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Gov.Enforced Enviro Indicators and Financial Act.
Here is my latest report
on codified state government environmental indicators and environmental
Do you know of any
municipality which is incorporating government enforced environmental financial
accounting rules with their sustainable indicators and or environmental
Member of the Society of
New US Accounting Rule
Creates Government Enforced Financial Environmental Reporting
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.
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
"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
"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,
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
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
Environmental officials in Colorado,
Wisconsin, Ohio, and Minnesota also expressed similar clueless
"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
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
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
"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
(C)Donald Sutherland 1999