Governmental Accounting Standards Board (G.A.S.B) The Plain-Language Articles Deidrea Brent ACC 380 Accounting for Not-for-Profit Organizations Professor Jennifer Bolden
August 20, 2012
While reviewing the Governmental Accounting Standards Board (G.A.S.B.) website on the Plain-Language Articles in the “Education section I found the article on the GASB Reconciles Disclosure Requirements for Governmental Pension and OPEB Reporting and GASB Statement Brings Greater Clarity and Consistency to Fund Balance Reporting to be a very interesting topic to summarize and discuss. Lets start with the summary of how the GASB Reconciles Disclosure Requirements for Governmental Pension and OPEB Reporting . The GASB Reconciles Disclosure Requirements for Governmental Pension and OPEB Reporting closely aligns the financial reporting requirements for pensions with those for other postemployment benefits (OPEB) and, in doing so, enhances information disclosed in notes to financial statements or presented as required supplementary information (RSI) by pension plans and by employers that provide pension benefits. The reporting changes required by this Statement amend applicable note disclosure and RSI requirements of Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 27, Accounting for Pensions by State and Local Governmental Employers, to conform with requirements of Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. Some of the Summary standards are as follows. Notes to financial statements should disclose the funded status of the plan as of the most recent actuarial valuation date. Defined benefit pension plans also should disclose actuarial methods and significant assumptions used in the most recent actuarial valuation in notes to financial statements instead of in notes to RSI. If the aggregate actuarial cost method is used to determine the annual required contribution of the employer (ARC), notes to financial statements should disclose the funded status of the plan, and a schedule of funding progress should be presented as RSI, using the entry age actuarial cost method. Plans and employers also should disclose that the purpose of doing so is to provide information that serves as a surrogate for the funded status and funding progress of the plan. Notes to financial statements should include a reference linking the funded status disclosure in the notes to financial statements to the required schedule of funding progress in RSI. If applicable, notes to financial statements should disclose legal or contractual maximum contribution rates. In addition, if relevant, they should disclose that the maximum contribution rates have not been explicitly taken into consideration in the projection of pension benefits for financial accounting measurement purposes
Basically these are guidelines for defined benefit pension plans and sole and agent employers must be presented when referring to note disclosures or RSI. Now lets see how the PEB Reporting and GASB Statement Brings Greater Clarity and Consistency to Fund Balance Reporting. The PEB Reporting and GASB Statement Brings Greater Clarity and Consistency to Fund Balance Reporting basically were designed to improve financial reporting by establishing fund balance classifications that are easier to understand and apply. In essence, it establishes a hierarchy based largely on the extent to which a government is bound to observe spending constraints that govern how it can use amounts reported in the governmental funds balance sheet. The Governmental Accounting Standards Board (GASB) has found that, thinks that the value of fund balance information is significantly diminished by
