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Suggested Citation:"Sample Calculation." National Research Council. 2001. Deferred Maintenance Reporting for Federal Facilities: Meeting the Requirements of Federal Accounting Standards Advisory Board Standard Number 6, as Amended. Washington, DC: The National Academies Press. doi: 10.17226/10095.
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Page 37

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DEFINITIONAL ISSUES AND POTENTIAL REVISIONS 37 CCF is the condition code factor CRV is the replacement cost of the facility n = the number of facilities in the real property database Condition Code 18 5 Excellent; no work required. 4 Good; less than 10 percent of components need repair. 3 Fair; more than 30 percent of components need repair. 2 Poor; greater than 30 percent of components need repair. 1 Unserviceable; failed system overall. System Weights 19 40% Structural 30% Mechanical 30% Electrical The condition code factor is assumed to be a decaying exponential function as the cost to repair increases dramatically with deteriorating condition: CCF = k1e { [k2 (1 ` NCC)]} Where: k1, k2 = constants, assumed to be 1; exp = “e” or 2.718. and NCC= Net Condition Code (sum of condition codes times system weights for each sample facility averaged for sample size) Sample Calculation Parameters: Assume an inventory of 100 facilities, $100M total current replacement value, and a 1 building sample. Mechanical assessment: Failing heating units, aging unreliable chillers. Condition Code = 3 Electrical assessment: 2 systems need replacement. Condition Code = 4 Net Condition Code (NCC)=((3 × 0.4)+(4 × 0.3)+(3 × 0.3))/1=3.3 CCF=exp(1-3.3)=0.10 (10%) Where: k1, k2 are assumed 1 for this example BMAR=($100M)(0.10)=$10M 18 The condition code factors and parametric weights are provided for illustrative purposes only. Each agency would need to develop its own set of condition code factors/parametric weights. 19 The condition codes for system weights are provided for illustrative purposes only. Each agency would need to develop its own set of conditions codes.

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Deferred Maintenance Reporting for Federal Facilities: Meeting the Requirements of Federal Accounting Standards Advisory Board Standard Number 6, as Amended Get This Book
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In 1996 the Federal Accounting Standards Advisory Board (FASAB) 1 enacted Standard Number 6, Accounting for Property, Plant, and Equipment (PP&E), the first government-wide initiative requiring federal agencies to report dollar amounts of deferred maintenance annually. The FASAB has identified four overall objectives in federal financial reporting: budgetary integrity, operating performance, stewardship, and systems and control. FASAB Standard Number 6, as amended, focuses on operating performance and stewardship. The FFC Standing Committee on Operations and Maintenance has prepared this report to identify potential issues that should be considered in any future amendments to the standard and to suggest approaches for resolving them. The committee's intent is to assist the CFO Council, federal agencies, the FASAB, and others as they consider how best to meet the objectives of federal financial reporting for facilities.

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