GASB closes the loop on postemployment benefits.

Author:Gauthier, Stephen J.
Position::The Accounting Angle
 
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The Governmental Accounting Standards Board (GASB) uses the term postemployment benefits to describe both pensions and other postemployment benefits (OPEB). The GASB, like its private-sector counterpart, the Financial Accounting Standards Board (FASB), is persuaded that both types of postemployment benefits are conceptually similar and should be accounted for comparably. Thus, in the case of employers, the GASB's authoritative guidance for OPEB (GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions') closely parallels the GASB's previous authoritative guidance for employers that offer pensions (GASB Statement No. 27, Accounting for Pensions by State and Local Governmental Employers). Likewise, the GASB's authoritative guidance for OPEB plans (GASB Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans) essentially mirrors the GASB's previous authoritative guidance for pension plans (GASB Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans).

Recently, the GASB fundamentally changed its conceptual approach to accounting and financial reporting for pensions with the release of GASB Statement No. 67, Financial Reporting for Pension Plans, and GASB Statement No. 68, Accounting and Financial Reporting for Pensions. Given the close conceptual connection between OPEB and pensions, it was only to be expected that the GASB would revisit its guidance for OPEB to ensure conceptual consistency in accounting and financial reporting for all postemployment benefits. Also, the scope of GASB Statements No. 67 and No. 68 expressly excluded pension arrangements not administered through qualifying trusts. To fill this latter gap and to bring OPEB accounting and financial reporting into line with the new accounting and financial reporting for pensions, the GASB approved the issuance of three new standards in June 2015, effectively "closing the loop" on accounting and financial reporting for postemployment benefits:

* GASB Statement 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.

* GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans.

* GASB Statement No. 75, Accounting and Financial Reporting for...

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