Overview
The Governmental Accounting Standards Board (GASB) has issued Statement No. 82 – Pension Issues – An Amendment of GASB Statements No. 67, No. 68, and No. 73. As the title communicates, this Statement clarifies and consolidates issues related to the previously issued pension statements.
When is GASB 82 Effective?
The requirements of this Statement are effective for reporting periods beginning after June 15, 2016, except for the requirements of this Statement for the selection of assumptions in a circumstance in which an employer’s pension liability is measured as of a date other than the employer’s most recent fiscal year-end. In that circumstance, the requirements for the selection of assumptions are effective for that employer in the first reporting period in which the measurement date of the pension liability is on or after June 15, 2017. Earlier application is encouraged.
What are the Key Attributes of GASB 82?
-Notably, Statement No. 82 amends the pension required supplementary schedules to now require presentation of covered payroll and related ratios, whereas the previous definition was covered-employee payroll and related ratios. The subtle difference between these two definitions is that covered payroll is the payroll on which the contributions to the plan are based. The previous definition, covered-employee payroll, is the payroll of employees that are provided with pensions through the pension plan.
-Statement No. 82 also clarifies that payments made by an employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements should be classified as plan member contributions for purposes of Statement 67 and as employee contributions for purposes of Statement 68. It also requires that an employer’s expense and expenditures for those amounts be recognized in the period for which the contribution is assessed and classified in the same manner as the employer classifies similar compensation other than pensions (for example, as salaries and wages or as fringe benefits).
How Will GASB 82 Impact Your Financial Statements?
-Information required by these two provisions should be presented retroactively, by restating the financial statements and 10-year schedules of required supplementary information for all years presented, if practicable. If restatement for prior years presented is not practicable, the reason for not restating prior years and the cumulative effect should be presented in notes to the applicable schedule/financial statements.
-Finally, Statement No. 82 clarifies terminology from the Actuarial Standard for Practice as it relates to financial reporting purposes. The Actuarial Standards define the term “deviation”, which is not in conformity with the requirements of Statement 67, Statement 68, or Statement 73 for the selection of assumptions used in determining the total pension liability and related measures. This provision should be applied on a prospective basis.
Please note this summary of GASB 82 is not meant to substitute for reading it in its entirety.