GASB 45
The Government Accounting Standards Board (GASB) issued Statement 45 (GASB 45) in June 2004; this statement establishes accounting and reporting standards for post-employment benefits other than pensions, or “other post-employment benefits (OPEB),” offered by state and local governments. It requires local governments to actuarially determine their annual required contribution (ARC) to fund OPEB and to account for the unfunded amount as liabilities on annual financial statements. Government employers required to comply with GASB 45 include all states, towns, education boards, public schools, and all other government entities that offer OPEB and report under GASB. In this paper, we will provide an overview of this pronouncement and see how it will affect governmental entities.
In addition to pensions, many state and local governmental employers provide other postemployment benefits (OPEB) as part of the total compensation offered to attract and retain the services of qualified employees. OPEB includes postemployment healthcare, as well as other forms of postemployment benefits (for example, life insurance) when provided separately from a pension plan…. (GASB 45)
Accounting and reporting standards that address pension obligations have been in place for many years. However, because of the absence of authoritative accounting and reporting standards for OPEBs, these liabilities have gone unreported. GASB 45 establishes standards for the measurement, recognition, and display of OPEB expenses or expenditures and related liabilities or assets, note disclosures, and, if applicable, required supplementary information (RSI) in the financial reports of state and local governmental employers. This statement requires governmental e...
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• Yusuf, J., & Musumec, T. (2012). CHANGING AND/OR FUNDING OPEB PROMISES: A TYPOLOGY OF LOCAL GOVERNMENT RESPONSES TO GASB 45 AND THE REALIZATION OF OPEB LIABILITIES. Journal Of Public Budgeting, Accounting & Financial Management, 24(3), 369-396.
The push for Congress to pass legislation protecting the rights of employees and their retirement was inevitable. Retirement plans are extremely important for all working individuals. Having funds to keep or exceed ones current standard of living and to enjoy one’s life beyond expectations after retire...
In the planning process, the health care organization’s first step should be to identify alternative expense reduction measures that can be implemented. Marshall and Broas (2009) and McConnell (2006) state that measures such as hiring freezes, reduced work hours, reduced salaries or bonuses, early retirement, limited use of temporary workers and discrepancy spending should be explored first before resorting to mass reduction in the workforce. Given the numerous legal cases in which employees have accused companies of lavish spending during layoff processes, a company should consider taking expense reduction measures. This would show that the company had explored another alternative before resorting to a RIF, and it would also help employers dismiss employees claims that the RIF was not necessary or discriminatory ( Marshall & Broas,2009) .Whatever alternative expense reduction measures were taken by the company along with the reasons for doing so should also be documented( Marshall & Broas,2009).Documenting the reason for the RIF, should be the next step.
The goal of the Codification is to simplify the organization of thousands of authoritative U.S. accounting pronouncements issued by multiple standard-setters. To achieve this goal, the FASB initiated a project to integrate and topically organize all relevant accounting pronouncements issued by the U.S. standard-setters including those of the FASB, the American Institute of Certified Public Accountants (AICPA), and the Emerging Issues Task Force (EITF)
The cost and administrative burden of providing health care benefits to employees has grown rapidly in the last several years, and organizations have opted to cheaper means of doing this by resorting to CDHPs programs that are little bit cheaper when using deductible health insurance plans. This has led to the hope of healthier generation in the near future as the cost of health services would be manageable (Buntin, Damberg, Haviland & Kapur, 2006).
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Offering employee benefits is one way a company must competes in today’s marketplace to retain old employees and attracts new ones. These benefit packages may range from offering basic health insurance to additional discretionary and perk benefits such as vacation and retirement packages. Benefit packages are often a large portion of employee costs and Federal mandates require an employer to carry and offer certain benefits even if they offer nothing else. Federally required employee benefits make up approximately a quarter of the costs associated with employer offered benefit packages. Some of these mandated benefits include Social Security, Worker’s Compensation Insurance, and the Family Medical Leave Act.
Waine, B. (2000). Managing peformanve through pay. In J, Clarke, S. Gewitz and E. karban, 2001) MH
Financial Accounting Standards Board. (1985). Statement of Financial Accounting Standards No. 86. Norwalk. Retrieved April 7, 2014, from http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175820922177&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=189998&blobheadervalue1=filename%3Dfas86.pdf&blobcol=url
Many employees when looking for a job or deciding whether to stay with their current employment often considers the employee benefits the company offers.
Albrecht, W. S., Stice, J. D., Stice, E. K., & Skousen, k. F. (2002). Accounting Concepts and Applications. Cincinnati: South-Western.
Trends in time off with pay can vary from public (i.e. not for profit) and private (i.e. for profit) sector organizations. Usually public sector employees are governed by benefits that separate vacation, sick, personal days, jury duty, funeral leave etcetera. Private sector employers primarily utilize Paid Time Off (PTO) that lump all of the instances of needing time off in a time bank that each employee is responsible for maintaining. Time off with pay is a topic that is regularly evaluated throughout organizations today. In this paper I will be discussing the paid time off benefits that are offered to public employees.
One of the most debatable topics in the accounting industry today is the extent in which we should make the financial statements understandable to the general population. The FASB currently gears its reporting standards toward...
From a tax perspective, amounts paid into the pension fund by BTH and employees are tax-deductible on corporate and personal income tax returns. Em...
Judgement is a notion of relevance and reliability in developing and applying accounting policies. It is a requirement of management that they exercise a high degree of professional judgement when selecting appropriate accounting policies in the preparation of financial statements that is relevant to decision-making and assessment needs of users. Management should also consider the applicability of IFRS and AASB in dealing with similar and related issues and then the definitions, recognition criteria in the Conceptual Framework when there is no IFRS standard or interpretation in certain circumstances that are specifically applicable. Management may also consider the most current pronouncements of other standard-setting bodies to the extent that do not conflict with IFRS and AASB in developing accounting standards and accepted industry practices by using a similar conceptual framework.