AICPA Supports GASB Vote to Improve Pension
The American Institute of CPAs supported the vote by the Governmental Accounting Standards Board to improve existing standards for pension accounting and financial reporting for state and local employers, as well as governmental pension plans.
“The AICPA strongly supports GASB’s efforts to improve transparency related to public pension benefits and their effect on the finances of state and local governments,” AICPA President and CEO Barry C. Melancon said.
“The new GASB standards will benefit users of these financial statements, as well as taxpayers, since state and local governments for the first time will have to report unfunded pension liabilities on their balance sheets providing a clearer view of pension obligations.”
Specifically, the new standards will require governments to report in their financial statements a net pension liability that is equal to the difference between the total pension liability and the value of assets set aside in a pension plan to pay benefits to current employees, retirees and their beneficiaries.
Currently, governments must only report as a liability the difference between the contributions they are required to make to a pension plan in a given year versus what they actually funded.
The two standards approved by GASB – Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68, Accounting and Financial Reporting for Pensions – have different implementation dates. The provisions in Statement 67 are effective for periods beginning after June 15, 2013. The provisions in Statement 68 are effective for fiscal years beginning after June 15, 2014.