Contaminated Sites. Municipal Officers Forum June 17, 2015

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Cleopatra Cameron
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1 Contaminated Sites Municipal Officers Forum June 17, 2015

2 Contaminated Sites -Applying the Standard -Definitions -Liability Recognition -Recognition Criteria -Liability Measurement -Liability Disclosure -Decision Tree

3 PS 3260 is effective for fiscal years beginning on or after April 1, 2014 Does not apply to: Acquisition or betterment of tangible capital assets; Retirement of long-lived tangible capital assets; Disposal/sale of long-lived tangible capital assets; Closure and post-closure of solid waste landfill site (has its own separate section). The government does own the site, Or is accepting responsibility, whereby the government does not own the site, but is stepping in to clean up what someone else has left behind.

4 Definitions: Contaminants, any physical, chemical, biological radioactive substance whose concentration exceeds standards. Contamination, is anything that exceeds an environmental standard (benchmark is exceeded, no absolute value) Contaminated site, a site which exceeds the maximum acceptable amount of the environmental standard. Note: Contaminated site does not include airborne contamination unless it enters the soil, water, or sediment.

5 Liability Recognition: A liability for remediation results from: All/part of an operation is no longer in use; Government accepts responsibility for the site; Changes in environmental standards An unexpected event (ie. toxic spill, or natural disaster)

6 Recognition, at financial reporting date: (1) environmental standard exists; (2) contamination exceeds the environmental standard; (3) Government directly responsible, or accepts responsibility; (4) its expected that future economic benefits will be given up; and (5) reasonable estimated amount can be made. All of the above 5 criteria have to be in effect in order to recognize a liability.

7 Uncertain of Responsibility? (1) Certain of future government responsibility => Book responsibility (2) Future responsibility unlikely => No liability (3) Future responsibility undeterminable => disclosure of contingent liability

8 Measurement of Liability: Include following costs in liability estimate: Post-remediation; On-going site maintenance & monitoring; Assets acquired for remediation; All costs to bring site back to environmental standard; Attributable costs such as payroll/benefits, legal; professional services; equipment/facilities, etc. Assets for remediation are not classes as TCA, they are expenses in the period when liability is recognized. If the acquired asset has an alternative future use, only remediation portion included in liability estimate.

9 Measurement (Continued): Government should use measurement technique, which results in best estimate (discounted cash flows, especially for complicated issues); The liability should be reduced by expected net recoveries (PS ) Liability to be reviewed at each financial reporting date; revisions accounted for in the period revisions are made.

10 Liability Disclosure: Nature/source of the liability; Basis of the liability estimate; If NPV used, the estimated undiscounted expenditures & discount rate; Reasons for not recognizing a liability; and Any estimated recoveries

11 Sample Accounting Policies Disclosure

12 Sample Accounting Policies Disclosure

13 Sample Liability Disclosure

14 Sample Liability Disclosure

15 Decision Tree

Ministry of Government Relations. PS 3260 Liability for Contaminated Sites

Ministry of Government Relations PS 3260 Liability for Contaminated Sites October 2015 Table of Contents Introduction... 2 Effective date of PS 3260. 2 Contamination defined..2 Recognition... 4 Environmental