GASB Clarifies Accounting for Contributions to Cost-Sharing Pension & OPEB Plans

The Governmental Accounting Standards Board (GASB) has published a staff Technical Bulletin, Recognition of Pension and Other Postemployment Benefit (OPEB) Expenditures/Expense and Liabilities by Cost-Sharing Employers.

The Technical Bulletin clarifies the application of requirements regarding accounting for employers' contractually required contributions to cost-sharing pension and OPEB plans issued in Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, and Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, respectively. The Technical Bulletin is issued to address questions raised and to foster a comparable application of the recognition requirements of those Statements by cost-sharing employers.

"In a cost-sharing pension or OPEB, the participating employers pool their benefit obligations and assets," said Project Manager Karl Johnson. "In addition to providing administrative services, the plan assumes from the individual employers the responsibility to fund promised benefits. In exchange, the individual cost-sharing employers incur liabilities to the plan for the contractually required contributions assessed to them by the plan as their share of the aggregate funding requirements for specified periods."

The Technical Bulletin clarifies that a cost-sharing employer should recognize the contractually required contributions assessed for the employer's financial reporting period as expenditures of that period, and should recognize any unpaid contributions assessed for that period as liabilities, in governmental fund financial statements prepared on the modified accrual basis of accounting. Because the employer's liability for unpaid contractually required contributions for the period is a matured liability, there generally will be no reconciling item required between the amount recognized as expenditures and the amount recognized as expense in government-wide financial statements prepared on the accrual basis of accounting.

The Technical Bulletin is effective for financial statements for periods ending after December 15, 2004, with respect to pension transactions (earlier application is encouraged), and should be applied simultaneously with the implementation of Statement 45 with respect to OPEB transactions.

A copy of the Technical Bulletin will be provided to GASB subscribers. For additional copies of this Technical Bulletin and pricing information, contact the Order Department, Governmental Accounting Standards Board, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, or call 1-800-748-0659. Please ask for Product Code No. GTB04-2.

You may like these other stories...

By Jason Bramwell Government leaders of eight of the world's largest economies pledged on June 18 to take a tougher stance on fighting tax evasion. The Group of Eight (G8) leaders, who met in Northern Ireland,...
By Jason BramwellAttorney General Eric Holder is scheduled to testify on May 15 before the House Judiciary Committee, one day after he announced the Justice Department has opened a criminal investigation of the IRS for...
By Jason BramwellPresident Barack Obama says he will not tolerate political bias at the IRS and promised to get to the bottom of the agency's admitted targeting of conservative groups, according to a May 13 article in...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.