3 Accounting
3.4 Liabilities
3.4.8 Solid Waste Utilities: Closure and Postclosure Cost
This guidance applies only to cities and counties.
Background
3.4.8.10 The Department of Ecology (Ecology) mandates funding of solid waste landfill closure and postclosure costs in Washington Administrative Code (WAC) 173-304-467, WAC 173-351-600, and WAC 173-350-400 subsection 8. The standards prescribe specific closure and postclosure procedures and their funding. While these standards apply to a landfill’s closure and postclosure, they are associated with its operation and represent a material cost to be recognized during its operation.
3.4.8.20 Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards (Cod.) Section (Sec.) L10 "Landfill Closure and Postclosure Care Costs" establishes standards of accounting and financial reporting for municipal solid waste landfill closure and postclosure care costs that are required to be incurred by federal, state, and local laws or regulations.
Department of Ecology guidelines
3.4.8.30 Ecology requires each owner or operator to prepare written closure and postclosure cost estimates as part of the facility closure and postclosure plans. These plans are to be reviewed annually and adjusted for cost changes, including inflation.
3.4.8.40 Each owner or operator is also required to either establish a reserve account or provide another form of financial assurance that, over the life of the facility, funds will be adequate to cover the costs of closing the facility and performing postclosure activities in accordance with state and federal regulations (RCW 70A.205.165). Ecology rules require that reserve accounts be set aside as restricted assets. These requirements apply to all landfill disposal facilities.
GAAP reporting
3.4.8.50 Landfills using proprietary fund accounting and reporting should recognize a portion of the closure and postclosure costs as an expense and liability in each period that they accept waste. The estimated cost assigned to each period should be based on the landfill use rather than the passage of time. GASB prescribes the following formula to determine the current period amount:
|
Estimated total current cost x Cumulative capacity used |
- Amount previously recognized |
|
Total estimated capacity |
3.4.8.60 Landfills using governmental fund accounting and reporting recognize expenditures and liabilities on the modified accrual basis of accounting. That means expenditures and liabilities should be recognized as payments come due as the government receipts goods or services used in the closing and postclosure process. The long-term liabilities for landfills using governmental fund accounting should be reported in the governmental activities’ column in the government-wide statement of net position. The liability reported in the government-wide statement of net position should use the measurement method described above.
3.4.8.70 GASB also provides guidance on equipment which is a part of the closure costs, versus equipment that is used during normal operations. The estimated cost of equipment expected to be part of the closure costs should be included in the closure cost estimate and the liability as calculated for each period. Such equipment cost should not be capitalized. When these assets are acquired, they should be reported as a reduction of the liability.
3.4.8.80 GASB requires state and local governments to disclose information about landfill closure and postclosure liabilities. See Note X – Closure and Postclosure Care Cost.
3.4.8.90 Local governments should report their estimated land fill closure and postclosure liability on BARS 4.8.3, Liabilities (Schedule 09).