Federal Accounting Standards Advisory Board

AGENCY:

General Accounting Office.

ACTION:

Notice of Proposed Statement of Federal Financial Accounting Standards (SFFAS) No. 18, Amendments to Accounting Standards for Direct Loans and Loan Guarantees.

Board Action: Pursuant to the Federal Advisory Committee Act (Pub. L. 92-463), as amended, and the FASAB Rules of Procedure, as amended in October, 1999 notice is hereby given that the Federal Accounting Standards Advisory Board on February 18, 2000, submitted to its principals for review for a period of 90 days a proposed Statement of Federal Financial Accounting Standards (SFFAS) No. 18, Amendments to Accounting Standards for Direct Loans and Loan Guarantees. If there is no objection from any of the principals, SFFAS No. 18 will be issued as a final FASAB statement as of May 19, 2000.

A summary of the proposed Statement follows:

SFFAS No. 18 amends SFFAS No. 2, Accounting for Direct Loans and Loan Guarantees, issued in August 1993, by adding several new requirements. The objectives of these amendments are to improve financial reporting for subsidy costs and performance of Federal credit programs. The new reporting requirements are:

• Report subsidy reestimates in two distinct components: the interest rate reestimate and the technical/default reestimate. The former is a reestimate due to a change in interest rates from the rate assumed in budget preparation and used in calculating the subsidy expense to the rates that are prevailing at the time the direct or guaranteed loans are disbursed. The latter is a reestimate due to changes made in projected cash flows under the terms of the direct loans or loan guarantees after reevaluating all the risk factors as of the financial statement date, except for the effect of interest rate reestimates.
• Display a reconciliation between the beginning and the ending balances of the subsidy cost allowance for direct loans and the liability for loan guarantees, reported in an entity's balance sheet. The reconciliation displays activities that affect the subsidy cost allowance or the loan guarantee liability. such as the subsidy expense for direct or guaranteed loans disbursed during the reporting period, subsidy reestimates, fees received, interest supplements paid, loans written off, claim payments made to lenders, recoveries obtained, and other adjustments.
• Provide a description of program characteristics and disclose: (1) The amounts of direct or guaranteed loans disbursed in each program during reporting year, (ii) the estimated subsidy rates for the total subsidy and the subsidy components at the program level in the current year's budget for the current year's cohorts, (iii) events and changes in economic conditions, other risk factors, legislation, credit policies, and subsidy estimation methodologies and assumptions, that have had a significant and measurable effect on subsidy rates, subsidy expense, and subsidy reestimates, and (iv) events and changes in conditions that have occurred and are more likely than not to have a significant impact but the effects of which are not measurable at the reporting date. Reporting entities should discuss how those events and changes have affected or would affect credit programs' subsidy costs, subsidy reestimates, and the subsidy rates estimated in the budget.

The amendments, if finally issued, will be effective for periods beginning after September 30, 2000

FOR FURTHER INFORMATION CONTACT:

Wendy Comes, Executive Director, 441 G St., N.W., Room 6814, Washington, D.C. 20548, or call (202) 512-7350.

Authority: Federal Advisory Committee Act. Pub. L. 92-463.