GASB publishes Implementation Guide for new accounting standards [UPDATE]
The Governmental Account Standards Board (GASB) will not delay the implementation of the accounting and financial reporting standards for public pensions, despite requests from numerous governmental agencies.
The requirements of GASB Statement No. 68, Accounting and Financial Reporting for Pensions will go into effect beginning June 15, 2014, according to The National League of Cities. The guidelines require cities to report the “net unfunded accrued liability of their pensions” or the funds that have not yet been added to the pension plan, but are expected to be. There is no penalty for not implementing the new standards, but old practices will no longer be recognized by the GASB.
The National League of Cities reports Statement 68 specifically applies to pension plans that administer benefits through trusts that meet the following criteria:
- Contributions from employers (and by other governments and entities on behalf of the employers) are irrevocable
- Assets in the trust are dedicated to providing pension benefits to the plan members
- Assets in the trust are protected from the creditors of the employers, the plan administrator, and the plan members (for defined benefit pensions)
The GASB published an Implementation Guide for the group’s new standards for accounting and the financial reporting of government pensions (Statement 68) in February. The guide is designed help state and local government preparers and auditors create accurate statements. They have also released a toolkit to help cities implement the new standards.
The GASB is a non-profit organization formed to establish and improve financial accounting and reporting standards for state and local governments. According to group materials, the standards decided upon by the organization are widely recognized and prevalent in state and local governments across the country.
According to GASB materials, the Implementation Guide answers questions about putting the new reporting and accounting standards into practice. Topics addressed in the guide include:
- The scope and applicability of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, the official title of the new standards
- Considerations on identifying sources of special funding
- Measurements of defined benefit pension liabilities of employers and nonemployer contributing entities
- Pension expenses and deferred inflows and outflows of resources related to pensions
- Note disclosures and supplementary information
- Unique issues related to cost-sharing employers and specific nonemployer contributing entities
- A how-to for transitioning to the new standards
- Questions and answers are provided in several appendices, which also include a glossary of terms and nonauthoritative illustrative material.
“Preparers and auditors of governmental financial reports posed questions to the GASB staff regarding the application of the pension standards throughout their development and after their issuance,” GASB Chairman David Vaudt said in a statement. “The Implementation Guide is in a question and answer format that includes illustrative examples to assist these stakeholders in understanding and applying the pension standards.”
Download the Implementation Guide here.