ASTM E3123-24 PDF

SIGNIFICANCE AND USE 4.1 Use—this guide is intended for use on a voluntary basis for evaluating environmental liabilities, often with Guide E2137 for estimation and Guide E2173 for disclosure. The user may elect to apply this guide for any or all of these purposes: 4.1.1 Determining if an environmental risk or liability exists, 4.1.2 Determining if similar environmental risks (for example, permits, plant or process expansion) are being recognized at similar points in their lifecycle, 4.1.3 Determining if several similar environmental risks and liabilities are being managed to similar outcomes, 4.1.4 Determining liability values, 4.1.5 Due diligence analysis for proposed mergers, acquisitions, or spinoffs, 4.1.6 Documenting key decisions on environmental liability provisions, reserves, budgets and cash flow forecasts. 4.1.7 Identifying and analyzing liabilities associated with the following: 4.1.7.1 certain remedial alternatives, 4.1.7.2 future land uses, property transfer and redevelopment decisions, 4.1.7.3 land use alternatives for former landfills and chemically impacted sites, 4.1.7.4 Meeting regulatory requirements, 4.1.8 Designing and implementing project and program controls, 4.1.9 Defending against third-party lawsuits, 4.1.10 Calculating insurance premiums, 4.1.11 Making and settling insurance claims, 4.1.12 Making purchase accounting adjustments, 4.1.13 Preparing an audit defense, and 4.1.14 Completing financial and investment analysis. 4.2 Principles—the following principles are an integral part of this guide and should be used to resolve ambiguity or dispute regarding the recognition and derecognition of environmental liabilities. These principles are drawn from several sources, including historical and current accounting principles, court decisions, academic studies, as well as good commercial and customary practice. 4.2.1 Current awareness of an entity’s accounting framework and applicable generally accepted accountin... SCOPE 1.1 Purpose—The purpose of this guide is to provide a series of options or instructions consistent with good commercial and customary practice for recognition and derecognition of environmental liabilities. This guide is consistent with Generally Accepted Accounting Principles (GAAP). Recognition of environmental liabilities is essential to determining the current book value of an entity. An entity may have future spending to extinguish risk and liabilities triggered in the past. Serious consequences, ranging from failed audits and poor capital stewardship to financial fraud and bankruptcy, exist for entities omitting material information from financial statements. 1.2 Objective—This guide enables users to reliably determine if a given type of environmental liability exists and subsequently has been settled, consistent with the accounting definitions in place. 1.3 This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.