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What You Need to Know about Implementing GASB Statement No. 67

Sikich

Feb 11 2015

3 min read

In June 2012, the Governmental Accounting Standards Board (GASB) issued two new statements impacting how state and local governments report their participation in pension plans. Statement Number 67, Financial Reporting for Pension Plans (an amendment to Statement Number 25) provides guidance on how to account for and report on pension plans, whether the plan issues its own financial statements or is included in the employer’s report as a pension trust fund.

GASB Statement 67 took effect beginning with the June 30, 2014 financial statements. Here are three factors employers should consider as they start implementing Statement Number 67:

Impacts to the employer’s report

The biggest change to the employer’s report is the expansion of notes to financial statements to include disclosure requirements for the employer. Having the pension plan issue a separate report, which includes detailed information, can reduce disclosures needed in the employer’s report. Then, the employer can refer to the separate report and not have to include it in the employer’s report. However, most multiple employer plan reports generally do not contain information by individual employer; instead, they report on the plan as a whole.

In addition, the required supplementary information (RSI) has greatly expanded and now requires employers participating in single-employer, agent and cost-sharing pension plans to present 10 years of data in three different tables.

Two financial statements for defined pension plans

Statement 67 requires defined benefit pension plans to present two financial statements―a statement of fiduciary net position and a statement of changes in fiduciary net position. In addition, following the accounting and financial reporting requirements of other standards is a best practice.

The statement of fiduciary net position presents assets such as receivables from employers and plan members, deferred inflows and outflows resources, liabilities to benefit payments due to plan members and fiduciary net positon. The statement of changes in fiduciary net position presents additions to contributions from employers and non-employers, deductions to benefit payments and administrative expenses, and net increase or decrease in fiduciary net position.

Measurement of the net pension liability

Changes to measurement in liability now require the net pension liability to be measured as the total pension liability and less of the pension plan’s fiduciary net position. In addition, the actuarial valuation of the total pension liability are required to be performed at least every two years, but more frequent valuations are encouraged. If a valuation is not performed in the fiscal year-end, the total pension liability is required to be based on update procedures to roll forward amounts from an earlier actuarial valuation.

Pension plan employers are encouraged to communicate with their actuaries coordinate all requirements to support the implementation.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

About the Author

Sikich

Sikich is a global company specializing in technology-enabled professional services. With more than 1,900 employees, Sikich draws on a diverse portfolio of technology solutions to deliver transformative digital strategies and is comprised of one of the largest CPA firms in the United States. From corporations and not-for-profits to state and local governments and federal agencies, Sikich clients utilize a broad spectrum of services* and products to help them improve performance and achieve long-term, strategic goals. *Securities offered through Sikich Corporate Finance LLC, member FINRA/SIPC. Investment advisory services offered through Sikich Financial, an SEC Registered Investment Advisor. 