News Archive

A Look at GASB’s Post-Implementation Review of Pension Standards

"Earlier this year, the Governmental Accounting Standards Board (GASB) completed an extensive post-implementation review (PIR) of the pension standards issued in 2012, Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68, Accounting and Financial Reporting for Pensions. NCPERS spoke with the GASB team about the review and the report issued at its conclusion earlier this year."  MORE >>

GASB Post-Implementation Review Report: GASB Statements No. 67, Financial Reporting for Pension Plans, and No. 68, Accounting and Financial Reporting for Pensions (PDF)

53 pages. "Overall, Statements 67 and 68 resolved the primary issues underlying the stated need for the standards ... Consistent with the comprehensive nature of the Statements, implementation costs were significant ... Overall, the expected benefits of Statements 67 and 68 -- improved user understanding about pension plans and pensions, including governments' net pension liabilities and contributions to pension plans, better decision making and assessment of accountability and interperiod equity, greater comparability and consistency, and increased transparency -- have been achieved."

MORE >>

Text of FASB Accounting Standards Update 2024-01: Compensation -- Stock Compensation (Topic 718) (PDF)

28 pages. "The FASB is issuing the amendments in this Update to improve generally accepted accounting principles (GAAP) by adding an illustrative example to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards should be accounted for in accordance with Topic 718, Compensation -- Stock Compensation."  MORE >>

Inflation Reduction Act Includes Retirement Plan and Prescription Drug Implications

"[Q]ualified DB pension plans and other non-pension DB benefit plans would be treated for purposes of the alternative minimum tax the same way they are treated for regular federal income tax purposes ... [P]ublicly traded corporations that repurchase more than $1 million in stock will be subject to an excise tax of 1% of the stock's fair market value.... The excise tax will not apply in cases where the repurchased stock (or an amount equal to its value) is contributed to an employer-sponsored retirement plan, employee stock ownership plan or similar plan.... HSA-qualifying HDHPs will be permitted to cover insulin before the annual deductible is satisfied."  MORE >>

GASB Aligns the Accounting for Compensated Absences

"[GASB] issued Statement No. 101, Compensated Absences, to align the recognition and measurement guidance for compensated absences and refine the related disclosure requirements.... The updated guidance is effective for fiscal years beginning after December 15, 2023, and all reporting periods thereafter."  MORE >>

SEC Staff Issues Accounting Guidance on 'Spring-Loaded' Compensation Awards to Executives

"[SEC staff] released guidance for companies about how to properly recognize and disclose compensation cost for 'spring-loaded awards' made to executives. Spring-loaded awards are share-based compensation arrangements where a company grants stock options or other awards shortly before it announces market-moving information such as an earnings release with better-than-expected results or the disclosure of a significant transaction. According to Staff Accounting Bulletin (SAB) No. 120 ... non-routine spring-loaded grants merit particular scrutiny by those responsible for compensation and financial reporting governance at public companies."  MORE >>

AICPA FAQs with Illustrative Auditor's Reports for Initial Year of Implementation of SAS No. 136 (PDF)

31 pages. "[These] frequently asked question (FAQ) and illustrative auditor's reports have been developed to aid practitioners as they apply AICPA Statement on Auditing Standards (SAS) No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA ... in their audits of financial statements of employee benefit plans subject to [ERISA] in the initial year of implementation."  MORE >>

IFRS Conversion Considerations: Employee Benefits

"Organizations considering a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Policies (U.S. GAAP) should note that there are differences surrounding employee benefit plans. This could result in a significant impact to the financial statements, particularly for organizations with large defined benefit plans."

MORE >>

GASB Aims to Mitigate Costs of Fiduciary Activities Standard

"The new standard intends to reduce the financial-reporting complexities and ease the overall implementation costs of GASB 84, Fiduciary Activities -- specifically when evaluating defined contribution pension and defined contribution post-employment benefit plans ... Implementation of GASB 97 is expected to minimize the number of DC plans that meet the criteria for reporting as a fiduciary component unit within a sponsoring government's annual financial report."  MORE >>

GASB Issues Guidance on Certain Component Unit Criteria and Section 457 Deferred Compensation Plans

"Prior standards presumed that all Section 457 plans were not pension plans and, therefore, were not subject to pension plan reporting requirements; similarly, benefits provided through Section 457 plans were not reported as pension benefits. Under Statement 97, however, Section 457 plans should be classified as either a pension plan or other employee benefit plan, depending on whether the plan meets the definition of a pension plan. It also clarifies that Statement 84, as amended, should be applied to all arrangements organized under IRC Section 457 to determine whether those arrangements should be reported as fiduciary activities."  MORE >>

AICPA Delays Required Implementation of New Reporting Standards for Plans Subject to ERISA

"The American Institute of Certified Public Accountants (AICPA) has issued Statement of Auditing Standards (SAS) Number 141, which provides for a delay in effective dates for ... SAS 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA ... to December 15, 2021. Additionally, it amends SAS 136 to no longer preclude early implementation."

MORE >>

GASB Proposes Changes to Section 457 Plans

"The [March 5] exposure draft is intended to improve the consistency of the reporting of fiduciary component units and enhance the comparability in the application of accounting and financial reporting requirements for deferred compensation plans. The amended guidance applies to all governmental organizations subject to generally accepted accounting principles (GAAP) for state and local governments. Comments are due by April 10, 2020."  MORE >>

COVID-19 and its Implications for Pension and OPEB Accounting

"If rates do not rebound before the end of the fiscal year, the rate decrease could increase governments' OPEB liabilities substantially when they prepare their June 30, 2020 financial statements. The increase could be by as much as 30% or more for less mature governments who provide Medicare supplemental benefits. The increases will be smaller for fixed dollar benefit plans or for plans with no benefit after Medicare eligibility."

MORE >>

Text of GASB Exposure Draft: Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans (PDF)

38 pages. "This proposed Statement would require that for purposes of determining whether a primary government is financially accountable for a potential component unit, except for a potential component unit that is a defined contribution pension plan, a defined contribution OPEB plan, or an other employee benefit plan (for example, a Section 457 plan to which only employees contribute), the absence of a governing board should be treated the same as the appointment of a voting majority of a governing board if the primary government performs the duties that a governing board typically performs.... In addition, this proposed Statement would require that all accounting and financial reporting requirements relevant to pension plans be applied to Section 457 plans that meet the definition of a pension plan. Similarly, this proposed Statement would specify that all accounting and financial reporting requirements relevant to pensions be applied to benefits provided through Section 457 plans that meet the definition of a pension plan."  MORE >>

Accounting and Financial Reporting Updated for Governments

"On February 5, 2020, [GASB] issued Statement No. 92, Omnibus 2020 ...  Statement No. 84, 'Fiduciary Activities,' requires a government to recognize a liability to the beneficiaries of a fiduciary activity when an event has occurred that compels the government to disburse fiduciary resources. The amendments clarify that this requirement also applies to assets that are accumulated for purposes of providing pensions or OPEB through defined benefit pension plans or defined benefit OPEB plans that aren't administered through trusts that meet the scope criteria of [GASB] Statement No. 73 ... and Statement No. 74 ... This amendment is effective for reporting periods beginning after June 15, 2020."  MORE >>

Accounting for Federal Retirement and Veterans' Benefits: Cash and Accrual Measures

"This report examines how cash and accrual measures differ for federal retirement and veterans’ benefits and highlights trade-offs between the types of information that those measures provide to policymakers. The report also discusses some ways to expand the use of accrual measures for such benefits."  MORE >>

How the New ERISA Employee Benefit Plan Audit Standards Will Affect Your Plans

"If your organization opts for what is currently called an ERISA limited scope audit ... you will be required to provide certain written representations related to the reliability of the certified investment information.... Plan sponsors must be able to produce a completed (or substantially complete draft) Form 5500 in order for their auditor to identify material inconsistencies and material misstatements of fact, if any, with the audited ERISA plan financial statements prior to dating the auditor's report.... Areas of plan reporting that tend to have a high rate of compliance issues, such as prohibited transactions, will be getting a closer review from your plan auditor."  MORE >>

Preparing for the New EBP Audit Standard

"SAS 136 is effective for audits of ERISA plan financial statements for periods ending on or after December 15, 2020 ... The standard addresses requirements specific to: Engagement acceptance ... Audit risk assessment ... Communication of reportable findings ... The form and content of the auditor's report for ERISA plans have changed[.]"  MORE >>

Are Public Pensions in a Crisis? Part 3 -- Is It Just an Accounting Problem?

"GASB rules ... reward injecting more risk into a public pension plan, even though it can make the situation more financially precarious.... GASB is ... providing information to ... the public officials who will have to manage, implement, and decide on various financial matters.... But who will ... give other stakeholders, such as taxpayers and public employees and retirees, information on how likely public pensions will start eating up all the budget? Or the likelihood that the funds are going to run out (and when)?"  MORE >>

The Case for New Public Pension Accounting Standards (PDF)

48 pages. "This report presents a critique of the existing accounting rules for public pension funds as formulated in the various statements of [GASB], and some suggestions about different directions that might help policy makers make better decisions about the pension plans they manage."  MORE >>

Text of GASB Exposure Draft: Section 457 Deferred Compensation Plans That Meet the Definition of a Pension Plan

"This proposed Statement would require that all accounting and financial reporting requirements relevant to pension plans be applied to Section 457 plans that meet the definition of a pension plan. Similarly, this proposed Statement would specify that all accounting and financial reporting requirements relevant to pensions be applied to benefits provided through Section 457 plans that meet the definition of a pension plan.... This proposal would require investments of all Section 457 plans to be valued as of the end of the plan's reporting period in all circumstances."  MORE >>

FASB Changes for Employee Benefit Plans with Master Trust Investments

"FASB issued Accounting Standards Update 2017-06 to provide additional guidance on disclosure of an employee benefit plan's interest in a master trust. The changes are aimed particularly at defined contribution plans, which generally have divided interests (rather than percentage interests) in master trusts. The guidance is effective for fiscal years beginning after December 15, 2018, and applies retrospectively to each period for which financial statements are presented."

MORE >>

GASB Issues Implementation Guide on Fiduciary Activities

"[GASB] has issued a new Implementation Guide that contains questions and answers about the GASB's recently issued standards on accounting and financial reporting for fiduciary activities. Implementation Guide No. 2019-2, Fiduciary Activities, answers many questions about how to apply the provisions of GASB Statement No. 84, Fiduciary Activities."  MORE >>

Financial Reporting for Tribal 401(k) Plans

"GASB No. 84 doesn't apply to a tribe's separately issued enterprise-fund financial statements if the enterprise funds aren't legally separate. However, a 401k plan may still be included in a tribal government's statements ... To determine if a legally separate casino sponsors its own 401k plan, consider if the casino can amend the vesting schedules in the plan document, appoint trustees, select the custodian, choose the third-party administrator (TPA), and appoint other service providers of the 401k plan. If so, the 401k plan will likely be included as a fiduciary activity."

MORE >>

What is the Effect of Prohibited Transactions on the EBP Audit Opinion?

"If a prohibited transaction with a party in interest is not properly reported, the auditor will modify the auditor's opinion on the ERISA-required supplemental schedule if the effect of the transaction is material to the plan's financial statements. Conversely, if the effect of the prohibited transaction is not material to the financial statements, the auditor will include an additional discussion describing the prohibited transaction in an "Other Matters" paragraph in the auditor's report on the ERISA-required supplemental schedules."  MORE >>