By Jason Bramwell, Staff Writer
The Governmental Accounting Standards Board (GASB) has corrected a potential issue with the transition provisions of accounting standards on pensions for state and local governments.
The GASB released Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - An Amendment of GASB Statement No. 68, which eliminates a potential source of understatement of restated beginning net position and expense in a government's first year of implementing Statement No. 68, Accounting and Financial Reporting for Pensions.
Statement No. 68, which was approved by the GASB on June 25, 2012, revises and establishes new financial reporting requirements for most governments that provide their employees with pension benefits.
When a state or local government transitions to the new pension standards, Statement No. 71 requires it 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 will 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 provisions are effective simultaneously with the provisions of Statement No. 68, which is required to be applied in fiscal years beginning after June 15, 2014.