

may not have required data available at the implementation of the

standards, are contained in the individual standards. These

requirements describe the nature of items to be reported by

Federal entities; guidance on the form and content of agency

financial reports, including the specific guidance on the format

in which items addressed in this Statement will be reported, will

be prescribed by OMB.

35 Reporting should be at the major program or category level;

individual transactions need not be reported unless significant.

Additional reporting is encouraged when preparers believe such

information would make the financial report more meaningful or

understandable.

Social

Insurance

36 The Board first considered accounting and reporting for

social insurance programs while considering SFFAS No. 5,

Accounting for Liabilities of the Federal Government. The Board

concluded, at that time, that the topic should be made part of

the Supplementary Stewardship Reporting project.

37 Research and deliberations regarding social insurance have

continued as part of the Supplementary Stewardship Reporting

project. However, the Board, recognizing the magnitude and

complexity of these programs, the strength of the views on the

accounting and reporting issues, the significant attention being

focused on these programs at the present time, and the potential

for change to the programs, has again concluded that additional

consideration is appropriate before issuing final guidance.

Accordingly, the Board has not included guidance on social
insurance in this Statement and has added a Social Insurance

Accounting project to its agenda.

Applicability

38 This standard requires that the consolidated financial

reports[FN12-The terms "financial statements" and "consolidated

financial statements" are used throughout this document to refer

to the basic financial statements of a reporting entity; the

basic financial statements normally include: the balance sheet,

the statements of net cost, changes in financial position,

financing, budgetary resources, and custodial activities and the

notes to the financial statements. The terms "financial reports"

and "consolidated financial reports" are used to refer to a

document which would include the financial statements but which

would also include items such as: a management discussion and

analysis section, a statement of program performance measures,

required supplemental information or required supplementary

stewardship information not included in the financial statements

or other supplemental financial and management information.] of

the Federal Government and the financial reports12 of its

component units contain RSSI relating to:

 -- amounts invested in human capital, research and

development, and nonfederal physical property; and

 -- quantities (stated in terms of physical units or

dollars) of land, heritage assets, and Federal mission property.

 Although FASAB's sponsors do not set accounting standards

for the legislative or judicial branches, Federal accounting

standards would be appropriate for them.

39 Because the financial reports of the Federal Government

present the aggregation of information about stewardship

investments and assets related to varied agencies and programs,

further deliberations by the Board are needed to reach a decision

on the amount and nature of information to be required under this

standard for reporting in the consolidated financial report.

Accordingly, except for the standard described in Chapter 8,

"Current Service Assessment," the effective date of the

stewardship standards as they apply to the consolidated financial

report, is deferred pending that decision. The effective date of

the standard in Chapter 8 is for fiscal periods beginning after
September 30, 1997. In the interim, the consolidated financial

reports should include such summary or selected information as is

feasible. Experimentation is encouraged, as is the reporting of

such additional information as will enhance the financial report.

40 Some Federal entities, including those government

corporations listed in the Government Corporation Control Act and

certain others, such as the US Postal Service, are required by

law or policy to publish financial statements pursuant to the

standards issued by the Financial Accounting Standards Board

(FASB). (Some entities also may be required to prepare statements

pursuant to standards set by a regulatory agency. That practice

would not be affected by this statement of standards.) For such

entities, this standard provides the following general

principles:

 -- Applying Applicable Accounting Principles -

Separately

issued (stand-alone) general-purpose financial statements on such

entities should apply applicable accounting principles that will

best meet user needs and comply with any relevant statutory

requirements. This principle would continue to be true for

separately issued statements even if, pursuant to the provisions

below, other information about these entities might need to be

presented when their financial statements are included within

reports of a larger Federal entity.

 -- Reporting Additional or Supplementary Information

-

When financial information on such entities is included in

general-purpose financial reports of a larger Federal reporting

entity (including Treasury's consolidated financial report), any

applicable standards recommended by the FASAB and issued by OMB

and the General Accounting Office (GAO) that call for additional

reporting or supplementary information should be applied.

 -- Applying Applicable Standards When Differences

Arise -

When financial information on such entities is included in

general purpose financial reports of a larger Federal reporting

entity (including Treasury's consolidated financial report),

standards recommended by FASAB and issued by OMB and GAO should

be used if the difference arising from differences between

Federal accounting standards and FASB's would be material to

users of the report of the larger entity.
Materiality

41 The provision of this Statement need not be applied to

immaterial items. The determination of whether an item is

material depends on the degree to which omitting or misstating

information about the item makes it probable that the judgement

of a reasonable person relying on the information would have been

changed or influenced by the omission or the misstatement.

Effective Date

42 The accounting standards in this statement, except for the

standards described in Chapters 2-7 to the extent that they

relate to the consolidated financial report of the Federal

Government, are effective for fiscal periods beginning after

September 30, 1997. Earlier implementation is encouraged. See

paragraph 39 for the effective date of standards in Chapters 2-7

relating to the consolidated financial report.

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CHAPTER 2: STANDARD - HERITAGE ASSETS

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Heritage Assets - Heritage assets shall be reported as required

supplementary stewardship information accompanying the financial

statements of the Federal Government and the component units of

the Federal Government responsible for such assets. Heritage

assets shall be reported in terms of physical units rather than

cost, fair value, or other monetary values.

Definition

43 "Heritage assets" are PP&E that are unique for one or more

of the following reasons:

 -- historical or natural significance;

 -- cultural, educational or artistic (for example,

aesthetic) importance; or

 -- significant architectural characteristics.

44 Heritage assets are generally expected to be preserved

indefinitely. One example of evidence that a particular asset is

heritage in nature is that it is listed on the National Register

of Historic Places.
45 Some investments in heritage assets, for example national

parks, will be reported by both 1) the number of physical units

identified as national parks in the heritage assets category, and

by 2) the number of acres used as a park or an historic site in

the stewardship land category (see Chapter 4 of this document).

Such reporting would not be considered duplication, as the type

of information reported on an item would be different for each

category of stewardship asset.

Measurement

46 Heritage assets shall be quantified in terms of physical

units (for example, number of items in collections or the number

of national parks). No asset amount shall be shown on the balance

sheet of the Federal financial statements for heritage assets.

47 The costs of acquiring, constructing, improving,

reconstructing, or renovating heritage assets shall be considered

an expense in the period incurred when determining the net cost

of operations.[FN13-For guidance in measuring and reporting the

cost of heritage assets transferred from other federal entities,

and heritage assets acquired through donation or devise, see the

general PP&E standard contained in Accounting for Property,

Plant, and Equipment SFFAS No. 6.] The cost shall include all

costs incurred to bring the heritage asset to its current

condition and location.

Multi-use Heritage

Assets

48 Not all heritage assets are used solely for heritage

purposes--some serve two purposes by providing reminders of our

heritage and by being used in day-to-day government operations

unrelated to the assets themselves. The cost of renovating,

improving, or reconstructing operating components of heritage

assets used in Government operations shall be included in general

PP&E. The renovation, improvement, or reconstruction costs to

facilitate Government operations (for example, installation of

communication wiring or redesign of office space) would be

capitalized and depreciated over its expected useful life. The

cost should not be depreciated over an unrealistically long life.

49 Costs of renovating or reconstructing the heritage asset

that cannot be associated directly with operations shall be

considered heritage asset costs and included as expense in
calculating net costs.

Minimum

Reporting

50 The determination of the most relevant information to be

presented should be made by the preparer; however, reporting at

the entity level shall be more specific than at the

governmentwide level. The following are examples of information

that should be considered for presentation:

 -- Description of each major category of heritage

asset.

 -- The number of physical units added and withdrawn

from

the heritage asset records during the year and the end-of-year

number of physical units for each type of heritage asset.

Heritage assets consist of (1) collection-type heritage assets,

such as objects gathered and maintained for exhibition, for

example, museum collections, art collections, and library

collections; and (2) noncollection-type heritage assets, such as,

parks, memorials, monuments, and buildings.

 -- Description of the methods of acquisition and

withdrawal of heritage assets.

 -- Condition[FN14-Examples of condition information

include, among others, (1) averages of standardized condition

rating codes; (2) percentage of assets above, at, or below

acceptable condition; or (3) narrative information.] of the

assets unless it is already reported in a note to the financial

statements in which case a reference to the note will suffice.

 -- A reference to a note to the financial statements

if

deferred maintenance is reported for the assets.FN15-For guidance

relating to deferred maintenance reporting, see the Deferred

Maintenance standard in Accounting for Property, Plant, and

Equipment SFFAS No. 6.]

Implementation

Guidance

51 For guidance on heritage assets that were previously

recognized as assets for balance sheet reporting, see Statement
of Federal Financial Accounting Standards (SFFAS) No. 6,

Accounting for Property, Plant and Equipment, page 18, paragraphs

63, 64, and 65.

*****************************************************************

CHAPTER 3: STANDARD - FEDERAL MISSION PROPERTY, PLANT, AND

EQUIPMENT

*****************************************************************

Federal Mission Property, Plant, and Equipment - Federal mission

property, plant, and equipment (PP&E) shall be reported as

required supplementary stewardship information accompanying the

financial statements of the Federal Government and the component

units of the Federal Government responsible for such PP&E.

Federal mission PP&E shall be valued and reported using either

the total cost or the latest acquisition cost valuation method.

Definition

52 Federal mission PP&E includes items used to meet a Federal

Government mission in which the specific PP&E used is an integral

part of the output of the mission.[FN16-The name "Federal mission

PP&E" may cause readers to erroneously assume that this category

should include any PP&E supporting a Federal mission. Federal

mission PP&E is limited to those items specifically identified

herein as well as any other items exhibiting at least one

characteristic from each of the two groups listed.] PP&E should

be considered Federal mission PP&E if it possesses at least one

of each of the two types of characteristics presented below. One

type of characteristic relates to the use of Federal mission

PP&E, and the other relates to its useful life.

53 Characteristics related to the use of the Federal mission

PP&E are that it

 -- has no expected nongovernmental alternative uses;

or

 -- is held for use in the event of emergency, war or

natural disaster; or

 -- is specifically designed for use in a program for

which

there is no other program or entity (Federal or nonfederal) using

similar PP&E with which to compare costs.
54 Characteristics related to the useful life are that it

 -- has an indeterminate or an unpredictable useful

life[FN17-This may be evidenced by the ability (1) to retire the

PP&E and later return it to service or (2) to continually upgrade

the PP&E to maintain its usefulness.] because of the unusual

manner in which it is used, improved, retired, modified or

maintained, or

 -- is at a very high risk of being destroyed during

use or

of premature obsolescence.

55 Federal mission PP&E excludes land whether the land is

general PP&E land or stewardship land.

56 Federal mission PP&E, however, specifically includes (1)

weapons systems PP&E (for example, fighter or attack aircraft,

submarines, and tracked combat vehicles) and (2) space

exploration equipment (for example, space hardware and launch,

tracking, and recovery facilities). Weapons systems and space

exploration equipment are defined in the following paragraphs.

57 Weapons Systems. Weapons systems are a combination of one

or more weapons[FN18-Weapons are instruments of combat used to

destroy, injure, defeat or threaten an enemy. (adapted from

Dictionary of Weapons and Military Terms)] with all related

equipment, materials, services, personnel, and means of delivery

and deployment required for self-sufficiency.[FN19-Joint Chiefs

of Staff, Department of Defense Dictionary of Military and

Associated Terms, Joint Publication 1-02, March 23, 1994.] This

standard addresses only the PP&E component of weapons systems.

PP&E included in weapons systems are distinguished from general

property, plant, and equipment held by defense agencies and

defense support agencies in that they are intended to be used

directly by the armed forces to carry out combat missions, when

necessary, and to train in peacetime.

58 Weapons systems include only those assets owned by defense

agencies and defense support agencies that would otherwise meet

the property, plant, and equipment definition. Items meeting

other than the PP&E asset category definitions are excluded from

Federal mission PP&E, such as items of inventory or operating

materials and supplies.

59 Space Exploration Equipment. Space exploration equipment
includes

 -- items that are intended to operate above the

atmosphere

for space exploration purposes, and

 -- any specially designed equipment to aid, service,

or

operate other equipment engaged in exploring space.

Measurement

60 Federal mission PP&E shall be valued using either the total

cost or the latest acquisition cost valuation method.

61 There is a presumption that the valuation method previously

used by the entity was appropriate for the circumstances and,

therefore, should be applied on a consistent basis. Accordingly,

the preparer shall justify any changes in the use of a valuation

method.

62 For purposes of this standard, the "total cost method" is

defined to include the actual acquisition cost of each item held

plus the costs of any additions, improvements, alterations,

rehabilitations, or replacements that extend the useful life of

the Federal mission PP&E.

63 Under the latest acquisition cost method, all like units

that are held are valued at the invoice price of the most recent

like item purchased, less any discounts, plus additional costs

described in the following paragraphs.

64 Using either cost valuation method, the cost assigned to an

item of PP&E shall include all costs incurred to bring the

Federal mission PP&E to a form and location suitable for its

intended use. For example, the cost of acquiring Federal mission

PP&E may include

 -- amounts paid to vendors;

 -- transportation charges to the point of initial

use;

 -- handling and storage costs;
 -- labor and other direct or indirect production

costs

(for assets produced or constructed);

 -- engineering, architectural, and other outside

services

for designs, plans, specifications, and surveys;

 -- acquisition and preparation costs of buildings and

other facilities;

 -- an appropriate share of the cost of the equipment

and

the facilities used in construction work;

 -- fixed equipment and related installation costs

required for activities in a building or a facility;

 -- direct costs of inspection, supervision, and

administration of construction contracts and construction work;

 -- legal and recording fees and damage claims;

 -- fair value of facilities and equipment donated to

the

government; and

 -- material amounts of interest costs

paid.[FN20-"Interest

costs" include any reimbursable interest paid by the reporting

entity directly to providers of goods or services related to the

acquisition or construction of Federal mission PP&E. It excludes

any interest costs paid by a reporting entity in financing its

own debt.]

65 No asset amount shall be shown on the balance sheet for

Federal mission PP&E.

66 The acquisition cost of Federal mission PP&E shall be

considered an expense in determining the net costs of operations

in the period acquired. The cost of constructing, improving,

reconstructing, or renovating Federal mission PP&E also shall be

considered an expense in determining net costs in the period

incurred.
67 For acquisitions of Federal mission PP&E where costs are

incurred over a number of years, the portion of the cost incurred

during the reporting period shall be considered an expense in the

period incurred in determining the net cost of operations and the

total cost to date considered an acquisition-in-process cost in

the required supplementary stewardship information.

Minimum

Reporting

68 Federal Mission PP&E shall be reported as required

supplementary stewardship information. Reporting at the entity

level for Federal mission PP&E shall be more specific than at the

governmentwide level. At a minimum, the following information

shall be reported:

 -- A description of major types of Federal mission

PP&E by

the holding entity and the values assigned under the valuation

method used.

 -- The value of Federal mission PP&E added and

withdrawn

during the year, the increase or the decrease in value resulting

from revaluations of assets held to latest acquisition cost, and

the end-of-year value for each major type of property using the

entity's valuation method.

 -- A description of the methods of acquisition and

withdrawal of Federal mission PP&E. This should be reported at

the major program or category level; individual transactions,

unless significant, need not be reported.

 -- Condition[FN21-Examples of condition information

include, among others, (1) averages of standardized condition

rating codes; (2) percentage of assets above, at, or below

acceptable condition; or (3) narrative information.] of the

assets unless it is already reported in a note to the financial

statements in which case a reference to the note will suffice.

 -- A reference to the applicable note to the

financial

statements if deferred maintenance is reported for the assets.

Implementation

Guidance
69 For guidance on Federal mission PP&E previously recognized

as assets for balance sheet reporting, see SFFAS No. 6,

Accounting for Property, Plant, and Equipment, page 16,

paragraphs 55 and 56.

70 For guidance on deferred maintenance reporting, see SFFAS

No. 6, Accounting for Property, Plant, and Equipment, page 23,

paragraphs 77 through 84.

****************************************************************

CHAPTER 4: STANDARD - STEWARDSHIP LAND

****************************************************************

Stewardship Land - Land not acquired for or in connection

with[FN22-"Acquired for or in connection with" is defined as

including land acquired with the intent to construct general PP&E

and land acquired in combination with general PP&E, including not

only land used as the foundation, but also adjacent land

considered to be the general PP&E's common grounds.] items of

general PP&E, that is, stewardship land, shall be reported as

required supplementary stewardship information accompanying the

financial statements of the Federal Government and the separate

reports of component units of the Federal Government responsible

for such land. Stewardship land shall be reported in terms of

physical units rather than cost, fair value, or other monetary

values.

Definition

71 "Land" is defined as the solid part of the surface of the

earth. Excluded from the definition are the natural resources

(that is, depletable resources, such as mineral deposits and

petroleum; renewable resources, such as timber; and the outercontinental shelf resources) related to land.

72 Although the Federal Government holds vast amounts of

"proven" and "inferred" natural resources, the major reasons for

addressing only surface land in this project were (1) the

allotted time frame within which to complete this standard; (2)

existing studies that point out the difficulties and the

complexities of accurately estimating and valuing natural

resources; and (3) disputes regarding the boundaries of the

outer-continental shelf.[FN23-The Board presently has an active

project to address standards for natural resources.]
73 Land and land rights[FN24-"Land rights" are interests and

privileges held by the entity in land owned by others, such as

leaseholds, easements, water and water power rights, diversion

rights, submersion rights, rights-of-way, mineral rights, and

other like interests in land.] owned by the Federal Government

and acquired for or in connection with items of general PP&E

shall be accounted for and reported as general PP&E.

74 Land and land rights owned by the Federal Government and

not

acquired for or in connection with items of general PP&E will be

reported as stewardship land. Examples of stewardship land

include land used as forests and parks, and land used for

wildlife and grazing.

Measurement

75 Stewardship land shall be quantified in terms of physical

units (for example, acres) rather than in monetary terms.

76 No asset amount shall be shown on the balance sheet of the

Federal financial statements for stewardship land.

77 The acquisition cost of stewardship land shall be

considered

an expense in the period acquired when determining the net cost

of operations.

78 In some cases, land may be acquired along with existing

structures. The following treatments may apply:

 -- if the structure, which would be deemed a heritage

asset, is significant in and of itself, the entity shall use its

judgement as to whether the acquisition cost shall be treated as

the cost of stewardship land, heritage asset, or both;

 -- if the structure is to be used in operations (for

example, as general PP&E) but 1) the value of the structure is

insignificant, or 2) its acquisition is merely a byproduct of the

acquisition of the land, the cost in its entirety shall be

treated as an acquisition of stewardship land; or

 -- only significant structures that have an operating

use

(such as, a recently constructed hotel or employee housing block)
shall be treated as general PP&E by identifying the cost

attributable to general PP&E and segregating it from the cost of

the stewardship land acquired.

79 However, no amounts for stewardship land acquired through

donation or devise[FN25-A will or clause of a will disposing of

property.] shall be recognized as a cost in calculating net cost.

The fair value of the property, if known and material, shall be

disclosed in notes to the financial statements. If fair value is

not estimable, information related to the type and quantity of

assets received shall be disclosed in the year received.

80 Any costs to prepare stewardship land for its intended use

(for example, razing a building) shall be expensed as a part of

the cost of stewardship land.

Minimum

Reporting

81 Reporting at the entity level for stewardship land shall be

more specific than at the governmentwide level. Minimum reporting

shall include the following:

 -- The number of physical units of stewardship land

by

category of major use, broken down within that category by

principal holding agency.

 -- Where parcels of stewardship land have more than

one

use, the predominant use of the land shall be considered the

major use. Examples of major uses of stewardship land include

forests and wildlife, grazing, parks, recreation, and historic

sites. In cases where land has multiple uses, none of which is

predominant, a description of the multiple uses shall be

presented.

 -- Acquisitions, withdrawals, and ending balance

should be

shown by major categories of use, and methods of acquisition and

withdrawal identified. Reporting should be at the major category

level; individual transactions, unless significant, need not be

reported.

 -- The condition[FN26-Examples of condition

information
include, among others, (1) averages of standardized condition

rating codes; (2) percentage of assets above, at, or below

acceptable condition; or (3) narrative information.] of the

stewardship land, unless it is already reported in a note to the

financial statement, in which case a reference to the note will

suffice.

 -- A reference to the note to the financial

statements if

deferred maintenance is reported for the assets.[FN27-For

guidance on deferred maintenance reporting, see the Deferred

Maintenance standard Accounting for Property, Plant, and

Equipment, SFFAS No. 6.]

Implementation

Guidance

82 For guidance relating to stewardship land that was

previously recognized as assets for balance sheet reporting, see

SFFAS No. 6, Accounting for Property, Plant and Equipment, page

21, paragraphs 75, and 76.

****************************************************************

CHAPTER 5: STANDARD - NONFEDERAL PHYSICAL PROPERTY

****************************************************************

Nonfederal Physical Property - Expenses included in calculating

net cost for nonfederal physical property programs shall be

reported as investments in required supplementary stewardship

information accompanying the financial statements of the Federal

Government and the separate reports of component units of the

Federal Government responsible for such investments. Reporting

will include data, in nominal dollars, on investment for the year

being reported upon and the preceding 4 years. Additional years'

data also may be reported if such data would provide a better

indication of the nature of the investment.

Definition

83 "Investment in nonfederal physical property" refers to

those

expenses incurred by the Federal Government for the purchase, the

construction, or the major renovation of physical property owned

by state and local governments, including major additions,

alterations, and replacements; the purchase of major equipment;

and the purchase or improvement of other physical assets. Grants
for maintenance and operations are not considered investments.

Measurement

84 "Expenses incurred" - The financial investment shall be

measured on the same basis of accounting as used for financial

statement purposes, including appropriate accrual adjustments,

general and administrative overhead, and costs of

facilities.[FN28-See Managerial Cost Accounting Standards for the

Federal Government, SFFAS No. 4, for a full discussion of Federal

cost accounting principles and standards.] Amounts shall be

reported in nominal dollars.

85 Cash grants related to nonfederal physical property

programs

are recognized and reported as expenses in arriving at the net

cost of operations.

86 Expenses incurred for program costs, contracts, or grants

with split purposes[FN29-An example of an investment with a split

purpose is a grant issued to a state to construct segments of the

National Highway System and to conduct highway research.] shall

be reported on the basis of an allocation of the expenses. If

allocation is not feasible, the investment shall be reported on

the basis of the predominant application of the expense or

transfer.

Minimum

Reporting

87 Minimum reporting shall include the following:

 -- Annual investment[FN30-As defined in this

standard,

"annual investment" includes more than the annual expenditure

reported by character class for budget execution. "Annual

investment" is the full cost of the investment. Full cost shall

be measured and accounted for in accordance with Managerial Cost

Accounting Standards for the Federal Government, SFFAS No. 4.]

shall be reported, including a description of Federally-owned

physical property transferred to state and local governments.

This information will be provided for the year ended on the

balance sheet date as well as for each of the 4 years preceding

that year. If data for additional years would provide a better

indication of investment, reporting of the additional years' data

is encouraged. In those unusual instances when entities have no
historical data, only current reporting year data need be

reported.

 -- Reporting shall be at a meaningful category or

level,

for example, a major program or department. Reporting of major

investments at the entity level shall be more specific than at

the governmentwide level.

 -- In some cases, the information called for above is

not

available because entities have maintained records on the basis

of outlays rather than expenses. For such entities to reconstruct

their accounts on the basis of expense data may be impracticable.

Agencies in this situation will continue to report historical

data on an outlay basis for any years for which reporting is

required and for which expense data are not available. If neither

historical expense nor outlay data are available for each of the

5 years, entities need report only expense data for the current

reporting year and such other years as available. At the end of 5

years, however, the agency will be able to report the expenses to

be categorized as investments for nonfederal physical property

rather than the outlays for each of the preceding 5 years.

 -- Reporting shall include a description of major

programs

involving Federal investments in nonfederal physical property

including a description of programs or policies under which noncash assets are transferred to state and local governments.

Recommended

Reporting

88 Reporting of the amount of significant state and local

total

contributions to shared or joint programs is encouraged but is

not required. If it is known, however, that other contributions

in a significant amount were made, that fact (for example,

expressed as a percentage of the total program) shall be reported

even if the exact amount of the contribution is not known.

****************************************************************

CHAPTER 6: STANDARD - HUMAN CAPITAL

****************************************************************

Human Capital - Expenses included in calculating net cost for

education and training programs that are intended to increase or
maintain national economic productive capacity shall be reported

as investments in human capital as required supplementary

stewardship information accompanying the financial statements of

the Federal Government and its component units. Continued

categorization of expenses as investments for stewardship

purposes is predicated on demonstrated outputs and outcomes

consistent with the intent of the program. Reporting will

ordinarily include data in nominal dollars on investment for the

year being reported upon and the preceding 4 years. Additional

years' data also may be reported if such data would provide a

better indication of the investment.

Definition

89 "Investment in human capital" refers to those expenses

incurred for programs for education and training of the public

that are intended to maintain or increase national productive

capacity and that produce outputs and outcomes that provide

evidence of maintaining or increasing national productive

capacity.

90 The definition excludes education and training expenses for

Federal civilian and military personnel. It also excludes

education and training expenses whose purpose is not maintaining

or enhancing national productive capacity.

Measurement

91 "Expenses incurred" - The investment shall be measured on

the same basis of accounting as used for financial statements,

including appropriate accrual adjustments, general and

administrative overhead, and costs of facilities.[FN31-See

Managerial Cost Accounting Standards for the Federal Government,

SFFAS No. 4, for a full discussion of Federal cost accounting

principles and standards.] Amounts shall be reported in nominal

dollars.

92 Expenses incurred for programs, contracts, or grants with

split purposes[FN32-An example of an investment with a split

purpose is a grant issued to a teaching hospital to perform both

medical education and medical research.] shall be reported on

the basis of an allocation of the investment expenses. If

allocation is not feasible, the investment shall be reported on

the basis of the predominant application of the expenses

incurred.
93 By no later than the third year after the effective date of

this standard, managers of the investment program should be able

to provide information on the outcomes for the programs for which

the investments are reported. If outcome data are not available

(for example, the agency has not agreed on outcome measures for

the program, the agency is unable to collect reliable outcome

data or the outcomes will not occur for several years), output

data that best provide indications of the intended program

outcomes shall be used to justify continued treatment of expenses

as investments until outcome data are available. Definitions and

characteristics of outputs and outcomes are provided in the

paragraphs that follow.[FN33-The human capital outputs and

outcomes should be the same as those measured for the Government

Performance and Results Act (GPRA) and the budget and could be

reported in a Statement of Program Performance Measures as

described in Appendix 1-F to the concepts statement entitled,

Entity and Display, SFFAC No. 2.]

 -- "Output" - A tabulation, calculation, or recording

of

activity or effort that can be expressed in a quantitative or

qualitative manner. Outputs shall have two key characteristics:

(1) they shall be systematically or periodically captured through

an accounting or management information system, and (2) there

shall be a logical connection between the reported measures and

the program's purpose. Examples of human capital output are high

school and college graduates as a percentage of population over

25.

 -- "Outcome" - An assessment of the results of a

program

compared to its intended purpose. Outcomes shall: (1) be capable

of being described in financial, economic, or quantitative terms

and (2) provide a plausible basis for concluding that the program

has had or will have its intended effect. Examples of human

capital outcomes are program graduates obtaining jobs within 2

months of program completion or program graduates obtaining jobs

making more money than they previously received on Federal aid.

Minimum

Reporting

94 Minimum reporting shall consist of:

 The annual investment[FN34-As defined in this
standard,

"annual investment" includes more than the annual expenditure

reported by character class for budget execution. "Annual

investment" is the full cost of the investment. Full cost shall

be measured and accounted for in accordance with Managerial Cost

Accounting Standards for the Federal Government, SFFAS No. 4.]

made in the year ended on the balance sheet date as well as in

each of the 4 years preceding that year shall be reported. If

data for additional years would provide a better indication of

investment, reporting of the additional years' data is

encouraged. In those unusual instances when entities have no

historical data, only current reporting year data need be

reported. Reporting shall be at a meaningful category or level,

for example, a major program or department. Reporting of major

efforts at the entity level shall be more specific than at the

governmentwide level.

 -- In some cases, the information called for above

will

not be available because entities have maintained records on the

basis of outlays rather than expenses. For such entities to

reconstruct their accounts on the basis of expense data may be

impracticable. Agencies in this situation will continue to report

historical data on an outlay basis for any years for which

reporting is required and for which expense data are not

available. If neither historical expense nor outlay data are

available for each of the 5 years, entities need report expense

data for only the current reporting year and such other years as

available. At the end of 5 years, however, the agency will be

able to report the expenses to be categorized as investments for

human capital rather than the outlays for each of the preceding 5

years.

 -- A narrative description of major education and

training

programs considered Federal investments in human capital shall be

included.

Recommended

Reporting

95 Reporting of the amount of significant state, local,

private, or foreign total contributions to shared or joint

programs is encouraged, but is not required. If it is known,

however, that other contributions in a significant amount were

made, that fact (for example, expressed as a percentage of the
total program) may be reported even if the exact amount of the

contribution is not known.

*****************************************************************

CHAPTER 7: STANDARD - RESEARCH AND DEVELOPMENT

*****************************************************************

Research and Development - Expenses included in calculating net

cost for research and development programs that are intended to

increase or maintain national economic productive capacity or

yield other future benefits shall be reported as investments in

research and development in required supplementary stewardship

information accompanying the financial statements of the Federal

Government and its component units. Continued categorization of

program expenses as investment is predicated on output and

outcome data consistent with the program's intent. Reporting

ordinarily will include data in nominal dollars on investment for

the year being reported upon and the preceding 4 years.

Additional years' data also may be reported if such data would

provide a better indication of the investment.

Definition

96 "Investment in research and development" refers to those

expenses incurred to support the search for new or refined

knowledge and ideas and for the application or use of such

knowledge and ideas for the development of new or improved

products and processes with the expectation of maintaining or

increasing national economic productive capacity or yielding

other future benefits. Research and development is composed of

 -- Basic research: systematic study to gain knowledge

or

understanding of the fundamental aspects of phenomena and of

observable facts without specific applications toward processes

or products in mind;

 -- Applied research: systematic study to gain

knowledge or

understanding necessary for determining the means by which a

recognized and specific need may be met; and

 -- Development: systematic use of the knowledge and

understanding gained from research for the production of useful

materials, devices, systems, or methods, including the design and

development of prototypes and processes.[FN35-See OMB Circular A-
11, section 44.]

Measurement

97 "Expenses incurred" - The investment shall be measured on

the same basis of accounting as used for financial statements,

including appropriate accrual adjustments, general and

administrative overhead, and costs of facilities.[FN36-See

Managerial Cost Accounting Standards for the Federal Government,

SFFAS No. 4, for a full discussion of Federal cost accounting

principles and standards.] Amounts shall be reported in nominal

dollars.

98 Expenses incurred for programs, contracts, or grants with

split purposes[FN37-An example of an investment with a split

purpose is a grant issued to a teaching hospital to perform both

medical education and medical research.] shall be reported on the

basis of an allocation of the investment expenses. If allocation

is not feasible, the investment shall be reported on the basis of

the predominant application of the expenses incurred.

99 By no later than the third year after the effective date of

this standard, managers of the investment program should be able

to provide information on the outcomes for the programs for which

the investments are reported.[FN38-The research and development

outputs and outcomes should be the same as those measured for the

Government Performance and Results Act (GPRA) and the budget and

will be reported in a Statement of Program Performance Measures

as described in Appendix 1-F to Entity and Display, SFFAC No. 2.]

If outcome data are not available (for example, the agency has

not agreed on outcome measures for the program, the agency is

unable to collect reliable outcome data, or the outcomes will not

occur for several years), the outputs that best provide

indications of the intended program outcomes shall be used to

justify continued treatment of expenses as investments until

outcome data are available. Definitions and characteristics of

outputs and outcomes follow.

 -- "Output" - A tabulation, calculation, or recording

of

activity or effort that can be expressed in a quantitative or

qualitative manner. They shall have two key characteristics: (1)

they shall be systematically or periodically captured through an

accounting or management information system, and (2) there shall

be a logical connection between the reported measures and the

program's purpose. In research and development programs, this
might consist of data for the year concerning the number of new

projects initiated, the number continued from the prior year, the

number completed and the number terminated. It also might consist

of such quantitative measures as bibliometrics (for example,

publication counts, citation counts and analysis, and peer

evaluation); patent counts and analysis; and science "indicators"

that assess the ongoing vitality of the research (for example,

statistics on scientific and engineering personnel, graduate

students and degree recipients by field and sector).[FN39-

Research Funding as an Investment: Can We Measure the Returns?,

A Technical Memorandum, Congress of the United States, Office of

Technology Assessment (Apr. 1986).]

 -- "Outcome" - An assessment of the results of a

program

compared to its intended purpose. Because of the difficulty of

measuring such results for research and development programs in

financial, economic, or quantitative terms, outcome data for such

programs are expected to consist typically of a narrative

discussion of the major results achieved by the program during

the year, along the following lines:

 - Basic Research - an identification of any

major new discoveries that were made during the year;

 - Applied Research - an identification of

any major new applications that were developed during the year; or

 - Development - the progress of major

developmental projects including the results with respect to projects completed

or otherwise terminated during the year and the status of

projects that will continue.

 The information provided concerning outcomes

should be chosen to provide, in concise form, a plausible basis for judging

the extent to which the program is achieving its purpose.

Minimum

Reporting

100 Minimum reporting shall consist of the following:

 -- The annual investment[FN40-As defined in this

standard, "annual investment" includes more than the annual expenditure

reported by character class for budget execution. "Annual

investment" is the full cost of the investment. Full cost shall
be measured and accounted for in accordance with Managerial Cost

Accounting Standards for the Federal Government, SFFAS No. 4.]

made in the year ended on the balance sheet date as well as in

each of the 4 years preceding that year shall be reported. If

data for additional years would provide a better indication of

investment, reporting of the additional years' data is

encouraged. In those unusual instances when entities have no

historical data, only current reporting year data need be

reported. Reporting shall be at a meaningful category or level,

for example, a major program or department. Reporting of major

investments at the entity level shall be more specific than at

the governmentwide level.

 -- In some cases, the information called for above

will not be available because certain entities have maintained records

on the basis of outlays rather than expenses. For such entities

to reconstruct their accounts on the basis of expense data may be

impracticable. Agencies in this situation will continue to report

historical data on an outlay basis for any years for which

reporting is required and for which expense data are not

available. If neither historical expense nor outlay data are

available for each of the 5 years, entities need report expense

data for only the current reporting year and such other years as

available. At the end of 5 years, however, the agency will be

able to report the expenses to be categorized as research and

development rather than the outlays for each of the preceding 5

years.

 -- A narrative description of major research and

development programs shall be included.

Recommended Reporting

101 Reporting of the amount of significant state,

local, private, or foreign total contributions to shared or joint

programs is encouraged, but is not required. If it is known,

however, that other contributions in a significant amount were

made, that fact (for example, expressed as a percentage of the

total program) may be reported even if the exact amount of the

contribution is not known.

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CHAPTER 8: STANDARD - CURRENT SERVICES ASSESSMENT

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Current Services Assessment - A Current Services Assessment (CSA)

on the basis of receipt and outlay data as published in the

President's Budget will be reported for all programs for the base
year and 6 years subsequent to the base year. "Base year" data

will be actual receipt and outlay data for the last completed

fiscal year; projected data will be receipt and outlay data that

are included in the current services estimates in the President's

Budget published after the close of the base year. The data would

be presented as required supplementary stewardship information

accompanying the consolidated financial statements of the Federal

Government but not in individual reports of its component units.

Reporting of projected data for additional years is encouraged

where it would be useful and relevant.

102 "A Current Services Assessment" provides receipt and outlay

data on the basis of projections of future activities. It is

relevant for assessing the sustainability of programs established

by current law, that is, the sufficiency of future resources to

sustain public services and to meet obligations as they come due.

The CSA focuses on the totality of government operations rather

than on individual programs. It provides an analytical

perspective on the Government because it shows the short- and

long-term direction of current programs.

Measurement

103 CSA will present receipt and outlay data published in the

President's Budget. Data will be presented for all programs for

the base year and at least 6 years subsequent to the base year,

summarized in sufficient detail to identify, at least, (1)

receipts by major source (e.g., individual income taxes, social

insurance taxes, etc.); (2) outlays for the defense, Social

Security, Medicare, and net interest functions; (3) all other

receipts and outlays; and (4) the deficit or surplus. The "base

year" is the year for which the financial statements are being

prepared. Reporting of projected data for additional years is

encouraged where it would be useful and relevant.

104 CSA data for the 6-year projection will be identical to

projected data published in the President's Budget for the same

period. "Base year" data will be actual receipt and outlay data

for the last completed fiscal year; projected data will be the

current services estimates of receipt and outlay data that are

included in the President's Budget published after the close of

the base year.

Minimum
Reporting

Governmentwide Report of the Federal Government

105 The CSA shall present flow data as described in the two

preceeding paragraphs for inclusion in the consolidated financial

report of the US Government.

106 Preparers of financial reports are encouraged to experiment

with the presentation of the CSA data in order to make it more

understandable.

107 In some cases, summary data will be more effective than

detailed data. There may be situations, too, where graphic

presentations will be more effective than tabular presentations.

Reporting Entities of the Federal Government

108 None.

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APPENDIX A

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109 This appendix provides a discussion of the more significant

comments that the Board received from respondents to the exposure

draft, Supplementary Stewardship Reporting, dated August 1995 and

from testimony at a public hearing on the exposure draft that was

held December 5, 1995.

110 Responses overall were generally favorable to the concept of

reporting stewardship information. In some cases, respondents had

questions about the specific reporting requirements or requested

clarification on particular items. Where feasible, these areas

were addressed or clarified in the final standards in this

Statement. In the case of issues raised by the respondents, this

appendix explains the basis of the Board's conclusions.

The Nature of Stewardship Reporting

111 The exposure draft presented the Board's approach to

reporting in a manner other than is done in the basic financial

statements for those items that it has categorized as stewardship

items. As the Board stated in the Introduction and Background

chapter of this Statement, it believes that these stewardship

items warrant specialized reporting to highlight their importance

and to portray them in additional ways than provided by financial
accounting. The Board designated a new category of reporting to

highlight the unique nature of stewardship reporting, Required

Supplemental Stewardship Information (RSSI).

112 Some respondents believed that, although reporting on

stewardship items might be warranted, a separate manner of

reporting might not. They believed that stewardship reporting

could be accommodated either within the basic financial

statements, for example, as a note, or as Required Supplemental

Information (RSI). They did not see the need for the separate

category of RSSI.

113 The Board, however, believes that a new category for

reporting on stewardship items is more appropriate. If

stewardship information were required to be reported in a note to

the basic financial statements, it would be subject to the same

level of audit scrutiny as that of the basic financial

statements. Since some of the stewardship information is nonfinancial, for example, physical units, and other data is based

on projections or assumptions, the same degree of audit coverage

as that of the basic financial statements for these items may not

be appropriate. Such data is not drawn directly from the

financial records. Thus reliance on financial records for audit

backup would not be feasible.

114 On the other hand, the Board believes that certain

stewardship information should receive more audit scrutiny than

it would if it were RSI. For RSI, the auditor reviews the data

for overall compliance with associated guidance and for

consonance with the basic financial statements. The auditor

usually provides in-depth review of the RSI only if there appears

to be some problem with the data. If he or she believes that the

data is not fairly presented, the auditor still may issue a clean

opinion on the basic financial statements while noting that there

are problems with the RSI.

115 Therefore, the Board has proposed that a new category, RSSI,

be designated to cover stewardship reporting. By developing this

new category, it is anticipated that audit standards will be

developed to address the specific items in that category.

Although the Board does not have authority to set audit

standards, it established RSSI with the expectation that OMB and

GAO will, in collaboration, determine appropriate audit

procedures for this information.
Social Insurance

116 Consideration of guidance for the recognition, measurement

and display of obligations for social insurance programs has

continued to present the Board with significant, vexing

theoretical and practical problems. The Board notes the strength

of feelings of respondents and commentators, some of whom believe

a liability should be recognized for amounts that will be paid in

future periods to or on behalf of current or future program

beneficiaries and others who believe that there is no obligation

associated with these programs that meets the definition of a

liability, other than amounts due and payable at the end of an

accounting period; additionally, some favor disclosure of

projected data relating to the magnitude of the present value of

future net benefit payments at a particular date while others

favor cash flow information for a long period of time. The Board

notes too the magnitude and complexity of these programs and the

extreme sensitivity of projections relating to the programs to

assumptions whose range of possibilities is large. More

importantly, the Board notes that social insurance programs are

presently being studied and discussed frequently and seriously

within government and by the public; a report and recommendations

are expected shortly from the 1994-95 Quadrennial Advisory

Council on Social Security. The prospects of significant changes

to the programs are reasonably high.

117 After deliberating the issue, the Board has concluded that

additional investigation and further deliberation is required and

has directed the FASAB staff to continue to research social

insurance issues focusing especially on: identifying the

characteristics of programs which should cause them to be subject

to the guidance provided in a Statement on Social Insurance; the

appropriate display of information in the financial statements;

the identification of additional information, if any, which

should be required for social insurance programs; the means for

measurement of financial data included in such additional

information; and, the desirability of nonfinancial indicators

(ratios of data to GDP or "covered payroll") to describe the

status of programs or the implications of potential changes to or

needs of the programs.The Board has instructed the staff to be

mindful of all current developments in structuring its research

and its recommendations.

Expensing

Stewardship

PP&E
118 Echoing their earlier comments to the Board's Exposure

Draft, Accounting for Property, Plant, and Equipment, some

respondents expressed concern that expensing rather than

capitalizing costs associated with stewardship PP&E would lessen

the value of the operating statement as a tool for performance

measurement since it would overstate the cost in the year an

asset is acquired.

119 The Board, however, believes that capitalizing and

depreciating stewardship PP&E provides information that is of

little usefulness. Stewardship PP&E includes heritage assets,

Federal mission PP&E, and stewardship land. Period costs related

to stewardship PP&E are of diminished usefulness because of

uncertain useful life (e.g., heritage assets, Federal mission

PP&E), uncertain historical cost basis (e.g., stewardship land),

or probability of being destroyed in use (e.g., Federal mission

PP&E). Therefore, the Board believes that attempting to

capitalize and depreciate stewardship PP&E is not warranted. It

believes that reporting on information related to the existence

and the condition of the stewardship PP&E has more relevance to

decision-makers and other users of the financial report.

Costing of Federal

Mission PP&E

120 Respondents to the Board's question on whether the

alternatives of presenting costs of Federal mission PP&E in terms

of either total (historical) or latest acquisition cost generally

believed that both options should not be allowed. Some believed

that use of alternative methods would not ensure consistency in

reporting. Others believed that only total (historical) costs

should be used. Still others believed that total (historical)

cost should be the long-term goal, with the use of latest

acquisition cost allowed only until such historical cost data

would be available.

121 The Board, however, recognizes that significant practical

problems may arise if an agency is compelled to adopt a specified

costing approach for reporting stewardship assets, and that such

cost approach would not be used for computing the net cost of

operations. Therefore, it believes that its decision to accept

either the historical cost or latest acquisition cost method is

appropriate. However, it also emphasizes that once a method is

chosen, an entity should switch to the other method only with

appropriate justification.
Reporting

Expense or

Outlay Data

122 The standards require that expense data be reported for

investments in human capital, research and development, and

nonfederal physical property. The standards also provide for a

period of 5 years to transition to reporting expense data for

those agencies that currently maintain only outlay data. Some

Board members suggested that since some agencies currently

maintain only outlay data, requiring that only outlay data be

reported might be more practical. However, the responses

reflected a clear consensus for reporting expenses, with little

or no support for reporting outlays only, and a minority

preferring to report both expenses and outlays. Therefore, the

standards, as proposed, remain unchanged.

Request for More

Specificity In

Reporting Requirements

123 When the Board developed the standards for stewardship

reporting, its intention was to provide overall guidance on

definitions, recognition, measurement, and minimum and

recommended reporting. This broad guidance was intended to

provide the basic reporting requirements while allowing each

entity maximum flexibility in such areas as determining what

constitutes the individual stewardship items for that entity,

which costs are directly attributable to the stewardship item,

and how best to report on multi-use items so that users will gain

the best picture of the entity's financial and performance information.

124 The Board believes that the desire for more specific

guidance expressed by several respondents stems from the belief

that without such guidance, an entity's determination of how to

apply the standards could be questioned. Nevertheless, the Board

reiterates its position that entities should be provided maximum

flexibility when applying the stewardship standards. However,

entities should make the determination of how best to apply the

stewardship standards based on a thorough analysis of their

individual entity, including its mission, financial practices,

and the impact of its mission and operation on financial report

users and on the Nation. Finally, all entity determinations of

the applicability of stewardship standards should be thoroughly

documented.
Issues for Which Changes

Were Made to the

Proposed Standards

125 Multiple Category Reporting. Some respondents were concerned

that there would be double counting if, as proposed by the

standards, some stewardship items would be reported in two

separate categories; for example, Yellowstone National Park would

be reported as a heritage asset and as stewardship land.

126 Reporting supplementary stewardship information in two

categories will not be deemed double counting. This is because

where multiple reporting is required, the units of measure are

different for each of the stewardship categories. In the example

above, Yellowstone National Park would be reported under a

category, such as "National Parks," as one of the total number of

heritage assets under the auspices of the Department of the

Interior; it also would be reported by the number of acres that

it occupies under the stewardship land category for the

Department. To clarify this point, the discussion of the process

of multiple reporting was expanded in the statement to explain

that the Board does not consider this reporting as double

counting.

127 Reporting the Fair Value for Stewardship PP&E Transferred to

State or Local Governments. Many respondents questioned the need

for, and the cost/benefit of, requiring that the fair value of

stewardship PP&E transferred to state and local governments be

reported. They stated that monetary values for stewardship PP&E

are not required to be reported because such values are either

difficult to obtain (e.g., lack of historical cost data on land

acquired at the birth of the Nation) or not meaningful (e.g., the

historical cost to build the Washington Monument). Therefore,

they questioned the cost/benefit of requiring that the fair value

of stewardship

property transferred to state and local governments be determined

and reported.

128 The Board agreed that the fair value of stewardship property

transferred to state and local governments need not be determined

and reported. The standards have been revised to require a

description of the property transfer transaction; if the fair

value is known, nothing would preclude reporting it.
Effective Date for

Consolidated Financial

Statements

129 In considering required reporting of stewardship

information, the Board became increasingly aware of the need to

be highly selective in proposing requirements for the

consolidated financial report of the Federal Government. It

recognized the potential for implementation problems in the first

few years after the effective date of this statement. In addition

to the normal problems associated with adapting to new standards,

several of these standards provide for a transition period during

which agencies may or, in some cases, may not report investments

in human capital, research and development and nonfederal

physical property; if investments are reported for each of five

years as called for in this statement, they may be reported for

earlier years during the transition period on the basis of either

outlays or expense. The merit of reporting the aggregate of

information prepared on different bases is questionable.

130 Further, the information required to be reported by these

standards goes beyond that customarily accompanying financial

reports of governments or commercial enterprises. Standards

related to heritage assets and stewardship land call for

reporting in terms of physical units (e.g., number of parks or

acres of land) rather than in terms of historical cost.

Implementation problems are foreseen at the consolidated report

level because of differing measures. Also, the Board is concerned

with the possibility of establishing requirements so detailed as

to render the consolidated financial report unwieldy, unfriendly

to the potential user and obfuscating of important information.

131 Because of these possible implementation problems and the

need to consider other disclosures or presentations, the Board

expressed a desire for further deliberations relative to the

consolidated financial report of the Federal Government.

132 Accordingly, the effective date of this statement will be

for fiscal years beginning after September 30, 1997 as it relates

to financial statements of component units of the Federal

Government; this same effective date applies to chapter 8 as it

relates to the consolidated financial statements of the Federal

Government. The effective date of the statement as it applies to

the consolidated financial statements, except for chapter 8, is

deferred pending further deliberations of the Board. In the

interim, the consolidated financial reports should include such
summary or selected information as is feasible. Experimentation

is encouraged, as is the reporting of such additional information

as will enhance the financial report.

Reporting of Information

Not Specifically Addressed

in the Standards

133 Some respondents requested that the standards provide for

reporting additional information, such as transfers of

stewardship property to foreign governments, stewardship land

sold to the private sector, the Federal Government's interest in

such things as property held by nonfederal entities or patents

generated through Federal research and development funds, and

foreign contributions to Federal programs.

134 In developing the standards for stewardship reporting, the

Board concentrated on providing guidance in the principal areas

of stewardship resources that have materiality for the majority

of Federal entities and for the consolidated financial reporting

for the Nation. The Board's intent was to ensure that these

significant areas, if material for an entity, would be reported

regularly and in a consistent manner.

135 In some cases, an entity may have other resources or

obligations that were not specifically addressed in the

stewardship standards, but that the entity believes may be

material to the presentation of its stewardship information. In

such cases, if the reporting of such additional data would be

useful and relevant to readers, and would provide a better

indication of the resources and obligations of the entity, the

Board encourages such reporting.

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APPENDIX B: SAMPLE STEWARDSHIP REPORTING

**************************************************

   NOTICE !!! ** **

APPENDIX B CONTAINS SAMPLE ILLUSTRATIONS OF ALL

THE REPORTING ELEMENTS ADDRESSED IN THE

SUPPLEMENTARY STEWARDSHIP REPORTING STANDARD.

HOWEVER, THE DETAILED GRAPHICS IN THE

SAMPLE REPORTING FORMATS ARE NOT REPRODUCIBLE IN

ASCII FORMAT FOR THIS ELECTRONIC POSTING OF STANDARD ON
FINANCENET. THEREFORE, READERS

INTERESTED IN EXAMINING THE SAMPLE REPORTING

FORMATS SHOULD CONTACT THE FASAB AT 202-512-7350,

OR FAX 202-512-7366 AND REQUEST:

 APPENDIX B OF THE SUPPLEMENTARY STEWARDSHIP

 REPORTING STANDARD

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APPENDIX C: GLOSSARY

Applied research

Systematic study to gain knowledge or understanding necessary for

determining the means by which a recognized and specific need may

be met.

Basic research

Systematic study to gain knowledge or understanding of the

fundamental aspects of phenomena and of observable facts without

specific applications toward processes or products in mind.

Budgetary resources

The forms of authority given to an agency allowing it to incur

obligations. Budgetary resources include the following: new

budget authority, unobligated balances, direct spending

authority, and obligation limitations. (A Glossary of Terms Used

in the Federal Budget Process, Exposure Draft, January 1993)

Condition

The condition of an asset is based on an evaluation of the

physical condition of an asset, its ability to perform as

planned, and its continued usefulness. Evaluating an asset's

condition requires knowledge of the asset, its performance

capacity and its actual ability to perform, and expectations for

its continued performance. The condition of a long-lived asset is

affected by its durability, the quality of its design and

construction, its use, the adequacy of maintenance that has been

performed, and many other factors, including: accidents (an

unforeseen and unplanned or unexpected event or circumstance),

catastrophes (a tragic event), disasters (a sudden calamitous

event bringing great damage, loss, or destruction), and

obsolescence.
Constant dollar

A dollar value adjusted for changes in the average price level. A

constant dollar is derived by dividing a current dollar amount by

a price index. The resulting constant dollar value is that which

would exist if prices had remained at the same average level as

in the base period. Any changes in such constant dollar values

would therefore reflect only changes in the real volume of goods

and services, not changes in the price level. Constant dollar

figures are commonly used to compute the real value of the gross

domestic product and its components and to estimate the real

level of Federal receipts and outlays. (A Glossary of Terms Used

in the Federal Budget Process, Exposure Draft, January 1993)

Current services

assessment

Projections of future receipts and outlays from future activities

based on the programs established by current law. The CSA focuses

on the totality of Government operations rather than on

individual programs, and shows the short- and long-term direction

of current programs.

Development

Systematic use of the knowledge and understanding gained from

research for the production of useful materials, devices,

systems, or methods, including the design and development of

prototypes and processes.

Disclosure

Reporting information in notes or narrative regarded as an

integral part of the basic financial statement. (Revenue and

Other Financing Sources, SFFAS No. 7)

Expenditure

With respect to provisions of the Antideficiency Act (31 U.S.C.

1513-1514) and the Congressional Budget and Impoundment Control

Act of 1974 (2 U.S.C.622(i)), a term that has the same definition

as outlay. (A Glossary of Terms Used in the Federal Budget

Process, Exposure Draft, January 1993)

Expense
Outflows or other using up of assets or incurrences of

liabilities (or a combination of both) during a period from

providing goods, rendering services, or carrying out other

activities related to an entity's programs and missions, the

benefits from which do not extend beyond the present operating

period. (Accounting for Selected Assets and Liabilities, SFFAS

No. 1)

Federal mission

property, plant,

& equipment (PP&E)

Items used to meet a Federal Government mission in which the

specific PP&E used is an integral part of the output of the

mission.

General PP&E land

Land and land rights owned by the Federal Government that are

acquired for or in connection with items of general PP&E.

Heritage assets

Property, plant, and equipment that are unique for one or more of

the following reasons: historical or natural significance;

cultural, educational or artistic (e.g., aesthetic) importance;

or,

significant architectural characteristics.

Human Capital

Expenses incurred for education and training programs financed by

the Federal Government for the benefit of the public and designed

to increase or maintain national economic productive capacity.

Land

Land is the solid part of the surface of the earth. Excluded from

the definition of land are the natural resources (that is,

depletable resources such as mineral deposits and petroleum;

renewable resources such as timber, and the outer-continental

shelf resources related to land).
Latest acquisition

cost (LAC) method

A method that provides that all like units that are held be

valued at the invoice price of the most recent like item

purchased, less any discounts, plus any additional costs incurred

to bring the item to a form and location suitable for its

intended use.

Maintenance

The act of keeping fixed assets in useable condition. It includes

preventive maintenance, normal repairs, replacement of parts and

structural components, and other activities needed to preserve

the asset so that it continues to provide acceptable services and

achieves its expected life. Maintenance excludes activities aimed

at expanding the capacity of an asset or otherwise upgrading it

in order to serve needs different than, or significantly greater

than, those originally intended. (Accounting for Property, Plant,

and Equipment, SFFAS No. 6)

Nonfederal Physical

Property

Physical properties financed by grants from the Federal

Government, but owned by state and local governments.

Nominal dollar

The dollar value assigned to a good or service in terms of prices

current at the time of the good or service is required. This

contrasts with the value assigned to a good or service measured

in constant dollars.

Outcome

An assessment of the results of a program compared to its

intended purpose. They shall: 1) be capable of being described in

financial, economic, or quantitative terms; and 2) provide a

plausible basis for concluding that the program has had or will

have this intended effect. For measuring outcomes for research

and development programs, results may be reported by a narrative

discussion of the major results achieved by the program during

the year. (See para. 99 for further discussion.)

Output

A tabulation, calculation, or recording of activity or effort

that can be expressed in a quantitative or qualitative manner.
They shall have two key characteristics: 1) they shall be

systematically or periodically captured through an accounting or

management information system, and 2) there shall be a logical

connection between the reported measures and the program's

purpose.

Outlay

The issuance of checks, disbursement of cash, or electronic

transfer of funds made to liquidate a Federal obligation. Outlays

also occur when interest on the Treasury debt held by the public

accrues and when the Government issues bonds, notes, debentures,

monetary credits, or other cash-equivalent instruments in order

to liquidate obligations. Also, under credit reform, the credit

subsidy cost is recorded as an outlay when a direct or guaranteed

loan is disbursed. (A Glossary of Terms Used in the Federal

Budget Process, Exposure Draft, January 1993)

Research and

Development

Federal investment in research and development refers to those

expenses incurred in support of the search for new or refined

knowledge and ideas and for the application or use of such

knowledge and ideas for the development of new or improved

products and processes with the expectation of maintaining or

increasing national economic productive capacity or yielding

other future benefits. Research and development is composed of

basic research, applied research, and development.

Required

Supplementary Stewardship

Information (RSSI)

The category defined by the Board for reporting information

required by the stewardship standards. Stewardship information

may be presented as RSSI, in the financial statements, or in the

notes to them. Stewardship information will be necessary for a

fair presentation of financial position and results of

operations.

Space Exploration

Equipment

Items that are intended to operate above the atmosphere to

explore space and any specially designed equipment to aid,

service or operate other equipment engaged in exploring space.
State and Local

Governments

State and local governments generally include:

 the 50 States and the District of Columbia

 cities, counties, townships, school districts, specia

districts, public authorities, and other local governmental units

as defined by the Bureau of the Census; and

 Puerto Rico, the Virgin Islands, and other US territories

Stewardship

The Federal Government's responsibility for the general welfare

of the nation in perpetuity. (FASAB Concepts Statement No. 1,

Objectives of Federal Financial Reporting)

Stewardship

investments

Items recognized as expense in calculating net cost, but meriting

special treatment to highlight the substantial investment and

long-term benefit of the expenses. This would include nonfederal

physical property, human capital, and research and development.

Stewardship land

Land and land rights owned by the Federal Government that are not

acquired for or in connection with items of general PP&E.

Stewardship

responsibilities

The projected financial impact on the Government of sustaining

the current services that it provides pursuant to laws already

enacted. The commitments and constraints reflected in "current

services" are inherent in the tax and spending policies contained

in current law.

Total cost method

An accounting method that includes the actual acquisition cost of

each item held plus the costs of any additions, improvements,

alterations, rehabilitations, or replacements that extend the

useful life of an asset.

Weapons
Instruments of combat used to destroy, injure, defeat or threaten

an enemy. (adapted from Dictionary of Weapons and Military Terms)

Weapons Systems

A combination of one or more weapons with all related equipment,

materials, services, personnel and means of delivery and

deployment required for self-sufficiency. (Joint Chiefs of Staff,

Department of Defense Dictionary of Military and Associated

Terms, Joint Publication 1-02, Mar. 23, 1994.)

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FASAB Board Members

Elmer B. Staats, Chairman

James L. Blum

Donald H. Chapin

Martin Ives

Norwood Jackson

Gerald Murphy

James E. Reid

Cornelius E. Tierney

Alvin Tucker

***********************************

Ronald S. Young, Executive Director

Project Staff:

Philip T. Calder

Rick Wascak

M. Lucy Lomax

Richard Fontenrose

Special Consultant:

Harry S. Havens

Federal Accounting Standards Advisory Board
750 First Street, NE

Suite 1001

Washington, DC 20002

Telephone (202) 512-7350

FAX (202) 512-7366