department of defense agency financial report fiscal year 2012

Department of Defense Agency Financial Report for FY 2012
associated environmental costs systematically over the life of the asset using two methods:
physical capacity for operating landfills and life expectancy in years for all other assets. The
Department expenses the full cost to clean up contamination for Stewardship PP&E at the
time the asset is placed into service.
Nature of Estimates and the Disclosure of Information Regarding
Possible Changes Due to Inflation, Deflation, Technology, or
Applicable Laws and Regulations
The Department had changes in estimates resulting from overlooked or previously unknown
contaminants, re-estimation based on different assumptions, and other changes in project
scope. Environmental liabilities may change in the future due to changes in laws and
regulation, changes in agreements with regulatory agencies, and advances in technology.
Uncertainty Regarding the Accounting Estimates Used to Calculate
the Reported Environmental Liabilities
The environmental liabilities for the Department are based on accounting estimates, which
require certain judgments and assumptions that are reasonable based upon information
available at the time the estimates are calculated. The actual results may materially vary
from the accounting estimates if agreements with regulatory agencies require remediation
to a different degree than anticipated when calculating the estimates. Liabilities can be
further affected if investigation of the environmental sites reveals contamination levels that
differ from the estimate parameters.
The Department has a liability to take environmental restoration and corrective action for
buried chemical munitions and agents; however, it is unable to estimate at this time
because the extent of the buried chemical munitions and agents is unknown. The
Department is also unable to provide a complete estimate for FUSRAP. The Department has
ongoing studies and will update its estimate as additional liabilities are identified. In
addition, not all components of the Department recognize environmental liabilities
associated with General PP&E due to process and system limitations.
The Department has the potential to incur costs for restoration initiatives in conjunction with
returning overseas Defense facilities to host nations. The Department is unable to provide a
reasonable estimate at this time because the extent of required restoration is unknown.
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Financial Information