The Governmental Accounting Standards Board voted unanimously Monday not to delay the implementation date of its new pension accounting and financial reporting standards, despite requests from various groups for an indefinite delay.
The requirements of GASB Statement No. 68, “Accounting and Financial Reporting for Pensions,” are scheduled to take effect for periods beginning after June 15, 2014.
The request to GASB for an indefinite delay in the implementation date came from stakeholder groups that asserted that such a delay is necessary until the related auditing procedures have been implemented for a sufficient period. Constituents expressed concern that governments in multiple-employer pension plans will receive a modified audit opinion on their financial statements in the interim.
But other individuals, organizations and stakeholder groups wrote to GASB requesting that the implementation date of Statement 68 not be changed, GASB pointed out. Some of these groups urged GASB and other organizations to find a solution that would not delay implementation.
“The board agreed that the issues raised by its stakeholders warranted thoughtful consideration,” said GASB chairman David A. Vaudt in a statement. “In response, we undertook a significant effort to gather meaningful input as quickly as possible in order to address these concerns on a timely basis. The GASB is committed to doing everything it can to assist governments, pension plans and their auditors with the implementation of Statement 68, including working with stakeholder groups. However, the board does not believe that delaying implementation will benefit its stakeholders in general.”
GASB said it had based its decision on feedback it received from various stakeholders, including government and pension plan officials, in addition to auditors, actuaries and users of financial statements. The board considered a number of factors. However, it decided that delaying the new standards would not necessarily address one of the concerns, about a modified audit opinion. It said it appears that, based on the feedback received, many governments would face a similar prospect of a modified audit opinion even if governments were to follow the previous pension standards.
Pension plans are already well into the process of implementing the associated pronouncement, Statement No. 67, Financial Reporting for Pension Plans, GASB pointed out. If the implementation of Statement 68 were postponed, some governments would now incur the added cost of engaging an actuary to provide information under the old standards in addition to the information already obtained under the new standards.
The financial statement users who provided feedback to GASB expressed a strong preference not to delay Statement 68, GASB added. “These users understand the circumstances under which some governments may receive modified audit opinions,” said GASB. “They stated that a clearly worded modification would not negatively impact their analyses of government finances.”
Concerns about the effort required to implement Statement 68, particularly with regard to governments in some cost-sharing multiple-employer pension plans, are real and significant, however, GASB acknowledged. However, the board said it was fully aware of these issues when it originally considered the costs and benefits associated with establishing the original implementation date, and no new evidence has been brought forth to date that would result in the reconsideration of this conclusion.