GASB Proposal Looks to Ease Transition to Pension Standards
by Terri Eyden on
By Jason Bramwell
The Governmental Accounting Standards Board (GASB) on July 2 issued for public comment an exposure draft, Pension Transition for Contributions Made Subsequent to the Measurement Date: An Amendment of GASB Statement No. 68, regarding the transition provisions of GASB’s new pension standards for state and local governments.
Stakeholders are encouraged to review the proposal and provide comments by August 26 (see sidebar).
The new pension guidelines, which were approved by GASB June 25, 2012, are intended to improve the accounting and financial reporting of public employee pensions by state and local governments. Under the new standards, governments for the first time will have to report unfunded pension liabilities on their balance sheets.
The proposal issued by the GASB this week would eliminate a potential source of understatement of restated beginning net position and expense in a government’s first year of implementing GASB Statement No. 68, Accounting and Financial Reporting for Pensions.
How to Comment
Written comments on the proposed statement for the transition provisions of the GASB's new pension guidelines for state and local governments should be addressed to the Director of Research and Technical Activities, Project No. 25-20. Comments can be e-mailed to email@example.com or mailed to:
Governmental Accounting Standards Board
401 Merritt 7
PO Box 5116
Norwalk, CT 06856-5116
To correct this potential understatement, the proposed statement would require a state or local government – when transitioning to the new pension standards – to recognize a beginning deferred outflow of resources for its pension contributions made during the time between the measurement date of the beginning net pension liability and the beginning of the initial fiscal year of implementation, according to the GASB.
This amount would be recognized, regardless of whether it is practical to determine the beginning amounts of all other deferred outflows of resources and deferred inflows of resources related to pensions.
The new provisions would be effective simultaneously with the provisions of Statement 68, which is required to be applied in fiscal years beginning after June 15, 2014.