NEWS RELEASE 12/01/06

Norwalk, CT, December 1, 2006—Reflecting its intention to ensure that costs and liabilities not specifically addressed by current governmental accounting standards are included in financial reports, the GASB today issued a standard that will require state and local governments to provide the public with better information about the financial impact of environmental cleanups.

To provide governments with better accounting guidance and consistency, GASB Statement 49, Accounting and Financial Reporting for Pollution Remediation Obligations, identifies the circumstances under which a governmental entity would be required to report a liability related to pollution remediation. According to the standard, a government would have to estimate its expected outlays for pollution remediation if it knows a site is polluted and any of the following recognition triggers occur:

• Pollution poses an imminent danger to the public or environment and a government has little or no discretion to avoid fixing the problem
• A government has violated a pollution prevention-related permit or license
• A regulator has identified (or evidence indicates it will identify) a government as responsible (or potentially responsible) for cleaning up pollution, or for paying all or some of the cost of the clean up
• A government is named (or evidence indicates that it will be named) in a lawsuit to compel it to address the pollution
• A government begins or legally obligates itself to begin cleanup or post-cleanup activities (limited to amounts the government is legally required to complete).

Liabilities and expenses would be estimated using an "expected cash flows" measurement technique, which is used by environmental professionals but will be employed for the first time by governments. Statement 49 also will require governments to disclose information about their pollution obligations associated with clean up efforts in the notes to the financial statements.

"This standard improves financial reporting by promoting better, more transparent and comparable information brought about by clearer and consistent accounting," said Robert Attmore, Chairman of the GASB. "Statement 49 enhances the ability of financial statement users to assess a government's obligations by requiring both earlier reporting of liabilities's and recognition of liabilities that may not have been reported before."

Statement 49 will be effective for financial statements for periods beginning after December 15, 2007, but liabilities should be measured at the beginning of that period so that beginning net assets can be restated.

About the Governmental Accounting Standards Board

The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board's diverse constituency, including preparers and auditors of government financial statements, users of those statements and members of the academic community. More information about the GASB can be found at its website www.gasb.org.