HomeMy WebLinkAbout06. GASB 67/68 Informationkp s
Central Contra Costa Sanitary District
October 27, 2014
TO: FINANCE COMMITTEE
VIA: DAVID HEATH, DIRECTOR OF ADMINISTRATION /3 W
ROGER S. BAILEY, GENERAL MANAGER
FROM: THEA VASSALLO, FINANCE MANAGER' %�
SUBJECT: FOLLOW -UP INFORMATION ON GOVERNMENTAL ACCOUNTING
STANDARDS BOARD (GASB) 67/68
GASB 67 - FOR PENSION PLANS
GASB 68 - FOR EMPLOYERS
At the October 6, 2014 Finance Committee meeting, Vikki Rodriguez of Maze &
Associates reported that Governmental Accounting Standards Board (GASB) 68,
regarding pensions, cannot be implemented early because the District's pension plan
with Contra Costa County Employees' Retirement Association (CCCERA) needs to
implement GASB 67 first.
To supplement that update, attached are slides containing general information about
GASB 67/68. These were supplied by Andrew Paulden, CPA, and Partner at Brown
Armstrong Accountancy Corporation, at the CCCERA Plan Sponsors /Employers Task
Force Meeting in June 2014.
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Attachment
N:\ADMINSUP\ADMIN \DIST- SEC\ COMMITTEES\ Finance \2014Wttachments \10 -27 -14 GASB 67 68 INFORMATION.docx67 68
Information
What Does it Mean?
-The GASB's new pension standards will fundamentally change how employers
account for the cost of pension benefits in their financial statements.
*The Statements change current pension accounting and financial reporting
standards for state and local governments.
-Disconnect pension accounting from pension funding.
-Total Pension Liability (TPL) code for Actuarial Accrued Liability.
*Require employers to recognize the Net Pension Liability (NPL) on their balance.
sheets (where NPL is code for the Unfunded Accrued Liability based on Market
Value of Assets).
•Require employers to recognize a new measure of the Pension.
*Pension Expense on income statements, which would be different from their
actuarially determined contributions (ARC)
*New note disclosures and required supplementary information with information
based on the new measures.
Lots More Work:
*By preparers of plan CAFRs.
*By preparers of employer CAFRs.
*By actuaries.
*By auditors.
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What Does it Not Mean?
*The GASB standards do not change the methods and assumptions used to determine
the contributions needed to fund the plan.
*The employer's pension liability should be fully (actuarially) measured at least every
two years.
-The employer should recognize the NPL as of the "measurement date" which should
be no earlier than the end of its prior fiscal year.
•If the TPL is not actuarially measured as of the "measurement date," it can be "rolled
forward" from an actuarial valuation performed not more than 30 months plus 1 day
prior to the employer's fiscal year -end.
*Professional judgment to determine extent of procedures.
-Consider changes in discount rate and municipal bond rate.
*Consider whether new actuarial valuation is needed.
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When is it Effective?
*Plans - GASB Statement No. 67, Financial Reporting for Pension Plans - Effective for
plan fiscal years beginning after June 15, 2013 (i.e., FYE's ending June 30, 2014 and
after).
*Employers - -GASB Statement No. 68, Accounting and Reporting for Pensions -
Effective for employer (and contributing non - employer) fiscal years beginning after
June 15, 2014 (i.e., FYE's ending June 30, 2015 and after).
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What is the Impact?
-Expect to see huge pension liability on employer's financial statements.
*Changes treated as an adjustment of prior periods:
•Affected financial statements should be restated or Report the cumulative effect
as a restatement of beginning net position
*Disclose the nature and effect of any restatement
*Describe the reason for not restating prior periods, if applicable
•GASB encourages restatement of beginning deferred outflows and inflows, but
only if this is practical.
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