Members and staff of the American Institute of CPAs’ (AICPA) State and Local Government Expert Panel (Panel) met with members and staff of the Governmental Accounting Standards Board (GASB) in June to discuss topics of mutual interest. Topping the list of discussion items was expected implementation issues associated with two new GASB standards on pensions (one for governmental pension plans and one for participating governmental employers).
These standards will require state and local governments, for the first time, to report significant pension-related liabilities on their balance sheets. GASB Statement No. 67, Financial Reporting for Pension Plans, is effective for fiscal years beginning after June 15, 2013, and GASB Statement No. 68, Accounting and Financial Reporting for Pensions, is effective for fiscal years beginning after June 15, 2014.
The Panel presented an educational session to the Board on what it views as very important accounting and related audit issues associated with governmental multiple-employer plans (i.e., both agent and cost-sharing plans) and the governments that participate in those plans. The Panel also expressed concerns that without early planning, plans may not be adequately addressing the information that will be needed, beyond the plan financial statements, for employers to prepare their financial statements when GASB Statement No. 68 becomes effective. The Panel reported it is working on several whitepapers that further describe these issues and related best practices that it hopes to issue in the next several months.
Additionally, the Panel reported that a new chapter on governmental pension plans and related employer issues is currently under development for the 2014 edition of the AICPA Audit and Accounting Guide, State and Local Governments. In the meantime, all agreed that early discussion and interaction between plans and governmental employers is key to ensuring that implementation of the new standards by employers is successful.
For background information about the AICPA’s earlier work regarding the new GASB pension standards, read the story in the August 2012 issue of The CPA Advocate. Information about the Expert Panel and its ongoing work, including the fact that the AICPA is preparing comment letters to two GASB due process documents, is available on the AICPA website. Also, watch the new AICPA video about the two new pension standards that discusses how their implementation will improve transparency of public pension benefits on the finances of state and local governments.