GASB Reporting Standards for Certain Plans Kick in
Financial reporting standards the Government Accounting Standard Board (GASB) set in place in Statement 74 last year are effective for fiscal years beginning after June 15, 2016. This affects a variety of retirement plans that provide postemployment benefits other than pension benefits (OPEB).
Statement 74 affects defined benefit and defined contribution plans administered through trusts that meet the following criteria:
- contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those contributions are irrevocable;
- plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms;
- OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities and the OPEB plan administrator; and
- if the plan is a DB OPEB plan, plan assets also are legally protected from creditors of the plan members.
The statement requires more extensive note disclosures and required supplementary information related to the measurement of the OPEB liabilities for which assets have been accumulated, including information about the annual money-weighted rates of return on plan investments. Statement 74 also sets forth note disclosure requirements for DC OPEB plans.
The GASB issued the statement to improve the usefulness of information about OPEB included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. It resulted from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions and OPEB regarding providing information useful to plans in making decisions, supporting assessments of accountability and interperiod equity, and creating additional transparency.