US Postal Service 2012 Annual Report Download - page 22

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2012 Report on Form 10-K United States Postal Service- 21 -
Contingent liabilities require significant judgment in estimating potential losses for legal and other claims. Each quarter,
significant new claims and litigation are evaluated for the probability of an adverse outcome. In addition, each quarter any
prior claims and litigation are reviewed and, when necessary, the liability balance adjusted for resolutions or revisions to
prior estimates. Estimates of loss can therefore change as individual claims develop and additional information becomes
available.
Other critical estimates include retirement and health benefits costs for current retirees and current postal employees who
have not yet retired as they represent a significant portion of expenses. Any change in laws or regulations affecting the
amounts, timing, or administration of these benefits could have a material effect on our financial position and results of
operations. We participate in the federal government pension and retiree health benefits programs, and accordingly
account for these using multiemployer plans accounting rules. As such, the expense is the amount we are required to
contribute.
In addition, the depreciation and amortization of capital assets over their estimated useful lives require us to make
judgments about future events. Because capital assets are utilized over relatively long periods of time, we make periodic
evaluations as to whether the estimated service lives remain appropriate. Changes to estimated lives may affect the
amount of depreciation expense recognized in a period and, ultimately, the gain or loss on disposal of the asset.
For further information, see Note 3, Summary of Significant Accounting Policies, Note 5, Property and Equipment, Note 7,
Contingent Liabilities, and Note 10, Workers’ Compensation, in the Notes to the Financial Statements.
RECENT ACCOUNTING PRONOUNCEMENTS
In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2011-
09, Compensation-Retirement Benefits-Multiemployer Plans (Accounting Standards Codification 715-80) which outlines
new required disclosures about an organization’s involvement in those plans. The amendments are effective for annual
periods for fiscal years ending after December 15, 2011. We have adopted the new rules for the year ended September
30, 2012, and applied the disclosures for 2012 and retrospectively for the previous two years presented.
Other new pronouncements issued but not effective until after September 30, 2012, are not expected to have a material
effect on our financial position or results of operations.