The Governmental Accounting Standards Board (GASB) recently issued guidance addressing practice issues raised by stakeholders during implementation of the Board’s pension accounting and financial reporting standards for state and local governments.
GASB Statement No. 82 (GASBS No. 82), Pension Issues, addresses the following:
- Presentation of payroll-related measures in required supplementary information,
- Selection of assumptions and the treatment of deviations from guidance in Actuarial Standards of Practice for financial reporting purposes, and
- Classification of payments made by employers to satisfy plan member contribution requirements.
The GASB issued the statement to improve consistency in the application of the pension standards by clarifying or amending related areas of existing guidance. Specifically, the practice issues raised by stakeholders during implementation relate to the following Statements:
- GASBS No. 67, Financial Reporting for Pension Plans
- GASBS No. 68, Accounting and Financial Reporting for Pensions, and
- GASBS No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68.
Prior to the issuance of GASBS No. 82 , GASBS Nos. 67 and 68 required presentation of covered-employee payroll, which is the payroll of employees that are provided with pensions through the pension plan, and ratios that use that measure, in schedules of required supplementary information. GASBS No. 82 amends GASBS Nos. 67 and 68 to require instead the presentation of covered payroll, defined as the payroll on which contributions to a pension plan are based and ratios that use that measure. GASBS No. 82 clarifies that a deviation, as the term is used in Actuarial Standards of Practice issued by the Actuarial Standards Board, is not considered to be in conformity with the requirements of GASBS No. 67 , GASBS No. 68 , or GASBS No. 73 for the selection of assumptions used in determining the total pension liability and related measures.
Specifically the GASB is clarifying that payments made by an employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements should be classified as plan member contributions for purposes of GASBS No. 67 and as employee contributions for purposes of GASBS No. 68. It also requires that an employer’s expense and expenditures for those amounts be recognized in the period for which the contribution is assessed and classified in the same manner as the employer classifies similar compensation other than pensions (for example, as salaries and wages or as fringe benefits).
The reporting requirements of GASBS No. 82 are effective for reporting periods beginning after June 15, 2016, except for the requirements contained in GASBS No. 82 addressing the selection of assumptions in a circumstance in which an employer’s pension liability is measured as of a date other than the employer’s most recent fiscal year-end. In that circumstance, the requirements for the selection of assumptions are effective for that employer in the first reporting period in which the measurement date of the pension liability is on or after June 15, 2017.
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