The Governmental Accounting Standards Board has issued a document outlining its preliminary views on how to improve pension accounting and financial reporting by government employers.
Local and state governments are experiencing increased problems in recent years in meeting their pension-funding obligations, especially in the wake of the recession, which hit tax revenues especially hard. The document presents GASBs current views on what it believes are the most fundamental issues related to recognition and measurement of pension obligations by state and local government employers.
The approach presented in the preliminary views would move governmental pension accounting and reporting away from the funding orientation that now exists, and instead introduce recognition and measurement standards that would be based on GASBs conceptual framework, including information that would help financial statement users better assess the degree to which inter-period equity has been achieved.
The purpose of the document is to obtain comments from constituents on those views before developing more detailed proposals for changes to existing accounting and financial reporting standards. In addition to the issues addressed in the preliminary views, the board will begin deliberations in July on pension note disclosures and supporting information for government employers and pension plan reporting issues.
The project to improve post-employment benefits accounting was launched by GASB, in part, in response to feedback from users of state and local government financial reports who feel that current standards do not provide them with the information they need to adequately understand the cost and liability for benefits promised to active and retired employees, said GASB Chairman Robert Attmore in a statement. Following considerable staff research and review of financial reports prepared under existing standards, the board has tentatively determined that changes are needed to improve the transparency, consistency and comparability of reported pension information.
The document is part of GASBs overall project to consider improvements to the existing standards of accounting and financial reporting for post-employment benefits. The document is available for download at www.gasb.org. The deadline for submitting written comments is Sept. 17, 2010. In addition, GASB has released a plain-language supplement to assist users of financial statements in commenting on the preliminary views.
GASB will host public hearings on the issue on Oct. 13 at the Hyatt Regency Dallas-Fort Worth Airport in Dallas; Oct. 14 at the offices of KPMG in San Francisco; and Oct. 27 at the Crowne Plaza LaGuardia in New York City.
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