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Gov.Enforced Enviro Indicators and Financial Act.

November 19, 1999
Here is my latest report on codified state government environmental indicators and environmental financial accounting.
Do you know of any municipality which is incorporating government enforced environmental financial accounting rules with their sustainable indicators and or environmental performance reporting?
Best Wishes,
Donald Sutherland
Member of the Society of Environmental Journalists
New US Accounting Rule Creates Government Enforced Financial Environmental Reporting System
By Donald Sutherland
Norwalk, Connecticut, November 16, 1999 - A new U.S. government accounting rule will change the way states, cities, and towns account for their environmental performance to taxpayers by requiring a more detailed financial reporting of agency environmental programs then currently used. 
The new sweeping standard approved by not-for-profit Government Accounting Standards Board (GASB) on June 10, 1999 requires municipalities and states to disclose in full detail costs of all government services including water and sewage services, landfill clean up and closure, and environmental liability compliance costs.
Government accounting regulators approved the new accounting standard to force state and local governments to disclose environmental liability and cleanup costs in financial reports as they are occurring.  Currently, these costs only have to be reported when they are paid out which allows for masking of fiscal problems from taxpayers.
"With GASB Statement No.34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments, environmental liabilities will be pulled into government activities statements and will be recorded as under the year incurred not the year they are paid," says David Dean, director of research at GASB.
"In the case where a state and or a municipality are a primary potential responsible party (PRP) to a Superfund site or any waste landfill, liability and cleanup costs are to be reported as they are being used now and not under post closure case reporting which can run five, ten, or even sixty years down the road," he says.
The new standard will take effect in three phases depending on the size of state and local budgets.
Phase 1:  Budgets with $100 million or more in annual revenue in fiscal years beginning after June 15, 2001
Phase 2:  Governments with at least $10 million but less than $100 million in revenues after June 15, 2002
Phase 3: Municipalities with less than $10 million in revenue after June 15, 2003
According to GASB officials, masking of fiscal problems can be done by many municipalities because they don't have laws on their books mandating GASB's rules but increasingly underwriters are demanding audited statements in accordance with these rules prior to issuing bonds.   Municipal bond traders, creditors, and elected officials are also demanding these governments financially account for themselves in the same fashion as U.S. companies.
"They can choose not to use GASB standards, but all states prepare financial statements in accordance with national Generally Accepted Accounting Principals (GAAP) which follows our rules," says Ken Sherman, senior project manager at GASB.
"We are always influenced by user groups and their needs which are compelling reasons to municipalities to issue financial statements using GASB even if the law doesn't require it", he says.
The new GASB accounting initiative comes on the heals of the April 1999 adoption by the Environmental Council of States (ECOS) of core performance measures (CPMs) to be used by all states in refining their state government environmental performance reporting to the Environmental Protection Agency (EPA).
The CPMs developed under a joint program with the not-for-profit ECOS and the EPA under the National Environmental Performance Partnership System (NEPPS) cover such factors as outdoor and indoor air quality, toxins in the workplace, radiation, acid rain, waste management, safe drinking water, groundwater quality, pesticide residues, and watershed protection.
What effect the new GASB Statement No.34 and current GASB Statements No.18 (landfill cleanup and closure) and No.10 (general liability) will have on the state financial reporting of ECOS CPMs has apparently not been reviewed by state environmental officials.
"I presume we are using appropriate current GASB standards for our environmental performance reporting," says Steve Adams, an economists in the office of strategic projects & planning at the Florida Department of Environmental Protection, "but I am an economists and I don't deal with accounting standards."
Environmental officials in Colorado, Wisconsin, Ohio, and Minnesota also expressed similar clueless responses.
"We do self assessment including CPMs, but how it is audited on a state basis I honestly cann't answer," says Ed Kitchen, rules coordinator in the director's office of the Ohio EPA.
State financial auditors and directors contacted in the same states didn't know about the ECOS's CPMs but did know how environmental GASB was reported.
"We comply with current environmental GASB standards and report the estimates for total future liability and clean up costs of landfills, Superfund sites, and petroleum tanks based on current costs, says Margaret Jennnigef, financial reporting director in the Minnesota Department of Finance. 
An official with the National Association of State Auditors, Comptrollers, and Treasurers (NASACT) did speculate the union of CPMS with environmental GASB could backfire on reporting agencies.
"This new model will move governments towards accrual accounting where you will possibly realize more environmental expenses then previously reported," says Kinney Poynter, deputy executive director of  NASACT, "and that could have a negative impact on the ECOS CPMs."
No state ECOS official contacted could speculate on the merger of CPMS with environmental GASB, but it seems an inevitable merger that could very possibly set a national precedent for codified government enforced financial environmental performance reporting.
(C)Donald Sutherland 1999