WHEN WILL WE NEED TO BE READY?
Plans have to comply with GASB 67 for fiscal years beginning after 6/15/2013. Governments that sponsor or contribute to state or local pension plans have to comply with GASB 68 for fiscal years beginning after 6/15/2014.
DO I NEED TO COMPLY?
It depends on how important a clean audit opinion is to you. If a plan or employer fails to adopt GASB 67/68 reporting on their financial statements, it will likely trigger a qualified audit opinion depending on the materiality.
It will be up to the leadership of each organization to assess the value of a clean audit opinion in deciding whether to comply with GASB 67/68.
WILL GASB 67/68 CHANGE THE WAY WE MAKE OUR PENSION FUNDING DECISIONS?
It depends on how your pension contributions are currently determined.
- If your pension contributions are already determined independently of financial reporting (e.g. through statute or other legal requirement) then your pension funding shouldn’t change.
- If your pension contributions are tied to your current GASB 27 ARC calculation, then you’ll need to develop a new funding policy a new Actuarially Determined Contribution.
WHAT LIABILITY WILL SHOW ON OUR FINANCIAL STATEMENTS?
The Net Pension Liability. This is the difference between the Total Pension Liability and the Fiduciary Net Position (the market value of assets). The Total Pension Liability is not the entire present value of future benefits. It’s the Actuarial Accrued Liability using the Entry Age Normal, % of pay method.
WHAT PENSION EXPENSE WILL SHOW ON OUR FINANCIAL STATEMENTS?
The pension expense consists of nine primary components:
1. Service cost
2. Interest on the net pension liability
3. Unexpected liability changes (amortized over plan members’ average remaining service)
4. Assumption changes (amortized over plan members’ average remaining service)
5. Liability due to benefit changes (recognized immediately)
6. Member contributions
7. Expected return on trust assets
8. Investments gains and losses (amortized over 5 years)
9. Administrative expenses
WHAT ELSE WILL CHANGE ON OUR FINANCIAL STATEMENTS?
Additional note disclosures and required supplementary information are also needed.
WE HAVE A DC PLAN . . . WILL OUR ACCOUNTING CHANGE?
No, the current requirements were left unchanged by GASB 68.
MEASUREMENT DATE, VALUATION DATE, REPORTING DATE . . . ?!
There are lots of dates being thrown about in GASB 67/68. The key here is to look at the requirements and the timing of your valuations and assign the dates accordingly. For instance, many employers will have the situation where the valuation date and the measurement date are two and one years prior to the reporting date, respectively. Keep in mind, it is important to assign dates consistently from year to year.
WHAT SHOULD I DO NOW?
We recommend the following compliance strategy:
- The employer and the plan should each consult with their auditors to decide how important it is to receive clean audit opinions on their financial statements.
- If either entity wants to comply with GASB 67/68, then you will need to find an actuary to complete the study.
- A full actuarial study is required every two years, but the GASB rules require an off-year update to reflect new asset values in the intervening year.
HOW LONG WILL IT TAKE TO GET NUMBERS?
As long as we can get the market value of assets, we should be able to turn numbers around in a few weeks.
HOW MUCH WILL IT COST TO GET OUR FINANCIAL NUMBERS?
Fees will vary based on the number, size and complexity of the plans.
CAN WE SEE A SAMPLE GASB 67/68 REPORT?
Of course. Call us toll free at 888.596.5960 or email us at: firstname.lastname@example.org