The Governmental Accounting Standards Board has issued for public comment a proposed statement on the transition provisions of GASB’s new pension standards for state and local governments with the goal of eliminating a potential source of understatement of restated beginning net position and expense in a government’s first year of implementing GASB’s new pension accounting standards.

GASB Statement No. 68, Accounting and Financial Reporting for Pensions, would have a significant impact on the reporting of pension obligations of state and local governments. The standards were approved last year (see GASB Approves New Pension Accounting and Reporting Standards).

To correct a potential understatement, GASB’s latest proposal Tuesday would require a state or local government, when transitioning to the new pension standards, to recognize a beginning deferred outflow of resources for its pension contributions made during the time between the measurement date of the beginning net pension liability and the beginning of the initial fiscal year of implementation. This amount would be recognized regardless of whether it is practical to determine the beginning amounts of all other deferred outflows of resources and deferred inflows of resources related to pensions.

The provisions would be effective simultaneously with the provisions of Statement 68, which is required to be to be applied in fiscal years beginning after June 15, 2014.

The exposure draft is available on GASB’s Web site, Stakeholders are encouraged to review the proposal and provide comments by Aug. 26, 2013. GASB welcomed a new chairman on Monday, former Iowa Auditor of State David A. Vaudt.

Implementation Guide
Separately GASB published an implementation guide last week for the new GASB standards regarding financial reporting for state and local government pension plans. The Guide to Implementation of GASB Statement 67 on Financial Reporting for Pension Plans is an authoritative resource designed to assist preparers and auditors of state and local government pension plan financial reports as they prepare to implement the standards, which are effective for periods beginning after June 15, 2013.

Prepared by the GASB staff, the implementation guide answers key questions about putting the new standards into practice. Topics addressed in the guide include:

• The scope and applicability of GASB Statement No. 67, Financial Reporting for Pension Plans
• The classification of pensions as defined benefit or defined contribution
• The determination of  the number of pension plans that should be reported
• The recognition  of certain transactions and other events in defined benefit pension plan financial statements
• Note disclosures and required supplementary information
• The calculation of the net pension liability

A digital version of the guide will be the first guide to be offered on GASB’s Web site as a download at no cost. GASB said that all subsequent guides will be available on its Web site at no cost moving forward. A hard copy bound edition of the guide can be ordered for $46.50 plus shipping by visiting the GASB store, or by calling the GASB Order Department at (800) 748-0659.

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