6509.11m_30 Page 1 of 29 FOREST SERVICE HANDBOOK NATIONAL HEADQUARTERS (WO) WASHINGTON, DC FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES Amendment No.: 6509.11m-2011-1 Effective Date: April 26, 2011 Duration: This amendment is effective until superseded or removed. Approved: DONNA M. CARMICAL Chief Financial Officer (CFO) Date Approved: 04/14/2011 Posting Instructions: Amendments are numbered consecutively by handbook number and calendar year. Post by document; remove the entire document and replace it with this amendment. Retain this transmittal as the first page(s) of this document. The last amendment to this handbook was 6509.11m-2008-3 to 6509.11m_contents. New Document 6509.11m_30 29 Pages Superseded Document(s) by Issuance Number and Effective Date 6509.11m_30 (Amendment 6509.11m-2007-3, 10/11/2007) 25 Pages Digest: 30 - Revises chapter title from “Accruing Environmental Cleanup Liabilities” to “Accruing Environmental and Disposal Liabilities” to comply with wording changes adopted by the Office of Management and Budget, Circular A-136, “Financial Reporting Requirements”. 30.1 - Adds 40 CFR 312.10 as authority setting forth the qualifications for an “Environmental Professional”. 30.4 - Updates Responsibilities to reflect organization changes. 30.5 - Adds new definitions and revises to clarify others. 31 - Revises entire section to update the requirements of the accounting process with more detailed descriptions and current methods. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 2 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES Table of Contents 30.1 - Authority........................................................................................................................... 3 30.4 - Responsibility ................................................................................................................... 4 30.41- Chief Financial Officer ................................................................................................ 4 30.41a - Director of Audit and Assurance .............................................................................. 4 30.41b - Director of Financial Reporting and Reconciliation................................................. 4 30.41c - Director of Financial Management Systems ............................................................. 5 30.41d - Director of Financial Policy ..................................................................................... 5 30.41e - Director of the Albuquerque Service Center-Budget and Finance ........................... 5 30.42 - Deputy Chief for the National Forest System ............................................................ 6 30.42a - Washington Office Director of Engineering ............................................................. 6 30.43 - Deputy Chief for the National Forest System, Regional Foresters, Station Directors, Area Director, Forest Products Laboratory Director, International Institute of Tropical Forestry Director, and the Job Corps National Office Director ................... 6 30.44 - Forest Supervisors, Research Project Leaders, and Job Corps’ Field Representatives ..................................................................................................................................... 7 30.5 - Definitions ........................................................................................................................ 8 31 - ENVIRONMENTAL CLEANUP LIABILITY ACCOUNTING PROCESS ................ 11 31.1 - Identify and Classify Incidents of Damage to the Environment .................................... 13 31.2 - Estimate Cleanup Costs for Each Government-Related Environmental Damage Site .. 13 31.21 - Activities Considered in the Cost Estimate .............................................................. 13 31.22 - Development of Cost Estimates................................................................................ 14 31.23 - Cost Estimate Documentation .................................................................................. 14 31.24 - Cost Estimate Updates .............................................................................................. 15 31.3 - Maintain the Inventory of All Environmental Cleanup Sites ......................................... 16 31.4 - Gather Information and Determine the Accrual Amount ............................................... 16 31.5 - Determine Financing for Environmental Cleanup ......................................................... 20 31.51 - Possible Financing Options ...................................................................................... 20 31.52 - Unfunded Cleanup Sites Become Funded ................................................................ 22 31.53 - All Financed Cleanup Projects Have Special Accounting Structure ........................ 24 31.6 - Prepare and Record the Accrual Entry ........................................................................... 24 31.7 - Analyze the Results of Accrual Methodology................................................................ 26 31.8 - Accrual Documentation and Reconciliation ................................................................... 26 WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 3 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 30.1 - Authority 1. Financial Accounting Standards Advisory Board (FASAB) Statements of Federal Financial Accounting Standards (SFFAS) No. 5, “Accounting for the Liabilities of the Federal Government” (http://fasab.gov). This standard instructs Federal agencies on accounting for liabilities. 2. FASAB SFFAS No. 6, “Accounting for Property, Plant, and Equipment.” This standard instructs Federal agencies on accounting for property, plant, and equipment. 3. FASAB SFFAS No. 12, “Recognition of Contingent Liabilities Arising from Litigation: An Amendment of SFFAS No. 5, Accounting for Liabilities of the Federal Government.” This standard instructs Federal agencies about accounting for liabilities arising from litigation. 4. USDA Financial and Accounting Standards Manual (http://www.ocfo.usda.gov/acctpol/pdf/fasm.pdf). This manual instructs USDA agencies on accounting policy and principles for measuring, recognizing, and reporting liabilities associated with environmental restoration cleanup liabilities. 5. U.S. Treasury Financial Management Service “United States Standard General Ledger - Treasury Financial Manual, Section 1 Chart of Accounts, Section II Account Descriptions, and Section III Accounting Transactions” (http://www.fms.treas.gov/ussgl/). These Treasury Financial Manual sections provide information to all Federal agencies about the United States Standard General Ledger accounts, their descriptions, and their application to transactions. 6. FASAB Federal Financial Accounting and Auditing Technical Release No. 2: “Determining Probable and Reasonably Estimable for Environmental Liabilities in the Federal Government” (http://www.fasab.gov/pdffiles/codification_report2010.pdf). This technical release supplements the relevant Federal standards, but is not a substitute for and does not take precedence over the standards issued by General Accountability Office (GAO) and the Office of Management and Budget which have precedence over these and other authoritative guidance for Federal entities. 7. FASAB Technical Bulletin 2006-1: “Recognition and Measurement of AsbestosRelated Cleanup Costs”, issued by the Federal Accounting Standards Advisory Board, September 28, 2006. Implementation of this Technical Bulletin is pending issuance of detailed guidance. 8. Title 40, Code of Federal Regulations, Part 312.10. This regulation sets forth the qualifications required for an “Environmental Professional”. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 4 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 9. Resource Conservation and Recovery Act of 1976 (RCRA). RCRA gave the Environmental Protection Agency (EPA) the authority to control hazardous materials from the “cradle-to-grave”. This includes the generation, transportation, treatment, storage, and disposal of hazardous wastes. RCRA also set forth a framework for the management of non-hazardous wastes. (http://www.epa.gov). 30.4 - Responsibility 30.41- Chief Financial Officer It is the responsibility of the Chief Financial Officer to ensure the quality and integrity of the financial data in the agency core financial system and its subsidiary systems. 30.41a - Director of Audit and Assurance It is the responsibility of the Director of Audit and Assurance to: 1. Maintain and analyze historical statistics and trends of unfunded liabilities recorded in standard general ledger (SGL) 2995. Annually, review the accuracy of the accruals retrospectively, to improve upon the current methodology and increase the accuracy and reliability of the amounts accrued. 2. Coordinate and collaborate with the Washington Office Engineering staff as required to obtain from the field, the detailed information for auditor requests and transaction sampling of environmental cleanup liabilities. 30.41b - Director of Financial Reporting and Reconciliation It is the responsibility of the Director or Financial Reporting and Reconciliation to: 1. Ensure the amount of environmental cleanup liabilities in the general ledger reflects the amount recorded on the related spreadsheet from the Washington Office Engineering staff on a quarterly basis. 2. Report the Forest Service’s liabilities in a timely and accurate manner in the financial statements. 3. Provide the quality assurance and monitoring required to ensure the correct timing and recording of the accruals and liabilities. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 5 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 30.41c - Director of Financial Management Systems It is the responsibility of the Director of Financial Management Systems to implement and maintain the appropriate posting models to allow for proper analysis, compilation, and recording of accounting data to generate the related accruals. 30.41d - Director of Financial Policy It is the responsibility of the Director of Financial Policy to: 1. Issue accounting policy and procedures governing the recognition and accrual of environmental liabilities. 2. Collaborate with the ASC-B&F staff and the Washington Office Engineering staff regarding questions about or updates to the procedures in this directive. 30.41e - Director of the Albuquerque Service Center-Budget and Finance It is the responsibility of the Director of the Albuquerque Service Center - Budget and Finance (ASC-B&F) to: 1. Provide the quarterly accrual calculation spreadsheet and the financial information from the financial system on all government-related environmental cleanup activity. Financial information must be retrieved for data elements such as: obligations, expenditures, and unpaid expenditures, recorded in job codes established with the special job code model described in this directive, designated for environmental cleanup projects. 2. Use environmental cleanup cost estimates provided by the regions, stations, and Area through the Washington Office Engineering staff, and retrieved from the financial system, to calculate the quarterly Environmental Cleanup Costs Covered and Not Covered by Budgetary Resources. 3. Record the quarterly accrual of Environmental and Disposal Liabilities in the core financial system. 4. Collaborate with the Washington Office Engineering staff and the Washington Office Financial Policy staff regarding questions about or updates to the procedures in this directive. 5. Maintain related spreadsheets provided by Washington Office Engineering staff in a central file for audit examination. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 6 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 30.42 - Deputy Chief for the National Forest System It is the responsibility of the Deputy Chief for the National Forest System to maintain day to day quality, continuity, and integrity in National Forest System operations related to financial matters such as accruals. 30.42a - Washington Office Director of Engineering It is the responsibility of the Washington Office Director of Engineering to: 1. Collaborate with the ASC-B&F staff and the Washington Office Financial Policy staff regarding questions about or updates to the procedures in this directive. 2. Participate as required in the annual financial statement audit meetings. Provide supporting documentation for the total current liability estimate as reported on the quarterly accrual spreadsheet, in response to auditor requests and sampled liability items. 3. Distribute the quarterly accrual spreadsheet of government-related cleanup sites provided by the ASC-B&F Service Wide and Accounts Maintenance (SWAM) staff to the regional foresters, station directors, Area Director, Forest Products Laboratory Director, International Institute of Tropical Forestry Director, and National Job Corps Office Director for their update of the estimated cleanup costs. When the updated spreadsheets are returned, review them for accuracy and completeness, and consolidate them into one spreadsheet. Forward the consolidated, updated accrual spreadsheet to the ASC-B&F SWAM staff by the requested due date. 30.43 - Deputy Chief for the National Forest System, Regional Foresters, Station Directors, Area Director, Forest Products Laboratory Director, International Institute of Tropical Forestry Director, and the Job Corps National Office Director It is the responsibility of the Deputy Chief for the National Forest System, Regional Foresters, Station Directors, Area Director, Forest Products Laboratory Director, International Institute of Tropical Forestry Director, and Job Corps National Office Director to: 1. Ensure the quality and integrity of financial data processed in their areas of responsibility; including the accurate, timely recording of obligations and accruals. 2. Comply with direction for hazardous materials/chemical management and environmental cleanup and disposal provided in FSM 2160. 3. Ensure compliance with the procedure set forth in this directive, which includes the following: WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 7 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES a. Ensure that the inventory of environmental cleanup and disposal sites is complete and the sites have been entered into the Center for Environmental Excellence (CEE) database. b. Ensure all funded environmental cleanup and disposal projects have an appropriate job code (sec. 31.8) to facilitate the reporting of liabilities. c. Update the environmental cleanup and disposal site’s status (that is, not-started, on-going, or complete) in the CEE database, ensuring completion by mid-August of each year. d. Ensure qualified staff meeting the definition of an environmental professional prepares the cleanup cost estimates for funding requests and government-related site liability reporting. e. Ensure that the cleanup cost estimates for government-related site liability reporting are accurately estimated and updated when funding is received and maintained for timely recording on the quarterly accrual spreadsheet. f. Ensure updates to the quarterly accrual spreadsheet reflect any new sites and/or additional information that is obtained for current sites. g. Ensure adequate, appropriate documentation to support cleanup cost estimates for government-related sites is maintained and provided upon audit request. 30.44 - Forest Supervisors, Research Project Leaders, and Job Corps’ Field Representatives Forest Supervisors, Research Project Leaders, and Job Corps’ Field Representatives responsibilities include: 1. Ensure the quality and integrity of financial data processed in their areas of responsibility; including the accurate, timely recording of obligations and accruals. 2. Comply with direction for hazardous materials/chemical management and environmental cleanup and disposal provided in FSM 2160. 3. Comply with the procedure set forth in this directive, which includes the following: a. Ensure the inventory of environmental cleanup and disposal sites is complete and all funded environmental cleanup and disposal projects have an appropriate job code (sec. 31.53) to facilitate the reporting of environmental and disposal liabilities. b. Ensure qualified staff meeting the definition of an environmental professional (sec. 30.5) prepares the cleanup cost estimates. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 8 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES c. Ensure all environmental cleanup and disposal sites are entered in the CEE database and updated whenever the status (for example, not-started, on-going, or complete) changes. d. Provide the Regional Environmental Engineer with individual government-related site cleanup accrual cost estimates for financial statement reporting as identified in section 31.4 Exhibit 02. Include any new sites and/or additional information obtained for current sites. e. Maintain adequate, appropriate documentation to support government-related site cleanup cost estimates; provide documentation upon audit request. 30.5 - Definitions Abandoned Mine Lands (AML). A category of locations where there is no longer an unpatented mining claim under the 1872 General Mining Law where extraction and processing activity have been determined to be inactive or permanently stopped. Center for Environmental Excellence Database (CEE). The primary record system for environmental cleanup and disposal sites for the Forest Service. CERCLA. Comprehensive Environmental Response, Compensation, and Liability Act of 1980 defined liability and compensation for hazardous substances releases. Under the auspices of CERCLA, Forest Service manages an active hazardous substances cleanup program, pursues parties responsible for environmental damage, mounts emergency response to environmental damage incidents, sets cleanup goals, and plans environmental protection business activities. Contingency. An existing condition, situation, or set of circumstances involving uncertainty as to possible gain or loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur. In some cases, contingencies may be identified but the degree of uncertainty is so great that no reporting, recognition or disclosure is necessary in the general purpose federal financial statements. However, law may require disclosure of remote contingencies in special purpose reports. Disclose (Disclosure). Information presented in formal notes to the financial statements is considered an integral part of the required, basic financial statements. A disclosure for liabilities should include the nature of any contingency and an estimate of the total range of possible liability costs. Environmental Compliance and Protection (ECAP) Program. Forest Service created ECAP to implement Executive Order (EO) 13148 which requires all Federal agencies to integrate environmental accountability into their agency’s day-to-day decision making procedures and operations across all mission elements, activities, and functions. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 9 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES Washington Office Engineering staff administers, manages, and coordinates the ECAP Program with other Washington Office program staff with delegated areas of responsibility as identified in FSM 2160.41. Environmental Cleanup and Disposal Liabilities (EDLs). The Federal government’s probable and measurable future outflow of resources to clean up or prevent damage to the environment caused by hazardous substances/ materials/wastes. EDLs may be predicated on either government-related or government-acknowledged events (see the definitions for government-related and government–acknowledged events). In general, environmental compliance and operation and maintenance activities are not considered EDLs. Environmental Professional. In accordance with 40 CFR 312.10, someone who possesses sufficient specific education, training, and experience necessary to exercise professional judgment to develop opinions and conclusions regarding conditions indicative of hazardous substance(s) release(s) on, at, or to National Forest System land. Government-Acknowledged Event. Events that are of financial consequence to the Federal government when it did not cause or contribute to the contamination and it is not otherwise liable for cleanup costs, but it chooses to respond to an event resulting in environmental damage or contamination, in order to provide for the public’s general welfare. For example, hazardous substances released from an abandoned mine may affect water quality downstream. Government-Related Event. Events resulting in environmental damage or contamination where the Federal government caused the contamination or is otherwise related to it, in such a way that the Federal government is legally and financially responsible for the cleanup; for example, environmental damage from Federal operations resulting in hazardous substances and/or hazardous waste that the Federal government is required by statutes and/or regulations to clean up, remove, contain or dispose of. Hazardous Material/Substance/Waste. A solid, liquid or gaseous material, or combination of these materials, which because of its quantity, concentration, or physical, chemical, or infectious characteristics may cause or significantly contribute to an increase in mortality or an increase in serious irreversible, or incapacitating reversible, illness or pose a substantial present or potential hazard to human health or the environment when improperly treated, stored, transported, disposed of, or otherwise managed. For example, solvent is a hazardous material or hazardous substance that is used to clean chainsaws or paintbrushes. With repeated use, the solvent becomes dirty and unserviceable, therefore, a hazardous waste. Liability. As used in this chapter, the term “liability” refers to a financial rather than a legal obligation. A financial liability is the probable and measurable future outflow of resources arising from past transactions or events. See the definitions of Probable and Measurable. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 10 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES Liabilities Covered by Budgetary Resources. Liabilities incurred that are covered by realized budgetary resources as of the balance sheet date. Budgetary resources encompass not only new budget authority but also other resources available to cover liabilities for specified purposes in a given year. Available budgetary resources include: (1) new budget authority, (2) unobligated balances of budgetary resources at the beginning of the new year or net transfers of prior year balances during the year, (3) spending authority from offsetting collections (credited to an appropriation or fund account), and (4) recoveries of unexpired budget authority through downward adjustments of prior year obligations. Liabilities are considered covered by budgetary resources if they are to be funded by permanent indefinite appropriations, which have been enacted and signed into law as of the balance sheet date, provided that the resources may be apportioned by the Office of Management and Budget (OMB) without further action by the Congress and without a contingency having to be met first. Liabilities Not Covered by Budgetary Resources. This category is for liabilities which are not considered to be covered by budgetary resources, as provided in the previous paragraph. Measurable. According to the Financial Accounting Standards Advisory Board, a liability must be “measurable”, that is, that which can be determined with reasonable certainty or is reasonably estimable. Measurable means that an item has a relevant attribute that can be quantified in monetary units with sufficient reliability to be reasonably estimable. Liabilities reported in the financial statements are measured by different attributes depending on the item (such as historical cost of a similar work project, fair market value, current cost, present value, expected value, and settlement value). Obligations. Amounts of orders placed, contracts awarded, services received, and other transactions occurring during a given period that would require payments during the same or a future period. Probable. According to the Financial Accounting Standards Advisory Board, a liability must be “probable”, that is, that which can reasonably be expected or believed to be more likely than not on the basis of available evidence or logic but which is neither certain nor proven. The probability of a future outflow or other sacrifice of resources is assessed on the basis of current facts and circumstances, including the law that provides general authority for federal entity operations and specific budget authority to fund programs. Reasonably Estimable. Reasonably estimable relates to the ability to reliably quantify in monetary terms the outflow of resources that will be required. Recognition (or Recognize). To determine the amount, timing, classification, and other conditions precedent to the acceptance and entry of a transaction; hence, to give expression on the books of account. Recognition is the process of formally recording or WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 11 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES incorporating an item into the financial statements of an entity as an asset, liability, revenue, expense, or the like. A recognized item is depicted in both words and numbers, with the amount included in the statement totals. Explanatory narrative may be included in the financial statement footnotes. Resource Conservation and Recovery Act of 1976 (RCRA). RCRA gave the Environmental Protection Agency (EPA) the authority to control hazardous materials from the “cradle-to-grave”. This includes the generation, transportation, treatment, storage, and disposal of hazardous wastes. RCRA also set forth a framework for the management of non-hazardous wastes. (http://www.epa.gov). Standard General Ledger (SGL). The Standard General Ledger provides a uniform Chart of Accounts and technical guidance to be used in standardizing Federal agency accounting, which supports the preparation of required standard external reports. The Treasury Financial Manual’s United States Standard General Ledger (USSGL) Supplement (released annually) is composed of five major sections: Chart of Accounts, Account Descriptions, Accounting Transactions, USSGL Attributes, and Report Crosswalks. A copy of the USSGL Supplement is available on Treasury’s website, http://www.fms.treas.gov/ussgl/index.html. 31 - ENVIRONMENTAL CLEANUP LIABILITY ACCOUNTING PROCESS Environmental cleanup and disposal cost liabilities arise from the need to clean up or prevent further release of hazardous substances, materials, and wastes into the environment. Forest Service is required to recognize a liability for environmental cleanup costs as a result of past transactions or events when a future outflow or other sacrifice of resources is probable and reasonably estimable. For assistance in determining probable and reasonably estimable liabilities related to environmental cleanup, refer to the Federal Accounting Standards Advisory Board’s (FASAB) Federal Financial Accounting and Auditing Technical Release No. 2: “Determining Probable and Reasonably Estimable for Environmental Liabilities in the Federal Government” (http://www.fasab.gov/pdffiles/codification_report2010.pdf). Forest Service’s inventory of environmental cleanup and disposal sites is kept electronically in the U. S. Department of Agriculture’s Center for Environmental Excellence (CEE) database. Environmental and disposal liabilities (EDL) may be recorded in three standard general ledger (SGL; see sec. 30.1, numbered paragraph 5) liability accounts, depending on the character and circumstances of the environmental damage site or project (the stage of its life). The three accounts and their related Forest Service handbook direction are identified in exhibit 01, as follows: WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 12 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31 - Exhibit 01 Liability Accounts for Environmental Cleanup and Disposal Liabilities Environmental Damage Circumstance 1. Funded cleanup projects’ contracts and agreements are accrued using a mathematical process (ASC-B&F Service-Wide and Accounts Maintenance staff). 2. Government related sites only. Includes unfunded cleanup work that is inventoried and given an estimate; and funded cleanup work that may be obligated in SGL 4801, Unliquidated Orders, reduced by payments made to date. 3. An external party initiates legal action against the Forest Service for alleged environmental damage. FS Accrual Handbook Section FSH 6509.11m, Chapter 20 SGL Account 2190 - Other Liabilities FSH 6509.11m, Chapter 30 2995 - Environmental Cleanup Liabilities FSH 6509.11m, Chapter 40 2920 - Contingent Liabilities WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 13 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.1 - Identify and Classify Incidents of Damage to the Environment Unit level employees shall identify all incidents of damage to the environment caused by hazardous substances, materials, and waste within their respective areas of responsibility. Units shall report those cleanup sites to their respective region, station or Area (R/S/A) environmental engineer. The R/S/A environmental engineer shall analyze the initial report to confirm that environmental damage or “release” occurred. If the damage or a release is confirmed, the R/S/A environmental engineer shall: 1. Consult with the Office of General Counsel as needed, to classify the site damage in terms of financial liability (refer to sec. 30.5 for the definition of liability), using the following categories: a. Government Related Event (Accidents; sec. 30.5). b. Government Acknowledged Event (sec. 30.5). 2. Establish a possible financing option (sec. 31.5). 3. Contact the Washington Office Engineering staff’s Environmental Compliance and Protection Program (ECAP) group for advice about environmental cleanup issues. 31.2 - Estimate Cleanup Costs for Each Government-Related Environmental Damage Site 31.21 - Activities Considered in the Cost Estimate Environmental and Disposal Liabilities (EDL) cost estimates include any cleanup activity or uncompleted portion of an activity, such as: 1. Studies, plans, cleanup activities, and cleanup operations and maintenance costs necessary to comply with applicable legal and regulatory requirements, and the costs of contractors, engineers, and consultants. Exclude from the estimate, operations and maintenance (O&M) costs associated with routine facility and agency operations. The only occasion when O&M costs are included is the closure of a facility operation in accordance with environmental regulatory permits. For example, if a R/S/A was operating an active landfill, the O&M costs associated with the landfill’s routine operations or infrastructure would not be considered an EDL. Even environmental sampling, analysis and reporting required under a RCRA permit during operation would not be an EDL. However, O&M costs associated with an environmental cleanup action or the closure of an inactive site (for example, a closed landfill), such as the O&M associated with a groundwater treatment system, would be an EDL. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 14 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 2. Machinery and equipment dedicated to a response action (removal or remedial) that do not have alternative uses, and their associated operating and maintenance costs are an EDL cost element. 3. Compensation and benefits of government personnel that devote significant time to an environmental cleanup effort are an EDL cost element. 4. Long-term monitoring (LTM) associated with a response action is an EDL cost element. 31.22 - Development of Cost Estimates The Financial Accounting Standards Advisory Board (FASAB) requires agencies to develop a total cleanup cost estimate for “probable” and “reasonably possible” EDLs if it is reasonable to do so. Cost estimates should be prepared within one fiscal year of EDL identification. If a total cleanup cost estimate cannot be developed (possibly because a study has not been completed and insufficient information is available regarding the type or extent of contamination), the R/S/A Environmental Professionals must develop a cost estimate for the portion of the cleanup (interim cleanup activities) that are known and estimable (such as the cost to study). A range of the total cleanup costs should be reported if site conditions have not yet been fully determined, such as the extent and/or nature of contamination or if several cleanup alternatives are possible and a preferred alternative has not been selected. Reporting a range of costs allows the R/S/A Environmental Professional to capture the uncertainty inherent when predicting future cleanup costs early in the cleanup process. The assumptions used to develop the low and high end of the cost estimate range must be documented such that the estimate is reproducible and easy to revise as new site information becomes available. For sites regulated under CERCLA that have one or more potentially responsible parties (PRPs), the R/S/A Environmental Professional may develop a cost range that reflects the agency’s likely cleanup responsibilities (such as oversight of the cleanup or long-term monitoring) on the low end of the range, and the total cleanup costs on the high end of the range. The assumptions used for creating such a range should be documented. 31.23 - Cost Estimate Documentation The R/S/A Environmental Professional ensures that all cost estimates are documented such that costs and underlying assumptions are clearly presented and understood. This includes backup materials that support the cost estimate for interim cleanup activities and total site cleanup (including assumptions used). The detailed backup materials that demonstrate how the costs were derived need to be maintained in the project files at the corresponding R/S/A field office. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 15 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES If only a portion of the total cleanup cost is estimable, then supporting documents applicable to the interim cleanup action costs will be developed and maintained. Cost estimates are presented by activity based work elements and include all capital costs, all labor costs, annual O&M costs (if applicable), and any periodic costs related to the cleanup action. Applicable documentation should be readily accessible for review even after the EDL is removed from the agency EDL inventory. Therefore, EDL records and documents are maintained for no less than two years after the site cleanup action is completed. Note: this retention requirement does not supersede applicable regulatory requirements for document and file retention. 31.24 - Cost Estimate Updates Changes or updates to cleanup cost estimates are required so that cost figures reported on the periodic financial statements are fairly presented. At least annually, between August 1st and 13th, or when there is a material change in the status of the site, the cost estimate will be reviewed by the R/S/A environmental professional and adjusted as needed. Any changes to the estimate must be documented in the detailed backup materials supporting the cost estimate. Examples of new facts or clarifying information that could affect a cost estimate include: 1. Further delineation of the nature and extent of contamination at the site. 2. Identification, number and financial position of potentially responsible parties (PRPs). 3. Allocation of costs among PRPs and the government based on court judgments, assessments, or consent decrees. 4. Results of an Engineering Evaluation/Cost Analysis (EE/CA), Remedial Investigation/Feasibility Study (RI/FS), Corrective Measures Study (CMS) or other study. 5. Approval of a Records of Decision (ROD) or other decision document. 6. Refinements of the remediation plan, including technology and methodology. 7. The type and duration of post-closure monitoring required. 8. New laws and regulations which will affect the site remediation. If no new site information has been obtained that would alter the cost estimate, the previous cost estimate generated would be appropriate for current use; however, the R/S/A environmental professional shall adjust the previous estimate annually for work completed and inflation. R/S/A environmental professionals shall update the cost estimates for government-related cleanup projects when funding is received. Each estimate must include both the funded and the known unfunded amounts. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 16 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES Government-related cleanup cost estimates that have not already been updated during the current fiscal year shall be adjusted by applying the inflation factor current for the year. All updates must be made to the quarterly accrual spreadsheet as noted in sec. 31.4, exhibit 01. 31.3 - Maintain the Inventory of All Environmental Cleanup Sites Each R/S/A must maintain an inventory of all environmental cleanup sites located on the lands or in the facilities under their management. The CEE database is the primary system of record for this inventory. The Washington Office and R/S/A environmental engineers record new cleanup sites, identifying the affected location or facility, and updates data on existing cleanup sites. All of Forest Service’s environmental cleanup and disposal sites for government related and government acknowledged events are identified in CEE. 31.4 - Gather Information and Determine the Accrual Amount Exhibit 01 illustrates the steps required to gather the financial information and determine the environmental cleanup costs accrual amount. R/S/A environmental engineers may estimate cleanup costs for all new sites on a “life-cycle” basis for budgeting purposes, but need only to provide estimates for government-related sites for the financial statements according to direction in FASAB Federal Financial Accounting and Auditing Technical Release No. 2, “Determining Probable and Reasonably Estimable for Environmental Liabilities in the Federal Government.” Forest Service policy is to include all obligations involving Government-acknowledged sites in the mathematical model used to determine accrual amounts. Exhibit 02 illustrates the basis for determining the “Total Outstanding Liability Estimate” amount for government-related sites that should be in column F in the quarterly accrual spreadsheet following Technical Release No. 2 guidance. Although there is not a “one size fits all” for these incidents, the clean up process happens in basically four phases, as follows: 1. Phase One - A study/assessment is underway, to determine if contamination exists. 2. Phase Two - The study/assessment is complete. Forest Service evaluates the extent of the clean up and the cleanup options available. At this point, for government-related incidents, a cleanup option is chosen and estimated costs are refined. 3. Phase Three - The Forest Service implements clean up procedures. 4. Phase Four - During this post-implementation or final phase, Forest Service continues to monitor the site to ensure that the site is contained and no new contamination is identified. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 17 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.4 - Exhibit 01 Environmental Cleanup Liability Accrual Amount’s Composition and Calculation Calculation Step 1. Chief Financial Officer (CFO) Financial Reporting & Reconciliation (FR&R) staff obtains the environmental financial information and initiates the accrual spreadsheet for the new quarter and sends it to ASC-B&F Servicewide & Accounts and Maintenance (SWAM) staff. For the first quarter of the fiscal year, the beginning balance in Column F is calculated by subtracting September’s actual expenditures from the prior year’s ending accrual amount for liability (Column L). The calculation is included in the spreadsheet that is provided to WO Engineering staff. 2. WO Engineering staff receives the quarterly accrual spreadsheet and the financial information from ASC-B&F SWAM. The financial information includes obligations, expenditures and unpaid obligations for all environmental cleanup projects that are recorded in job codes established with the special job code model described in this directive. 3. WO Engineering staff distributes the quarterly accrual spreadsheet to the R/S/A environmental engineers to obtain their updates to the total outstanding liability estimate and verification of expenditures from their project site documentation. [Follow 31.4 - Exhibit 02 for total current liability estimate amount determination.] 4. WO Engineering staff reviews R/S/A input for accuracy and completeness and then compiles the responses into one spreadsheet. 5. WO Engineering staff submits the quarterly accrual spreadsheet to the ASCB&F SWAM staff showing the calculation of the environmental cleanup cost accrual. 6. ASC-B&F SWAM staff forwards the accrual spreadsheet to the CFO FR&R staff for review and concurrence. 7. CFO FR&R staff reviews the accrual spreadsheet and requests clarification or additional information from WO Engineering staff if needed. Any necessary changes are made with concurrence from WO Engineering staff. 8. ASC-B&F SWAM is notified of concurrence from CFO FR&R staff and the accrual is posted to the financial system. If changes are made (from Step 7), the updated quarterly accrual spreadsheet will be forwarded to ASC-B&F SWAM staff as well as instructions to record the new accrual amount in the financial system. Responsible Area FR&R/ASCB&F WO Engineering WO Engineering WO Engineering WO Engineering ASCB&F/FR&R FR&R ASC-B&F WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 18 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.4 - Exhibit 02 Total Outstanding Liability Estimate Amount Determination Process Phase Process Prior to Phase 1 If probable cleanup activity would be accomplished on the site if the contamination level requires it, develop an estimate that is either based on experience with a similar site or the estimated cost of a study or assessment if a similar site is not available. Phase 1 Once a study or assessment is underway, the estimate would be the actual cost associated with that full activity. For example, the Total Current Liability Estimate would include the obligation for a company doing the study, plus force account charges, supplies, and so forth, similar to the all-inclusive list of costs included in the WorkPlan system. Throughout the assessment activity, modify the estimate according to situations at the site by recording the needed increase or decrease to the total estimate in column G. Between If there is a time delay in selecting a cleanup option, report the costs for the option Phase 1 with the lowest amount of cost. &2 Phase 2 Option is selected awaiting funding; estimate would be based on the option selected and any known additional expense for employees and/or supplies, etc., until funding for the option is received and through the cleanup activity (that is, what would be included in WorkPlan for the entire space of time for cleanup, even if it is anticipated to take 2 or more years). Phase 3 Once funding is received and the selected option work is initiated, the estimate would essentially be the same as in Phase 2 with modification for actual cost contracts and known changes to other requirements. Throughout the cleanup activity, modify the estimate according to situations at the site by recording the needed increase or decrease to the total estimate in column G. Phase 4 Estimate the cost for monitoring the site after the cleanup activity is completed using either the study’s estimate for monitoring costs or an engineer’s estimate if the study did not include post-cleanup site monitoring. Throughout the monitoring activity, modify the estimate according to situations at the site by recording the needed increase or decrease to the total estimate in column G. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 19 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.4 - Exhibit 02--Continued Phase Process Phase 1, [Note: At the beginning of each fiscal year, the Current Fiscal Year Beginning 2, 3, & 4 Liability Estimate (Column F) is populated with the Accrual Amount for Liability with for the 4th Quarter (Column L) less September’s actual expenditures. expenses WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 20 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.5 - Determine Financing for Environmental Cleanup Environmental cleanup sites listed in CEE are initially unfunded. Many cleanup sites remain in CEE for many, many years due to the unavailability of funds. 31.51 - Possible Financing Options Program National Forest System Minerals and Geology (NFMG) is ECAP’s designated appropriated funds. Generally, a government-related cleanup project qualifies for the NFMG or USDA financing options if the original event that caused the damage (such as a spill or release) occurred on or prior to October 17, 1986 when the Superfund Amendments and Reauthorization Act (“SARA”) was enacted. Government-acknowledged cleanup projects, on the other hand, generally qualify for the NFMG or USDA financing options regardless of the date when the original event that caused the damage occurred. Both NFMG and USDA funding are allocated on a competitive basis. If neither NFMG nor USDA funding is forthcoming and a cleanup is essential, then cleanup must be financed by the program identified by a primary purpose analysis. Program funds, identified by applying the primary purpose principle, finance the cleanup of environmental damage caused by government-related events that occurred after October 10, 1986. The three possible financing options are set out in exhibit 01 as follows: WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 21 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.51 - Exhibit 01 FINANCING OPTIONS FOR ENVIRONMENTAL CLEANUP WORK Date of the Event That Caused the Damage Government-Related Events occurring on or prior to 10/17/1986 Government-Acknowledged Event Regardless of Date Government-Related or Government-Acknowledged Event Regardless of Date Government-Related Events occurring on or prior to 10/17/1986 or GovernmentAcknowledged Event Regardless of Date Appropriate Financing Treasury Symbol 12X1106 “National Forest System Fund/Program Fund/Program Name NFNF/NFMG National Forest System/ Minerals and Geology Management 12X1106 “National Forest NFNF/NFMG National Forest System System/ Minerals and Geology Management Forest Service Financing is Determined by Applying the Primary Purpose Principle Reimbursable Agreement with USDA, Financed by 12X0500 “Hazardous Materials Management, Agriculture” Forest Service’s NFEX/NFEX (12X1106) National Forest System External Reimbursable WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 22 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.52 - Unfunded Cleanup Sites Become Funded Unfunded cleanup sites become funded in a variety of ways, as follows: 1. In Conjunction with a Forest Land Management Project on the Same Site. A previously unfunded site’s cleanup work may become funded because the cleanup must be completed in connection with a new work project on the same site. For example, an illegal trash dump must be cleaned up before construction can begin on the same site to build a new campground. In these cases, the same funds used for the construction of the campground are also used for the cleanup of the illegal dump. This financing method is called the primary purpose principle. 2. In Priority Order. The regions, stations, Area, and Job Corps (R/S/A) environmental engineer, Washington Office Engineering staff, and the USDA Environmental Management Division (EMD) collaborate to prioritize cleanup sites for financing. This cooperation occurs before each fiscal year begins and frequently during the year as conditions change. Cleanup work is prioritized according to the following criteria: a. The cleanup site violates environmental statutes such as the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and the Resource Conservation and Recovery Act of 1976 (RCRA). b. The degree of potential, or existing, harm to life and property (public health risks). c. The availability of Forest Service appropriated funds, either NFMG (ECAP’s designated appropriated funds), or other appropriated funds determined by applying the primary purpose principle. d. The availability of U.S. Department of Agriculture funds to finance reimbursable agreements for environmental cleanup projects on Forest Service lands. e. Under special circumstances, funding may be available from Environmental Protection Agency (EPA) Superfund and/or the Coast Guard Oil Spill Trust Fund. Washington Office Deputy Chiefs, regions, stations, Area, and Job Corps allocate funding on a discretionary basis within the budget of the particular program area with primary responsibility (determined by applying the primary purpose principle) for the event that caused or threatens to cause the contamination. Exhibit 01 illustrates the financing of environmental cleanup costs: WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 23 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.52 - Exhibit 01 FINANCING ENVIRONMENTAL CLEANUP COSTS Status of Environmental Cleanup Site 1. Unfunded Work Standard General Ledger Account 2995, Unfunded Environmental Cleanup Liability 2. Cleanup Work Required in Conjunction with A Resource Project on the Same Site. Apply the Primary Purpose Principle. 3. Work Funded by Forest Service Appropriated Funds, as An Environmental Cleanup Project. Damage occurred on or before 10/17/1986. 4. Environmental damage occurred after 10/17/2006. Apply the Primary Purpose Principle. 5. Work Funded by Forest Service Appropriated Funds, as A Discretionary Environmental Cleanup Project. 6. Cleanup Work Financed by the USDA Hazardous Materials Management Division, Under a Reimbursable Agreement With the Forest Service Treasury Symbol Fund Program 12X1106 - National Forest System NFNF - National Forest System NFMG - Minerals and Geology Management Same As the Resource Project Same As the Resource Project Same As the Resource Project 12X1106 - National Forest System NFNF - National Forest System NFMG - Minerals and Geology Management Analyze the Original Event that Caused the Damage to Identify the Treasury Symbol, Fund, and Program to Finance the Cleanup. Analyze the Original Event that Caused the Damage to Identify the Treasury Symbol, Fund, and Program to Finance the Cleanup. Forest Service Side: 12X1106 USDA Side: 12X0500 “Hazardous Materials Management, Agriculture” Forest Service Side: NFEX “External Reimbursable” Forest Service Side: NFEX “External Reimbursable” N/A N/A WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 24 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.53 - All Financed Cleanup Projects Have Special Accounting Structure Environmental cleanup projects, regardless of financing source, use a special accounting structure. The special format facilitates the electronic retrieval of project expenditures which are an essential element in the environmental liability accrual process. All environmental cleanup projects shall have this mandatory accounting structure, as displayed in the Structure Guide maintained on the ASC B&F Budget Policies and Procedures website, as follows: http://fsweb.asc.fs.fed.us/bfm/programs/budget-execution/fieldGuidance.php. 31.6 - Prepare and Record the Accrual Entry The Engineering staff’s ECAP group must provide the environmental cleanup cost accrual spreadsheet to ASC-B&F SWAM by the 20th of the last month in each fiscal quarter. (If the 20th falls on a Saturday, submit the day before. If it falls on a Sunday, submit the day following.) The amount accrued is the sum of unfunded and funded cleanup work, less the amount of expenditures made on the funded projects (sec. 31.4). The ASC-B&F SWAM staff will forward the accrual spreadsheet to the CFO FR&R staff for review and concurrence. The CFO FR&R staff will review the accrual spreadsheet and request clarification or additional information from Washington Office Engineering staff as needed. Any necessary changes shall be made with concurrence from Washington Office Engineering staff. Once ASC-B&F SWAM staff are notified of concurrence by the CFO FR&R staff, the ASC-B&F SWAM prepares the service-wide estimated accruals for environmental clean-up costs and enters them in the financial system quarterly, at a national level in region 17 (“servicewide accounting center” 17), reversing the previous quarter’s accrual at the same time. The accrual spreadsheet is retained for audit. Data elements for the accrual entry are displayed in exhibit 01 below. For brevity, one general fund/program is illustrated. Environmental Liabilities are recorded in Standard General Ledger (SGL) account 2995, Environmental Cleanup Cost Liability, defined as the estimated liability for projected future cleanup costs (not yet due and payable) associated with removing, containing and /or disposing of (1) hazardous materials from property, or (2) material and/or property consisting of hazardous materials at permanent or temporary closure or shutdown of associated property, plant and equipment. SGL 2995 Environmental Cleanup Cost Liability has two liability attributes: 1. Not Covered by Budgetary Resources. The Forest Service has not received funding to cover the outflow of resources, and 2. Covered by Budgetary Resources. The Forest Service has received funding to cover the outflow of resources. Forest Service’s entry in SGL 2995 must be the sum of the two types of projects, those unfunded and those funded but undelivered. The field’s entries in the accrual spreadsheet are the basis for the amount in SGL 2995. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 25 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.6 - Exhibit 01 Accruing Environmental Cleanup Liabilities: Standard General Ledger Postings Fund/Program NFNF/NFMG - Minerals and Geology Management (Note: For brevity, only one general fund/program combination is displayed.) Standard General Ledger Postings Proprietary: Debit: 6800 Future Funded Expenses Credit: 2995 Estimated Cleanup Cost Liability Budgetary: None Vendor Identification Code FS ACCRUAL Budget Object Code 2540 WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 26 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.7 - Analyze the Results of Accrual Methodology Audit and Assurance staff, Internal Quality Assurance Branch performs periodic analysis, at least annually, of accrual methodologies to determine necessary adjustments for current and/or future reliable estimates of accruals. 31.8 - Accrual Documentation and Reconciliation ASC-B&F SWAM group maintains the accrual spreadsheet and adjustment document relating to these accruals in a central file. CFO FR&R reviews the accruals for environmental cleanup and disposal costs for reasonableness quarterly. The accrual spreadsheet columns are described in exhibit 01, as follows: WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 27 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.8 - Exhibit 01 QUARTERLY ACCRUAL SPREADSHEET FIELDS Column Column Title Description A # Sequential number assigned to each site. Please add any new sites at the bottom of the spreadsheet. B Site Site name, including any descriptive information that will assist with cost estimation. C Region, City, State Site location information, including enough descriptive information to facilitate site visit planning. D Accounting (Job) Code Project accounting (job) code, including any new accounting (job) codes established since the last quarterly accrual. E Is the liability probable and estimable? If the liability is probable and estimable, enter “Y”, if not, enter “N”. If the liability is NOT probable and estimable, STOP. Do not enter any further information for the site on the spreadsheet. F Current Fiscal Year: Beginning Liability Estimate Amount in the current fiscal year which will be accrued if all criteria in SFFAS 5 are met. For the first quarter of the year, this column is pre-populated with a calculated balance using prior year’s ending balance less any expenses incurred in September. Adjustments resulting from the addition of a new site or updated information should be recorded in Column G. G Increase or Decrease to Beginning Liability Estimate Increases or decreases to the current liability estimate are recorded here. Changes to the current liability estimate may result from additional information regarding an existing site as well as the addition of a new site. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 28 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.8 - Exhibit 01--Continued Column Column Title Description H Total Current Liability Estimate (Column F + G) This is an automatically calculated field and no entry is required. This field is the summation of Column F (Current Fiscal Year Beginning Liability Estimate) and Column G (Increase or Decrease to Beginning Liability Estimate). I Amount of Liability Funded in Current Year Amount of the Total Current Liability Estimate (Column H) that is funded in the current year. Note: This amount never exceeds the amount in Column H. J Unpaid Expenditures as of 2nd Month of the (Current) Quarter Amount of YTD cumulative unpaid expenditures from the EDL Expenditure Status Report that is provided with the quarterly accrual spreadsheet. K Paid Expenditures YTD through 2nd Month of the (Current) Quarter Amount of YTD paid expenditures from the EDL Expenditure Status Report that is provided with the quarterly accrual spreadsheet. L Accrual Amount for Liability for (Current) Quarter 20yy (Column H – J-K) This is an automatically calculated field and no entry is required. This field subtracts Column J (Unpaid Expenditures as of 2nd Month of the Quarter) and Column K (Paid Expenditures YTD through 2nd Month of the Quarter) from Column H (Total Current Liability Estimate). M Previous Quarter Accrual Amount for Liability (Previous) Quarter 20yy) Accrual amount for the previous quarter. WO AMENDMENT 6509.11m-2011-1 EFFECTIVE DATE: 04/26/2011 DURATION: This amendment is effective until superseded or removed. 6509.11m_30 Page 29 of 29 FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK CHAPTER 30 - ACCRUING ENVIRONMENTAL AND DISPOSAL LIABILITIES 31.8 - Exhibit 01—Continued Column Column Title Description N Percentage Difference between the current quarter and the previous quarter This is an automatically calculated field and no entry is required. The amount in Column N is the percentage difference between EDL liability compiled for prior quarter and current quarter. O Explanation if difference is >20% Detailed explanation for accrual amount changing by more than 20% from the previous quarter is required.