Pension Plan GAASB Changes
GAASB has implemented changes to Pension Plan reporting that go into effect on June 15, 2013 for Statement 67 and June 15, 2014 for Statement 68. This will affect the accounting and financial statement reporting of governmental organizations. Pension expense liability will be reported on the balance sheet to show a clearer picture of the organization's obligations, as well as more disclosure requirements and additional supplementary material.
Under Statement 67 the Net Pension Liability (NPL) is equal to the Total Pension Liability (TPL) minus the Plan Fiduciary Net Position (PFNP). The NPL must be reported on the balance sheet in the government wide financial statements (Kausch, 2012). The TPL is the liability for projected benefits attributable to post service, including automatic COLAs and substantively automatic ad hoc COLAs. It is determined on a historical pattern base, consistency of amounts, and evidence that they might not be paid in the future. TPL is also determined using a traditional entry age, normal cost method, and the single discount rate. The normal cost is expressed as a level percentage of payroll. The single discount rate is based on long-term expected return to the extent of projected plan fiduciary net position is sufficient to pay future benefits. A portion is based on a tax-exempt municipal bond rate, 20-year tax-exempt general obligation municipal bond index rate, to the extent of projected plan fiduciary net position is insufficient.
The financial statement disclosures are required...
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