GASB presses forward with pension implementation.

• Author: Gauthier, Stephen J.
• Position: The Accounting Angle - Governmental Accounting Standards Board

The previous issue of Government Finance Review (April 2014) explored the unintended audit ramifications of Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions. To avoid the significant negative impact that would result from premature implementation, the Government Finance Officers Association and other government groups urged the GASB to delay the implementation date of GASB Statement No. 68 to allow sufficient time for employer auditors to obtain the information necessary to offer an unmodified ("clean") opinion. Instead, the GASB chose in late March 2014 to press forward and make no adjustment to the effective date of GASB Statement No. 68.

BACKGROUND

Most pension plans are administered separate and apart from the employer governments they serve. Consequently, auditors of employers under the new GASB pension standard will have to obtain reasonable assurance regarding the reliability of data provided by the pension plan that they themselves will not be in a position to audit. Moreover, those who are in a position to audit that data (pension plan auditors) will need guidance as to what specifically they need to do to furnish employer auditors with the level of assurance they require.

Multiple-employer pension plans pose special challenges. For example, agent plan financial statements do not contain any actuarial data, either on the face of the financial statements or in the notes for the plan auditor to build upon. Similarly, auditors of cost-sharing plans will need to find a way to provide reasonable assurance regarding each participating employer's proportionate share of each pension-related amount for participating employers in total.

Consequently, both employer auditors and pension plan auditors needed specific direction from the American Institute of Certified Public Accountants, which is responsible for auditing standards, to determine just how those objectives are to be achieved.

The AICPA's State and Local Government Expert Panel has spent the past three years working to find a solution to the practical auditing challenges that will result from the implementation of GASB Statement No. 68 and recently issued guidance. Unfortunately, because that guidance was issued only recently, a large number of employer governments find themselves in circumstances where it will be impossible for their auditors to implement the new auditing guidance in time for the scheduled implementation date...