Ask Marcum: We have the answers to current government issues.
Government employers face many questions regarding the implementation of Governmental Accounting Standards Board ("GASB") Statement No. 68, Accounting and Financial Reporting for Pensions, an amendment of GASB Statement No 27.
In the recent months, many of our clients have reached out to us with questions regarding the accounting and financial reporting requirements established by this standard. Below are the answers to the most common questions we have received.
QUESTION: I am the finance director of a local municipality which participates in more than one defined benefit pension plan. Currently, we participate in a single-employer plan and a cost-sharing employer plan (Florida Retirement System), and I was wondering if I need to use the same "measurement date" for both plans?
ANSWER: No. Provided that the measurement date for each (collective) net pension liability meets the requirements of Statement 68, the related pension liabilities presented in an employer's financial report can have different measurement dates.
QUESTION: For financial statement reporting purposes, must the net pension liability (or aggregation of net pension liabilities) be displayed on a separate line on the face of the financial statements?
ANSWER: No. The net pension liability is not required to be displayed separately on the face of the financial statements. However, aggregated pension assets and aggregated pension liabilities should be separately displayed.
QUESTION: I just took over a finance director position at a local municipality and noticed that the Municipality does not have a recently issued actuarial valuation. What is the earliest date of an actuarial valuation that can be used as the basis for determining the total pension liability component of the net pension liability reported by a single or agent employer at its September 30, 2015 fiscal year-end?
ANSWER: Statement 68 permits use of an actuarial valuation as of a date 30 months and 1 day earlier than the employer's most recent fiscal year-end as the basis for the total pension liability reported by a single or agent employer. Therefore, in its September 30, 2015 financial statements, the employer can use the results of an actuarial valuation as of March 31, 2013, or later.