US Postal Service 2014 Annual Report Download - page 40

2014 Report on Form 10-K United States Postal Service 36
adjusted for resolutions or revisions to prior estimates. Estimates of loss can therefore change as individual claims develop and
additional information becomes available. We disclose the range of amounts for pending claims and litigations that are deemed
to be reasonably possible of an unfavorable outcome. No provisions for these reasonably possible losses are accrued for or
included in the financial statements.
For further information, see Item 8. Financial Statements and Supplementary Data, Note 1- Organization and Summary of
Significant Accounting Policies, Note 10- Workers’ Compensation and Note 7- Commitments and Contingencies.
Recent Accounting Standards
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09 “Revenue
from Contracts with Customers” (“ASU 2014-09”.) The new standard outlines a single comprehensive model for entities to use
in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance,
including industry-specific guidance. ASU 2014-09 is effective for fiscal years and interim periods within those years,
beginning after December 15, 2016. Early adoption is not permitted. We are currently evaluating the impact of adoption of this
standard on our financial statements which is not known or reasonably estimable at this time.
In August 2014, the FASB issued Accounting Standards Update 2014-15 “Disclosure of Uncertainties About an Entity’s Ability
to Continue as a Going Concern” (“ASU 2014-15”.) The new standard requires management to perform interim and annual
assessments of an entity’s ability to continue to meet its obligations as they become due within one year after the date that the
financial statements are issued. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim
periods thereafter, with early adoption permitted. We do not believe the adoption of the new standard will have a significant
impact on our operations.
Legislative Update
This legislative update section provides ongoing insights into the legislative and policy decisions that may affect the Postal
Service and its operations. Following are significant legislative actions which occurred during 2014:
Appropriations
On September 19, 2014, the President signed into law the Continuing Appropriations Resolution, 2015 (“P.L. 113-164”). The
law provides funding for the Federal Government to continue operations at current levels through December 11, 2014. The
Postal Service’s appropriation for free mail for the blind and overseas voters remains the same at $70.8 million. The law
contains no provisions related to the Revenue Forgone Reform Act of 1993, which authorizes the Postal Service to receive $29
million annually through 2035 as reimbursement for services it provided from 1991 through 1998. The provision requiring six-
day delivery frequency remains in effect.
Administration Proposals
President’s Fiscal Year 2015 Budget Proposal
On March 4, 2014, the President released his Fiscal Year 2015 Budget Proposal for the U.S. Government. The President’s
proposal is one component of the budgeting process and includes a comprehensive postal reform package that would:
• Refund to the Postal Service, over a period of two years, the FERS surplus, and require that the OPM calculate future costs
using factors specific to the demographics and salary assumptions of the Postal Service workforce.
• Defer the 2014 RHB prefunding payment, and reduce the fixed payments due in 2015 and 2016 by one half.
• Shift to paying an estimate of how much the Postal Service needs to set aside annually to fund retirement health care
benefits for current employees, normal cost, beginning in 2014 rather than 2017 as in current law. The missed RHB
payments in 2012 of $11.1 billion and 2013 of $5.6 billion would be incorporated into the 40-year amortization schedule
for the remaining unfunded liability starting in 2017.
In addition, the Budget proposes reforms to reduce Postal Service costs and improve its revenue, including:
• Authorizing the Postal Service to adjust mail delivery frequency from six days to five days per week upon enactment.
• Allowing the Postal Service to leverage its resources by increasing collaboration with state and local governments.
• Allowing the Postal Service to begin shifting to centralized and curbside delivery where appropriate.
• Codifying the current administrative plan (POST Plan) to avoid small and rural Post Office closures.
• Permanently extending the January 2014 exigent price increase beyond two years, as limited by the Postal Regulatory
Commission.