When PS 3280, Asset Retirement Obligations becomes effective in 2022, what will it mean to public sector financial statements?
The Asset Retirement Obligations standard (AROs) is a liability standard and it will impact the Net Debt of public sector entities upon adoption. The standard is effective for year ends beginning on or after April 1, 2022.
The implementation of the standard will present a number of challenges. Auditors will challenge governments to demonstrate that the reported liability is complete. Landfill liabilities will need to be re-measured using a new approach. Asset values will require adjustments, impacting public sector amortization charges for future years. Obligations such as Asbestos removal will need to be booked.