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Accounting for benefits, incl. FASB, GASB

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[Guidance Overview] Proposed Statement of Auditing Standards: Redesigning the Audit Reporting Model for ERISA Plan Financial Statements
"In addition to changing the form and content of limited scope audit reports to better explain the auditors' responsibilities, the proposed SAS requires the auditor to report findings from procedures performed on specific plan provisions that affect the financial statements." (Belfint Lyons & Shuman, CPAs)
Accounting for Stock Compensation Under FASB ASC Topic 718 (PDF)
13 pages. "FASB ASC Topic 718 is in substantial convergence with the International Accounting Standard Board's final standard on Share-based Payment, except for transactions with nonemployees and nonpublic companies, and minor technical differences in regard to employee stock purchase plans, modifications, liabilities, and income tax effects. Topic 718 creates a more 'level playing field' for equity compensation design that has resulted in the increased prevalence of full-value and performance-vesting awards, and a corresponding decline in plain-vanilla, tax qualified, and reload stock options, and employee stock purchase plans." (FW Cook)
2017 Global Survey of Accounting Assumptions for Defined Benefit Plans
"During 2016, investment returns on plan assets (both bond and stock returns) showed a mild performance in major markets and, in most cases, this performance was countered by declining interest rates, which left companies with minor changes in average projected benefit security ratio from prior year levels.... The majority of surveyed countries imply life expectancies between 20 and 30 years." (Willis Towers Watson)
ASBCA Grants $253 Million Northrop Post-Retirement Benefits Claim
"In rejecting DCMA's form-over-substance argument, the [Armed Services Board of Contract Appeals (ASBCA)] signaled that it will take a harder look at whether a contractor's noncompliance with a regulation was material and whether the claimed costs are valid and were incurred even if there has been a technical discrepancy in the contractor's cost accounting practices. While contractors must still comply with cost accounting rules, the ASBCA's decision strikes the right balance in situations where the contractor takes a good faith position that deviates from the applicable rules but the government denies a claim due to a technicality." (Blank Rome LLP)
FASB Update to Accounting Pension Expense Creates Opportunities (PDF)
"The new changes will bring about much needed simplicity and dampen some of the volatility often associated with these types of plans.... Under the new accounting treatment ... the expected rate of return is no longer an operating expense and thus is de-emphasized. Hence, there is one school of thought that this change will result in more plans moving to a more conservative investment approach." (Findley Davies | BPS&M)
Could Accrual-Based Accounting Aid Your Company's Retirement Plan?
"Cash-basis accounting means no confirmation of receivables and no confirmation of receivables means no real ability to track contributions on a participant level. This is how errors ... go unnoticed ... Once receivables are properly included in your reporting you'll actually have accurate financial reporting for the year, you'll have more accurate participant counts listed on the Form 5500, and the contributions listed on the Form 5500 will finally tie to your W3 and your corporate Form 1120!" (Benefit Resources Inc.)
[Official Guidance] Text of GASB Proposed Implementation Guide: Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions
281 pages. "The objective of this Implementation Guide is to provide guidance that clarifies, explains, or elaborates on the requirements of Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, as amended, and Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended. Questions and answers in this Implementation Guide address issues related to accounting and financial reporting for postemployment benefits other than pensions and for plans that are used to administer those benefits.... The requirements of this Implementation Guide apply to the financial statements of all state and local governments." [June 28, 2017; comments due to GASB by Sept. 25, 2017.]. (Governmental Accounting Standards Board [GASB])
Pension/OPEB 2017 Assumption and Disclosure Study (PDF)
23 pages. "The 2016 median discount rate for pension plans in the study decreased 20 basis points since 2015 and has decreased more than two full percentage since 2007 ... Median plan funding levels remained unchanged from 2015, with pension plan assets equal to approximately 82% of the projected benefit obligation (PBO) in 2016 and 2015.... The 2016 median discount rate for OPEB plans in the study decreased 25 basis points since 2015 and has decreased by more than two full percentage points since 2007 ... For OPEB plans that are funded, the median plan funding level has remained essentially unchanged, with OPEB plan assets equal to approximately 53% of the accumulated postretirement obligation (APBO) in 2016 compared with 54% in 2015." (PricewaterhouseCoopers)
[Guidance Overview] GASB 75: Proportionate Share Allocations for Cost-Sharing Employers (PDF)
"For cost-sharing plans, a 'proportionate share' for each employer must be developed to distribute the aggregate plan liability, deferred items, and expense among the employers' financial statements. Note that under GASB 75, the component government units of a single-employer plan may be required to provide a similar division of accounting metrics using the rules for cost-sharing plans." (Milliman)
Plan Sponsors Using Limited-Scope Audits Should Watch for Proposed Changes
"The proposed SAS requires the plan sponsor to acknowledge its responsibility when it comes to the audit. The auditor would be required to get it in writing.... This change will most likely increase plan sponsor costs, especially when plan sponsors opine on certified financial statements prepared by financial institutions. Plan sponsors may need to engage the appropriate subject-matter expert to comment on asset valuation and financial statement presentation." (HRDailyAdvisor)
Changing Retiree Medical Plan Benefits to Reduce OPEB Liabilities Under Governmental Accounting Rules (PDF)
"GASB 74 became effective for financial statements for fiscal years beginning after June 15, 2016. As governmental employers have begun to determine and report OPEB liabilities, a question has arise n similar to a question that had earlier arisen in the context of reporting pension liabilities -- whether the governmental employer can make changes to the plan to reduce the amount of liabilities." (Groom Law Group)
Text of CBO Answers to Questions from Senate Budget Committee on Funding Estimates for Federal Employee Pensions (PDF)
"Relative to cash estimates over a 10-year projection period ... an accrual measure would give policymakers a more accurate sense of whether proposed changes to deferred compensation would increase or decrease the deficit. That is particularly important when considering modifications to defined benefit pension plans because such plans involve commitments over long periods.... [But cost estimates] can vary substantially depending on the discount rate used for the accrual measure, which may make them less transparent than a cash-based measure. Accrual accounting also depends on decades of projections for future wages and inflation -- which are highly uncertain." (Congressional Budget Office [CBO])
FASB Issues Helpful Guidance on Accounting for Equity-Based Compensation
"The ASU should reduce the instances that an entity is required to apply modification accounting to a share-based payment award.... The ASU streamlines the application of modification accounting by stating that when making a change to the terms or conditions of a share-based payment award, a company should apply modification accounting to the award, unless each of [three] conditions is met[.]" (Winston & Strawn LLP)
[Official Guidance] Text of GASB Implementation Guidance No. 2017-2: Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans
118 pages. "The objective of this Implementation Guide is to provide guidance that clarifies, explains, or elaborates on the requirements of Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended.... The requirements of this Implementation Guide apply to the financial statements of all state and local governments." (Governmental Accounting Standards Board [GASB])
State and Local Government Pensions at the Crossroads
"Underfunding, questionable investment decisions, imperfect assumptions on future market returns, declining interest rates, and the structure of defined benefit plans have created a fiscal crisis for many public pension funds. The implementation of several recent GASB pronouncements has made these problems more apparent and distinct to the public. The authors examine the current reporting challenges, describe the approaches taken by some governments, and suggest their own potential solutions." (The CPA Journal)
AICPA Proposes New Standard for ERISA Plan Audits
"The [DOL's] chief accountant had asked the [AICPA Audit Standards Board] to review the auditor reporting model for ERISA plan audits and provide improved public insight about the scope of responsibilities for management and the auditor. That review also was to include when management limits the audit scope, which is permitted by the DOL's ERISA regulations. DOL recommendations were considered as the proposed standard was developed." (
[Official Guidance] Text of Exposure Draft on Proposed Statement on Auditing Standards: Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA (PDF)
133 pages. "The proposed [Statement on Auditing Standards (SAS)] includes the form and content of the auditor's report for an unmodified opinion, a new form of opinion when an ERISA-permitted audit scope limitation exists and reporting requirements on findings from procedures performed on specific plan provisions relating to the financial statements (either included in the auditor's report on the ERISA plan financial statements or issued as a separate report). The proposed SAS would apply to audits of single employer, multiple employer, and multiemployer plans subject to ERISA." (American Institute of Certified Public Accountants [AICPA])
Latest Pension Accounting Update May Be Huge -- or Not!
"Under the new standard, interest cost, amortizations and expected return on assets will be moved out of operating expenses. They will remain as other expenses on the income statement, but in a separate area outside of operations.... This change in recognition can result in a sudden increase or decrease in pension related operating expenses depending on each sponsor's situation. Frozen plans and those that are significantly underfunded will likely see reductions. While non-frozen, well-funded plans may actually see increases." (The Principal Blog)
[Guidance Overview] GASB Omnibus Statement Addresses Pension and OPEB Issues
"The issues covered by GASB Statement No. 85, Omnibus 2017, include: ...Timing of the measurement of pension and other postemployment benefits (OPEB) liabilities and related expenditures recognized in financial statements prepared using the current financial resources measurement focus ... Recognizing on-behalf payments for pensions or OPEB in employer financial statements ... Simplifying certain aspects of the alternative measurement method for OPEB." (Governmental Accounting Standards Board [GASB])
[Guidance Overview] FASB Changes the Presentation of Pension Cost (PDF)
"On March 10, 2017, the FASB issued final guidance on the presentation of net periodic pension and postretirement benefit cost (net benefit cost).... The amendment requires the bifurcation of net benefit cost. The service cost component will be presented with other employee compensation costs in operating income (or capitalized in assets). The other components will be reported separately outside of operations, and will not be eligible for capitalization." (PricewaterhouseCoopers)
FASB Issues Accounting Standards Update
"[ASU 2017-07] amends ASC 715, Compensation -- Retirement Benefits, to require employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in nonoperating expenses. Employers that do not present a measure of operating income are required to include the service cost component in the same line item as other employee compensation costs." (Willis Towers Watson)
FASB Changes Presentation of Defined Benefit Costs
"[T]he new standard requires a reporting organization to separate the service cost component from the other components of net benefit cost for presentation purposes. The new standard also: [1] Provides explicit guidance on how to present the service cost component and other components of the net benefit cost in the income statement. [2] Allows only the service cost component of net benefit costs to be eligible for capitalization." (Journal of Accountancy)
[Official Guidance] Text of FASB Accounting Standards Update 2017-07 (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (PDF)
58 pages. "The Board is issuing this Update primarily to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost... Topic 715, Compensation -- Retirement Benefits, does not prescribe where the amount of net benefit cost should be presented in an employer's income statement and does not require entities to disclose by line item the amount of net benefit cost that is included in the income statement or capitalized in assets.... To improve the reporting of net benefit cost in the financial statements, the Board added a standard-setting project to provide additional guidance on the presentation of net benefit cost in the income statement and on the components eligible for capitalization in assets." (Financial Accounting Standards Board [FASB])
[Guidance Overview] FASB Updates Employee Benefit Plan Master Trust Presentation, Disclosure Requirements
"The new standard is designed to make disclosures more useful to users of financial statements. All plans will be required to disclose the dollar amount of their interest in each general type of investment. This will supplement the existing requirement to disclose the master trust's balances in each general type of investment." (Journal of Accountancy)
[Official Guidance] Text of FASB Accounting Standards Update 2017-06: Employee Benefit Plan Master Trust Reporting
"This Update relates primarily to the reporting by an employee benefit plan for its interest in a master trust.... The amendments in this Update clarify presentation requirements for a plan's interest in a master trust and require more detailed disclosures of the plan's interest in the master trust. The amendments also eliminate a redundancy relating to 401(h) account disclosures." [This update addresses Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965).] (Financial Accounting Standards Board [FASB])
Accounting Treatment of Refund of Excess Contributions
"If a contribution is deposited to a retirement plan trust account, but is later treated as an excess contribution to be returned to a participant, is it still a contribution or did it never happen in the first place? It depends on each party's perspective.... Regardless of which method is used, financial statement auditors should disclose the accounting policy used for corrective distributions, as well as any differences between the reporting on Form 5500 and the financial statements." (Belfint Lyons & Shuman, CPAs)
Understanding Independent Qualified Plan Auditor Opinions on Financial Statements
"A disclaimer of opinion is given when there is a scope limitation on the audit procedures that precludes the auditor from performing the audit in accordance with Generally Accepted Auditing Standards (GAAS).... When an auditor performs a limited-scope audit, he or she does not perform audit procedures on testing investments and investment transactions. The [DOL] has allowed this type of audit to occur when a limited-scope certification is provided by a regulated financial institution such as a bank, trust company, or insurance company." (Belfint Lyons & Shuman, CPAs)
Ford Takes a $2 Billion Charge Due to Pensions, Benefits
"The automaker is changing how it values pensions and other retiree obligations and is now counting them in the year they were incurred instead of spreading out the impact over a number of years." (USA TODAY)
Understanding the Internal Controls Needed by a Retirement Plan
"Reviewing controls helps auditors understand the processes in place to administer each retirement plan and design the audit strategy to address any identified control weaknesses. Controls at the plan sponsor are important because they may help prevent mistakes in plan administration." (Belfint Lyons & Shuman, CPAs)
Fortune 1000 Companies: Accounting for Pensions and Other Postretirement Benefits, 2016
"At fiscal year-end (FYE) 2015, the average discount rate used to calculate the present value of pension obligations increased to 4.34%, compared to last year's rate of 3.98% for companies in this year's report. The salary scale assumption at FYE 2015 used to project current pay remained essentially unchanged at an average value of 3.60%. For companies in this year's report, the expected rate of return on asset assumptions decreased 18 basis points, down to 6.95% from FYE 2014 to FYE 2015." (Willis Towers Watson)
2016 Pension Accounting Preview: A Positive Outlook
"Many [DB] plan sponsors are aware that interest rates dropped significantly in the first half of 2016 but staged a remarkable rise since the November election. Combined with relatively strong equity returns, 2016 year-end pension disclosures may not be as bad as expected 6 to 8 weeks ago." (Van Iwaarden Associates)
[Guidance Overview] Changes to Employee Benefit Plan Auditor's Reports May Be on the Way
"Changes to the auditor's report were intended to better help the auditors understand their responsibilities as well as to provide users of the financial statements with additional information on what the auditors do.... Much of the auditor's report under the proposed [Statement of Auditing Standards] will look familiar; however, there are some new aspects to it. Highlighted [in this article] are some of these difference for limited and full-scope audits, including whether the changes apply only to limited or full-scope audits." (Schneider Downs)
[Official Guidance] Text of FASB Proposed Accounting Standards Update to Topic 718: Stock Compensation -- Scope of Modification Accounting
24 pages. "The Board is issuing this proposed Update to provide clarity and reduce diversity in practice, as well as to reduce cost and complexity, when applying the guidance in Topic 718, Compensation: Stock Compensation, about a change to the terms or conditions of a share-based payment award.... The amendments in this proposed Update would affect any entity that changes the terms or conditions of a share-based payment award." (Financial Accounting Standards Board [FASB])
SEC Comment Letter Trends: Pension and Other Postretirement Benefits (PDF)
13 pages. "This publication includes an analysis of comments made by the SEC staff to registrants published on the SEC's website between July 1, 2015 and June 30, 2016 related to pensions and postretirement benefits other than pensions (OPEB).... 70% of the comments received related to Form 10-K filings. When evaluated by section of the filing, 58% of the total number of comments received related to the financial statements. When evaluated by topical area, 34% of the comments related to disclosure and 17% related to assumptions." (PricewaterhouseCoopers)
[Guidance Overview] GASB 74/75: Impact on Small Government Employers (PDF)
"An employer is qualified to use the [Alternative Measurement Method (AMM)] if fewer than 100 employees (active and inactive) are eligible for OPEB through the plan as of the beginning of the measurement period. The AMM includes the same broad steps as an actuarial valuation, including projecting benefit payments, discounting those payments to a present value, and attributing the present value of projected benefit payments to time periods using an actuarial cost method. However, the AMM permits some simplified methods for setting the assumptions to be used in the calculation." (Milliman)
[Guidance Overview] GASB 73: Implementation and Overview (PDF)
"New accounting rules for public postretirement benefit plans in the United States are set to take effect soon. Successful implementation of the new rules will require an understanding of a variety of technical concepts regarding the various newly required calculations." (Milliman)
[Official Guidance] Text of FASB Proposed ASU: Employee Benefit Plan Master Trust Reporting
25 pages; covers Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965). "This proposed Update relates primarily to the reporting by an employee benefit plan for its interest in a master trust. A master trust is a trust for which a regulated financial institution ... serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held.... The amendments in this proposed Update would clarify presentation requirements for a plan's interest in a master trust and require more detailed disclosures of the plan's interest in the master trust. The proposed amendments also would eliminate a redundancy relating to 401(h) account disclosures." (Financial Accounting Standards Board [FASB])
Survey Finds Concerns About GASB's OPEB Accounting Changes, Yet Relatively Few Actions Taken to Mitigate the Impact (PDF)
11 pages. "A large percentage (57 percent) [of responding jurisdictions] have either completed, nearly completed or partially implemented a Medicare Advantage group waiver plan for their Medicare eligible retirees, but only a few have considered or are acting on eliminating retiree health benefits entirely. Also, about 30 percent of the responding jurisdictions indicated that they are moving toward a defined contribution funding approach for retiree health benefits." (Segal Consulting)
[Guidance Overview] GASB 74/75: Depletion Date Projections by Public Pension Plans (PDF)
"Required implementation is imminent, with GASB 74 effective for plan fiscal years beginning after June 15, 2016, and GASB 75 effective for employer fiscal years beginning after June 15, 2017.... This article ... focuses on the determination of a plan's depletion date, which is the projected point in the future (if any) when plan assets are no longer sufficient to satisfy benefit obligations. It also looks at the impact on liability calculations that will result from a conclusion that a depletion date exists. Unlike pension plans, many other postemployment benefits (OPEB) plans are not pre-funded through a dedicated trust. These plans, and pension plans that fall under GASB 73, will not have to prepare depletion date analyses. However, GASB 75 (or GASB 73 for pension plans that are not pre-funded) will impact the selection of the discount rate." (Milliman)
[Opinion] Retiree Health Costs: California Gets Some Bad News and Some Not-So-Bad News
"[California's] unfunded retiree health obligation (well in excess of $65 billion) has now surpassed its unfunded pension obligations -- and, more importantly, there is no statutory or administrative construct in place (like CalPERS) to force State agencies, cities and local governments to properly fund for these growing obligations." (Chang Ruthenberg & Long PC)
FASB Stock Compensation Accounting Amendments (ASU 2016-09): Summary of Early Adopters (PDF)
"Of the 44 early-adopters, 16 chose to account for forfeitures as they occur and 7 chose to continue estimating forfeitures under the current guidance. 21 companies did not explicitly disclose their policy election.... Of the 16 companies accounting for forfeitures as they occur, 11 disclosed the cumulative effect resulting from this change in accounting principle." (PricewaterhouseCoopers)
[Guidance Overview] GASB 73/74/75: Timing Considerations for Compliance with New Financial Reporting Rules (PDF)
"There are several important dates to consider when calculating and reporting OPEB liability ... For plan reporting, the actuarial valuation must have been performed as of a date no more than 24 months prior to the plan's FYE. For employer reporting, the actuarial valuation must have been performed as of a date no more than 30 months and one day prior to the employer's FYE.... The measurement date is the date as of which the net OPEB liability is measured ... For purposes of GASB Statement Nos. 73 and 75, the measurement date may be selected from a range starting no earlier than the end of the employer's prior FYE and ending no later than the employer's current fiscal year." (Milliman)
[Guidance Overview] GASB 74/75: Calculation Specifics on Individual Entry Age Normal (PDF)
"The individual entry age cost method is specifically identified in the new standards as the only appropriate method for determining a plan's Total OPEB Liability (TOL) ... Entry age allocates the present value of benefits of a member over the active service of that member, from his or her 'entry age,' or date of membership, through his or her assumed age(s) of exit from active service.... There are also entry age variations related to how plan changes are reflected in the allocation process, and to whether allocation calculations are performed on an individual member basis or aggregated across groups of members. These variations may not comply with the specific individual entry age variation prescribed in GASB 74/75." (Milliman)
State OPEB Funding Has Improved
"States' other post-employment benefit (OPEB) liabilities decreased 10%, to $627 billion, between 2010 and 2013, after adjusting for inflation ... This drop resulted from lower rates of growth in health care costs and changes states made to their OPEB funding policies and retiree health plan provisions ... State-funded ratios increased from 5% in 2010 to 6% in 2013.... [T]he funded ratio of eight states decreased, and Oregon increased its funded ratio by 25 percentage points." (PLANSPONSOR)
U.S. Pensions Solve New Debt Equation. Answers Vary by Billions
"New accounting rules that took full hold last year prevent governments from counting on investment returns after they're broke, a technique that masked the scale of the debts they face as workers retire. But outside of their certified books, they're free to sideline it. 'There is great confusion about the numbers and what they mean,' said Robert North Jr., former chief actuary for New York City's pension funds. 'Whatever numbers are used are dependent on how they are created, what they represent and their purpose.' " (Bloomberg)
[Opinion] Comments to FASB on Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715) and Changes to the Disclosure Requirements for DB Plans (Subtopic 715-20)
Links to the text of comment letters submitted to FASB by 27 firms, including Willis Towers Watson, AT&T, CNA Financial Corporation, BB&T Corporation and FedEx Corporation. (Financial Accounting Standards Board [FASB])
[Opinion] Comments by American Academy of Actuaries to FASB on Changes to the Disclosure Requirements for Defined Benefit Plans (PDF)
"[T]he following four items listed in the exposure draft can provide decision-useful information for users of a plan sponsor's financial statements: [1] Description of benefits; [2] Weighted-average interest crediting rate for cash balance plans; [3] Narrative description of reasons for significant gains and losses; and [4] Disclosure of the impact of a 1-percentage-point change in health care trend rates for nonpublic entities." (American Academy of Actuaries)
[Guidance Overview] FASB Simplifies Accounting Rules for Stock-Based Compensation
"Current accounting standards provide that an equity award will qualify for equity classification (i.e., resulting in fixed accounting treatment) if the fair market value of shares withheld to cover an employer's withholding obligations upon settlement of the award do not exceed the minimum statutory withholding requirement. If an equity plan permits share withholding in excess of this withholding requirement, equity awards granted under the plan currently would be subject to mark-to-fair value accounting (i.e., variable accounting).... Under the Amendment, an equity plan may now allow share withholding up to the maximum statutory withholding requirement while still avoiding variable accounting." (Meridian Compensation Partners, LLC)
[Guidance Overview] GASB Issues Statement 82 -- Pension Issues Amending GASB Statements 67, 68 and 73
"The primary purpose of Statement No. 82 is to improve financial reporting by enhancing consistency in the application of financial reporting requirements to certain pension issues.... Affected plans and plan sponsors in consultation with their auditors and actuaries need to determine whether any changes are needed for future financial reporting and if any of the changes require prior financial statements to be restated to meet the statement's requirements for the classification of employer paid member contributions or the presentation of payroll-related measures." (Cheiron)
Things You Should Know About Public Pension Disclosure Changes (PDF)
"The new GASB requirements do not affect actuarial funded ratios or pension contribution requirements ... The placement of net pension liabilities on an employer's balance sheet could create the erroneous impression that this is an obligation that is due immediately. This is not the case.... A new term, pension expense, refers to the change in the net pension liability from one year to the next, and should not be confused with what governments actually budget and expend on pension contributions." (Center for State & Local Government Excellence)
[Guidance Overview] GASB's Updated Accounting Standards for Other Postemployment Benefits (OPEB) (PDF)
"This publication summarizes the key requirements in the updated statements, which are intended to provide a more comprehensive picture of the costs associated with st ate and local governments' OPEB benefits. It also notes some of the implications. As a result of the changes, which are generally very similar to the changes GASB proposed in Exposure Drafts published in 2014, sponsors of public sector plans will face significant additional work in order to prepare their financial statements." (Segal Consulting)
[Guidance Overview] FASB Issues Update for Stock-Based Compensation Accounting (PDF)
"[T]wo changes will be most beneficial to plan administration: [1] Tax withholding in shares will now be permitted up to the maximum applicable statutory tax rate (previously, withholding shares above the minimum statutory tax rate threatened liability accounting for equity awards); and [2] With respect to forfeitures, companies will be permitted to elect to either (a) account for forfeitures as they occur, or (b) estimate forfeitures and account for the equity awards that are expected to vest (which previously was the only option)." (ExeQuity)
[Guidance Overview] GASB Addresses Pension Issues
"Statement 82 amends Statements 67 and 68 to require the presentation in schedules of required supplementary information of covered payroll -- defined as the payroll on which contributions to a pension plan are based -- and ratios that use that measure." (Journal of Accountancy)
[Official Guidance] Text of GASB Statement 82: Pension Issues -- An Amendment of GASB Statements 67, 68 and 73
"The objective of this Statement is to address certain issues that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. Specifically, this Statement addresses issues regarding [1] the presentation of payroll-related measures in required supplementary information, [2] the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and [3] the classification of payments made by employers to satisfy employee (plan member) contribution requirements." (Governmental Accounting Standards Board [GASB])
[Guidance Overview] GASB 68 Implementation War Stories
"Although the statements have existed for nearly four years, many plan sponsors are just now adopting the new standards. This article will share some key [items learned] from actual implementations, with a focus on single-employer plans ... [and] will highlight planning-type items to be considered for a smooth implementation of the new standards." (Cowden Associates, Inc.)
[Guidance Overview] Summary of GASB Statement 73 (PDF)
8 pages. "[T]he Statement requires all employers and [non-contributing employers] with pensions to follow the rules provided under Statement 68, with certain adjustments and exceptions.... DB and DC pensions are not within the scope of Statement 68 if they are not administered through trusts that meet the GASB's trust criteria ... For example, in some cases, a state may have a DB pension plan for a relatively small group of employees in which the assets are not held in trust. This type of plan would be subject to Statement 73." (Gabriel Roeder Smith & Company)
Will More Transparency Help with Public Pension Plan Financing?
"That's the premise behind a bill introduced in Congress to require state and local government pension plans to be more candid, but whether it turns out to be true will depend on what accounting standard is used to determine plan liabilities... The introduction of PEPTA fits into a decade-old campaign by economists and their actuary allies who believe that all pension plans should be evaluated on a 'market liability basis' ... [which] calculates a plan's liability according to the discount rate that the plan would get if it were to go into the market and settle its pension obligations by purchasing an annuity or portfolio of low risk bonds[.]" (Bloomberg BNA)
Accounting for Pension Buy-In Arrangements (PDF)
"The purchase of a traditional buy-out annuity contract generally triggers settlement accounting, and often significant income statement impact. The buy-in contract, however, typically results in no settlement charges but retains some other advantages of an annuity purchase. This [article] explores the advantages, disadvantages, and accounting implications of buy-in arrangements." (PricewaterhouseCoopers)
Annual California State Report Begins Showing Pension Debt
"New rules from the Governmental Accounting Standards Board are directing state and local governments to report more of their pension debt ... Following the old rules, the Comprehensive Annual Financial Report last year only reported the pension debt for single-employer state plans, a $3.2 billion obligation for judges and a closed plan for legislators. The new report this month for the fiscal year ending last June 30 includes the debt for the five plans in the main CalPERS fund, $39.4 billion, and the state share of more than a third of the CalSTRS debt, $22 billion." (Calpensions)
[Guidance Overview] Accounting Standards Update 2015-12: Simplifying Employee Benefit Plan Financial Statement Disclosures
"ASU 2015-12 removes the requirement to report fully benefit-responsive investment contracts at fair value and to show the adjustment from fair value to contract value on the face of the financial statements.... ASU 2015-12 removes the requirement to report investments that represent 5 percent or more of net assets available for benefits and, although it still requires disclosures of the net appreciation or depreciation of investments, it does not require disaggregation by investment type.... For plans whose fiscal year-end does not coincide with a month-end, the plan may measure investments and investment related accounts (e.g., a liability for a pending trade with a broker) using the month-end closest to the plan's fiscal year-end." (Belfint Lyons & Shuman, CPAs)

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