The Governmental Accounting Standards Board (GASB) has issued GASB Statement Nos. 67 (Financial Reporting for Pension Plans) and 68 (Accounting and Financial Reporting for Pensions), which have been in the works since 2006. The new standards will improve the means by which state and local governments report their pension liabilities and expenses. It will be more reflective of the obligations associated with pensions. Citizens and other users of these financial reports will have a greater understanding of the size and nature of the pension obligations to employees for their services. Currently, state and local governmental entities report their pension-related activities based on their current obligations only, by only recording a liability for the difference between the contributions they are required to make versus what they actually fund in a given year. The new standards require net pension liabilities to be reported on the balance sheet. The net pension liability is equal to the difference between the total pension liability and the value of the assets invested to pay the benefits. This is the most significant change to the current reporting, however, there are additional disclosures required that may take some time to prepare. The effective date to adopt the standards for plans is for periods beginning after June 15, 2013 or for June 30 year-end plans, July 1, 2013 to June 30, 2014. For employers, the implementation is required for periods beginning after June 15, 2014. Early application is encouraged. If you have questions regarding these standards, please contact Schneider Downs; we’d be happy to help.
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