The chairman of the Federal Accounting Standards Advisory Board (FASAB), Scott Showalter, announced today that FASAB has issued Statement of Federal Financial Accounting Standards (SFFAS) 48, Opening Balances for Inventory, Operating Materials and Supplies, and Stockpile Materials.
“The Board is committed to providing the Department of Defense (DoD) with a cost-effective means to adopt generally accepted accounting principles (GAAP),” according to Chairman Scott Showalter. “SFFAS 48 is intended to provide an alternative valuation method for the adoption of GAAP when historical records and systems do not provide a basis for valuation of opening balances in accordance with SFFAS 3, Accounting for Inventory and Related Property, which has thus far been a challenge faced by DoD.”
SFFAS 48 allows a reporting entity to apply an alternative valuation method in establishing opening balances for inventory, operating materials and supplies (OM&S), and stockpile materials. The alternative valuation method is available only when presenting information following GAAP either (1) for the first-time or (2) after a period during which existing systems could not provide the information necessary for producing such GAAP- based financial statements without use of the alternative valuation method. The application of SFFAS 48 based on the second condition is available once per reporting entity.
SFFAS 48 is effective for periods beginning after September 30, 2016, and early implementation is encouraged.