Does PS 3280, Asset Retirement Obligations require costs related to the removal of asbestos to be recorded as a liability?
PSAB's ARO standard requires recognizing a liability related to asbestos removal, even though these costs may not be incurred for many years. At the end of the useful life of a building or at an earlier point in time where the building is renovated, asbestos will have to be removed. If the costs that must be incurred to remove asbestos are well into the future, they should be discounted when reflecting the liability on public sector balance sheets.
The specific example of Asbestos has been illustrated quite clearly in PS 3280, Asset Retirement Obligations, but stepping back, it also illustrates the broad scope and long term nature of the standard. Effective implementation of AROs would require linkages to a comprehensive asset management plan and understanding lifecycle costs for complex public infrastructure.