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All News > Accounting

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IFRS Conversion Considerations: Employee Benefits
Schneider Downs Link to more items from this source
Feb. 25, 2021

"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."

Tags: Accounting  •  Funding of DB Plans

GASB Aims to Mitigate Costs of Fiduciary Activities Standard
Moss Adams LLP Link to more items from this source
[Guidance Overview]
Oct. 6, 2020

"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."

Tags: Accounting  •  Fiduciary Duties  •  State and Local Government Plans

GASB Issues Guidance on Certain Component Unit Criteria and Section 457 Deferred Compensation Plans
Governmental Accounting Standards Board [GASB] Link to more items from this source
[Guidance Overview]
June 23, 2020

"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."

Tags: 457 Plans  •  Accounting  •  State and Local Government Plans

Editor's Pick AICPA Delays Required Implementation of New Reporting Standards for Plans Subject to ERISA
Ascensus Link to more items from this source
May 12, 2020

"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."

Tags: Accounting  •  Health Plan Administration  •  Retirement Plan Administration

Accounting and Tax Deduction Are Not Changed by CARES Act Delay in 2020 Pension Funding Contributions
Milliman Retirement Town Hall Link to more items from this source
[Guidance Overview]
Apr. 10, 2020

"Under the CARES Act, the due date for any minimum required contribution otherwise due during calendar year 2020 has been extended to January 1, 2021, which may be past eight and a half months after the end of the plan year. However, the CARES Act does not extend the timing for tax deductions. As such, taking advantage of the delayed due date may postpone the tax deduction to the following tax year."

Tags: Accounting  •  CARES Act  •  Coronavirus (COVID-19)  •  Funding of DB Plans

GASB Proposes Changes to Section 457 Plans
Moss Adams LLP Link to more items from this source
[Guidance Overview]
Mar. 13, 2020

"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."

Tags: 457 Plans  •  Accounting

COVID-19 and its Implications for Pension and OPEB Accounting
Bolton Link to more items from this source
Mar. 10, 2020

"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."

Tags: Accounting  •  Coronavirus (COVID-19)  •  Retiree Health Plans

Text of GASB Exposure Draft: Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans (PDF)
Governmental Accounting Standards Board [GASB] Link to more items from this source
[Official Guidance]
Mar. 9, 2020

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."

Tags: 457 Plans  •  Accounting

Accounting and Financial Reporting Updated for Governments
Moss Adams LLP Link to more items from this source
Feb. 19, 2020

"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."

Tags: Accounting

Accounting for Federal Retirement and Veterans' Benefits: Cash and Accrual Measures
Congressional Budget Office [CBO] Link to more items from this source
Sept. 11, 2019

"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."

Tags: Accounting  •  Federal Government Plans  •  Funding of DB Plans  •  Retirement Plan Design

How the New ERISA Employee Benefit Plan Audit Standards Will Affect Your Plans
CBIZ Link to more items from this source
Aug. 28, 2019

"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."

Tags: Accounting  •  Health Plan Administration  •  Reporting to Government Agencies  •  Retirement Plan Administration

Preparing for the New EBP Audit Standard
WithumSmith+Brown, PC Link to more items from this source
Aug. 27, 2019

"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[.]"

Tags: Accounting

Are Public Pensions in a Crisis? Part 3 -- Is It Just an Accounting Problem?
STUMP Link to more items from this source
[Opinion]
Aug. 22, 2019

"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)?"

Tags: Accounting  •  State and Local Government Plans

The Case for New Public Pension Accounting Standards (PDF)
National Conference on Public Employee Retirement Systems [NCPERS] Link to more items from this source
[Opinion]
July 10, 2019
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."

Tags: Accounting  •  State and Local Government Plans

Text of GASB Exposure Draft: Section 457 Deferred Compensation Plans That Meet the Definition of a Pension Plan
Governmental Accounting Standards Board [GASB] Link to more items from this source
[Official Guidance]
July 1, 2019
"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."

Tags: 457 Plans  •  Accounting  •  State and Local Government Plans

FASB Changes for Employee Benefit Plans with Master Trust Investments
McDermott Will & Emery Link to more items from this source
June 20, 2019
"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."

Tags: Accounting  •  Health Plan Administration  •  Multiemployer Plans  •  Retirement Plan Administration

GASB Issues Implementation Guide on Fiduciary Activities
Governmental Accounting Standards Board [GASB] Link to more items from this source
[Official Guidance]
June 18, 2019
"[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."

Tags: Accounting  •  State and Local Government Plans

Financial Reporting for Tribal 401(k) Plans
Moss Adams LLP Link to more items from this source
June 17, 2019
"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."

Tags: 401(k) Plans  •  Accounting  •  Retirement Plan Administration

What is the Effect of Prohibited Transactions on the EBP Audit Opinion?
Belfint Lyons Shuman Link to more items from this source
June 4, 2019
"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."

Tags: Accounting

Editor's Pick The Importance of Retaining and Protecting Employee Benefit Plan Records (PDF)
American Institute of Certified Public Accountants [AICPA] Link to more items from this source
May 6, 2019
32 pages. "This advisory describes ERISA and DOL record retention requirements, protecting personally identifiable information, the effect of inadequate records on audit scope and testing and the auditor's report, and the implications to the plan administrator for failure to properly retain records. The advisory also provides suggestions for best practices for record retention and data protection and additional resources."

Tags: Accounting  •  Health Plan Administration  •  Retirement Plan Administration

FASB Amends Master Trust Reporting Requirements for Employee Benefit Plans
EisnerAmper Link to more items from this source
Apr. 3, 2019
"This guidance will reduce diversity in disclosures relating to master trust interests in employee benefit plan financial statements and provide the users of these financial statements with more information, especially when a plan has a specific (divided) rather than proportionate (undivided) interest in a master trust."

Tags: Accounting

Editor's Pick What ERISA Practitioners Need to Know About Accounting for Benefit Plans (PDF)
Employee Benefits Committee [EBC], American Bar Association Link to more items from this source
Mar. 29, 2019
38 presentation slides, from ABA EBC 2019 Midwinter Meeting. Topics include: [1] Practice tips. [2] What does a Balance Sheet/ statement of Net Assets look like? [3] What does the Income Statement/Statement of Changes in Net Assets Available for Benefits look like? [4] What does a DB plan's Actuarial Information look like? [5] What does a health plan's Benefit Obligations look like? [6] Uses of financial statements in ERISA practice and litigation. [7] Statutory basis for audit requirement. [8] Questions DOL identified that a fiduciary should ask the plan auditor. [9] Investment valuation: what's required. [10] Investment valuation: issues for fiduciaries. [11] Investment valuation: what should trustees/investment committees do periodically?

Tags: Accounting  •  Fiduciary Duties  •  Health Plan Administration  •  Retirement Plan Administration

Final Balloted Draft of Employee Benefit Plan Audit Standards Released by Auditing Standards Board
Belfint Lyons Shuman Link to more items from this source
[Guidance Overview]
Mar. 5, 2019
"[T]he Final Balloted Draft standard shouldn't affect the nature and extent of audit procedures performed by compliant auditors. However, the standard formally memorializes the objectives of the audits and the responsibilities of the auditor and management, to provide a clear framework of accountability for all parties involved."

Tags: Accounting

A Curious Lace in the Other Shoe About to Drop on State Balance Sheets
Truth in Accounting Link to more items from this source
Dec. 20, 2018
"Looking across the 50 states, and using the state governments' own actuarial and accounting assumptions, total unfunded retiree health care obligations run about 80% as high as total unfunded pension obligations. Retiree health care debt actually runs higher than pension debt in 12 of the 50 states.... What characterizes the top ten ('Stronger Credit Rating') states, compared to the bottom ten ('Stronger Taxpayer Burden') states? ... The states with 'Stronger Credit Ratings' have very high OPEB (retiree health care) debt per taxpayer, compared to the 'Stronger Taxpayer Burden' states."

Tags: Accounting  •  State and Local Government Plans

Text of AICPA Statement on Auditing Standards: Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA (PDF)
American Institute of Certified Public Accountants [AICPA] Link to more items from this source
[Official Guidance]
Dec. 3, 2018

Final Balloted Draft; 104 pages. "This Statement on Auditing Standards (SAS) addresses the auditor's responsibility to form an opinion and report on the audit of financial statements of employee benefit plans (EBPs) subject to [ERISA], hereinafter referred to as ERISA plans. It also addresses the form and content of the auditor's report issued as a result of an audit of ERISA plan financial statements.... When issued as final, this SAS is effective for audits of ERISA plan financial statements for periods ending on or after December 15, 2020. Early adoption is not permitted."

Tags: Accounting  •  Health Plan Administration  •  Retirement Plan Administration


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