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Suggested Citation:"Lack of Accountability for Stewardship." 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 49
Suggested Citation:"Lack of Accountability for Stewardship." 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 50

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APPENDIX A 49 Lack of Information to Justify Maintenance and Repair Budgets In the federal budget and operations environment, facilities maintenance and repair is often deemed to be a low priority issue because facilities program managers do not have the information they need to present their case for funding to senior managers and public officials. “Interviews indicate that public officials, such as elected officials and chief administrative officers, find the most convincing and compelling information to be the future costs that can be avoided by undertaking early, preventive, or corrective maintenance activities” (Urban Institute, 1994). However, there is “very little study of the costs and implications of deferring maintenance... and cost avoidance information is lacking” (Urban Institute, 1994). Estimates of the implications of deferred maintenance on cost and quality of service are also lacking even though public officials “appear to believe such information to be of considerable use” (Urban Institute, 1994). Because information on maintenance and repair issues most convincing to public officials, particularly avoiding future costs, is not available, and because the information that is available, such as the backlog of deferred maintenance, is not compelling, facilities program managers have found it difficult to justify their maintenance and repair budget requests to senior executives and public officials. Lack of Accountability for Stewardship Buildings are durable assets constructed to last at least 30 years; but they are composed of a number of components with service lives of less than 10 years. Buildings themselves seldom fail in an obvious, catastrophic sense. The deterioration of individual components generally occurs over time and may not be readily apparent: detecting the incipient deterioration of roofs, mechanical and electrical systems, pipes, and foundations requires regular inspections by trained personnel. Once detected through regular inspections or condition assessments, relatively small problems can be repaired before they develop into much more serious problems through an adequately planned and funded maintenance program. Because facility deterioration occurs over a long period of time, it may appear to senior executives and public officials that the maintenance and repair of facilities can always be deferred one more year without serious consequences in favor of more urgent operations that have greater visibility. Unless a roof actually falls in, senior managers are not likely to be held accountable for the condition of a facility in any given year. Yet they are held accountable for current operations. Consequently, public officials and senior executives have few incentives to practice effective stewardship of the federal facilities portfolio and are subject to few penalties if they do not.

APPENDIX A 50

Next: APPENDIX B Excerpts from FASAB Standard Number 6 »
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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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