Pollution remediation obligations: the GASB's preliminary views document on accounting and financial reporting for pollution remediation obligations marks a departure from traditional accounting practice.(The Accounting Angle)(Governmental Accounting Standards Board )

Earlier this year, the Governmental Accounting Standards Board offered its "preliminary views" on Accounting and Financial Reporting for Pollution Remediation Obligations. The GASB defines a pollution remediation obligation as "an obligation to address the current or potential detrimental effects of existing pollution by participating in pollution remediation activities." Examples of pollution remediation activities include cleaning up spills of hazardous substances and removing contamination. Several aspects of the proposed guidance mark a departure from traditional accounting practice, explaining the board's decision to issue a preliminary views document rather than proceeding directly to an exposure draft.

OBLIGATING EVENTS

The GASB is proposing that a government only be required to consider the possibility of recognizing a pollution remediation obligation if it either "knows or reasonably believes a site is polluted or contaminated." Even then, no obligation would be recognized until at least one of the following five obligating events had occurred:

* Imminent endangerment has caused the government to take remedial action

* The government has violated a pollution prevention-related permit or license

* The government has been named, or evidence indicates that the government will be named, as a responsible party or potentially responsible party by a regulator

* The government has been named, or evidence indicates that the government will be named, in a lawsuit to enforce cleanup