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Other Auditor Reports 12/31/2006
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Other Auditor Reports 12/31/2006
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6/5/2014 11:12:29 AM
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Finance Dept
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Other Auditor Reports
Date
12/31/2006
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VEIN <br />Imo <br />Accounting and Financial Reporting for Pollution Remediation Obligations (GASB Statements <br />No. 49) (Continued) <br />Expenditure recognition or asset capitalization occurs when one of the following five obligating events <br />takes place: <br />The government is compelled to take pollution remediation action because of an imminent <br />endangerment. <br />The government violates a pollution prevention related permit or license. <br />The government is named, or evidence indicates that it will be named, by a regulator as a <br />responsible party or potentially responsible party for remediation, or as a government <br />responsible for sharing costs. <br />The government is named, or evidence indicates that it will be named, in a lawsuit to compel <br />participation in pollution remediation. <br />The government commences or legally obligates itself to commence pollution remediation. <br />Costs of remediation should be accrued for all components (legal fees, site investigation costs, etc.) of <br />the obligation that are reasonably estimable. The standard outlines a method for recording a liability <br />based on estimated future remediation payments (expected cash flow technique = sum of all probability <br />weighted amounts in a range of possible estimated amounts). The liability should be reduced by any <br />estimated insurance or other recoveries that are not yet realized or realizable. An asset should be <br />reported separately for any known insurance or other recoveries that are already realized or realizable. <br />If liability recognition is necessary, it is required to be recorded at current value versus estimated future <br />inflating factors for such criteria as unknown technologies, laws or regulations. This liability amount is <br />carried forward unchanged until one of the five benchmarks occurs, there is a change in the remediation <br />plan, or there is a change in operating conditions. <br />Additional footnote disclosures accompanying recognition of a liability include explaining the nature and <br />source of the remediation obligation as well as the methods and assumptions used to estimate the <br />liability. <br />(15) <br />
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