GASB Pensions: Issues and Resources 


    In June 2012, the Government Accounting Standards Board (GASB) issued two new standards that will substantially change the accounting and financial reporting of public employee pension plans and the state and local governments that participate in such plans. GASB Statement No. 67, Financial Reporting for Pension Plans, revises existing guidance for the financial reports of most governmental pension plans. GASB Statement No. 68, Accounting and Financial Reporting for Pensions, revises and establishes new financial reporting requirements for most governments that provide their employees with pension benefits. GASB Statement No. 67 is effective for financial statements for periods beginning after June 15, 2013. GASB Statement No. 68 is effective for financial statements for fiscal years beginning after June 15, 2014. 

    There are numerous accounting and auditing issues facing employers that participate in multiple-employer plans of which the State and Local Government Expert Panel (SLGEP) has been working very diligently to address. The GAQC has issued two whitepapers that address issues and suggested best practice solutions related to cost-sharing multiple-employer plans (cost-sharing plan) and the participating employers and the AICPA Auditing Standards Board has issued three related auditing interpretations. The GAQC has also issued a whitepaper that addresses issues and suggested best practice solutions related to agent multiple-employer plans (agent plans) as well as two related auditing interpretations.  In trying to address the issues at hand, the SLGEP has had many discussions internally as well as with stakeholders including actuaries, plans, governmental employers, and even the GASB.

    Whitepaper Released Relevant to Agent Plans, Participating Employers, and Auditors
    With the implementation of GASB Statement No. 68, employers will be required to recognize a liability as employees earn their pension benefits (that is, as they provide services to the government). For the first time, employers participating in agent plans will recognize their specific pension amounts which include net pension liability,  deferred outflows of resources, deferred inflows of resources, and pension expense. The SLGEP has addressed numerous issues from the employer and employer auditor perspective that arise from the change in accounting it its whitepaper titled, Governmental Employer Participation in Agent Multiple-Employer Plans: Issues Related to Information for Employer Reporting. The whitepaper addresses issues related to how employers participating in agent plans obtain all necessary information to properly recognize and disclose pension amounts in their financial statements and how their auditors obtain sufficient appropriate evidence to support their opinions on employer financial statements. It should be of interest to agent plans, participating employers, and their auditors. 

    Whitepapers Released Relevant to Cost-Sharing Plans, Participating Employers, and Auditors
    With the implementation of GASB Statement No. 68 employers will be required to recognize a liability as employees earn their pension benefits (that is, as they provide services to the government). For the first time, employers participating in cost-sharing plans will recognize their proportionate share of the collective pension amounts for all benefits provided through the plan. The SLGEP has addressed numerous issues from the employer and employer auditor perspective that arise from the change in accounting. The SLGEP has also addressed responsibilities of the plan and its auditor regarding the completeness and accuracy of all census data underlying certain financial statement elements of the plan. These papers are discussed in more detail below:

    • Whitepaper on Employer and Related Auditor Issues.  The whitepaper titled, Governmental Employer Participation in Cost-Sharing Multiple-Employer Plans: Issues Related to Information for Employer Reporting, addresses issues related to how employers participating in cost-sharing plans obtain all necessary information to properly recognize and disclose pension amounts in their financial statements and how their auditors obtain sufficient appropriate evidence to support their opinions on the employer financial statements. The SLGEP recommends that cost-sharing plans calculate and disclose in schedules each employer’s allocation percentage and collective pension amounts. The SLGEP further recommends the plans engage their auditors to obtain reasonable assurance and report on the schedules in accordance with AU-C section 805, Special Considerations – Audits of Single Financial Statements and Specific Element, Accounts, or Items of a Financial Statement. The employer and employer auditor have their own responsibilities in regard to the information provided by the plan, as discussed in the whitepaper, but the plan auditor’s report on the schedules provides evidence that the pension amounts allocated to the employer and included in the employer’s financial statements are not materially misstated. The issues and recommended best practices are discussed in detail in the whitepaper.  

    New Governmental Pension-Related Auditing Interpretations
    The SLGEP has been working with the AICPA Audit and Attest Standards Team on several auditing interpretations which have been issued in final form. All of the interpretations can be accessed on the Audit and Attest Standards Team's Web page titled "Recently Issued Audit Interpretations." The following includes a brief summary of each interpretation and provides direct link.

    All Types of Plan

    Cost-Sharing Plans

    Agent Plans

     

    Resources on Pensions Currently Available
    If you are an auditor of a governmental pension plan or participating government and need additional resources in advance of the implementation of the new standards, there are numerous resources available which are highlighted below.

    • GASB Pronouncements. The GASB has made available the following pronouncements on its website: Statements of Governmental Accounting Standards (including GASB Statement Nos. 67 and 68); Concepts Statements; GASB Interpretations; and GASB Technical Bulletins

    • GASB Educational Resources. The GASB has made available numerous resources on its website that include podcasts, fact sheets, articles, and more which are all available to the public.

    • GAQC Archived Web Events on Pensions (available now to GAQC members). The GAQC has offered numerous Web events on the GASB pension standards. GAQC members can access the following archived events:
      • An Overview of the New GASB Pension Accounting Standards: Part I, addresses the new accounting. While this event was originally done in February 2013, the accounting has not changed. Thus, for those that need assistance in understanding the accounting issues related, primarily to GASB Statement No. 68, this 2-hour archived web event is an excellent resource. 
      • The GASB Pension Standards Part I: Considerations for Cost-Sharing Plans, Participating Employers, and Their Auditors addresses the accounting and auditing challenges related to cost-sharing plans and their participants.
      • The GASB Pensions Standards Part II: Considerations for Agent Plans, Participating Employers and Their Auditors addresses the accounting and auditing challenges related to agent plans and their participants. 
    • GAQC Alert No. 249. This GAQC Alert, which is open to the public, describes the auditing interpretations addressing pension-related matters.
    • GAQC Alert No. 244. This GAQC Alert, which is open to the public, describes the cost-sharing whitepapers and the various SLGEP efforts on pension-related matters.
    • AICPA Governmental Conferences.  Anticipating the significant effect the new GASB pension standards will have on plans, employers, and their auditors, the AICPA will provide extensive coverage of these matters in the 2014 governmental conference agendas.  Consider attending:



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