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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... benefits. December 1. Available at: http://www.westvirginia.com/peia/content/WV%20OPEB%20Final%20Report%202005%206-30-06%20 (corrected%20page%203).pdf.
. 2005. S&P 500 companies significantly under funded for other post employment benefits (OPEB). Extract, December 19. Available at: http://goliath.ecnext.com/coms2/summary0199-5047543 ITM.
• Summary of Statement No. 45. Retrieved November 2, 2013, from http://www.gasb.org/st/summary/gstsm45.html
• The Anticipated Impact of Government Accounting Standards Board (GASB) Standard 45. (n.d.). CMSplus. Retrieved November 3, 2013, from http://iafc.cms-plus.com/files/GASB45Qa3.pdf
• 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.
Waine, B. (2000). Managing peformanve through pay. In J, Clarke, S. Gewitz and E. karban, 2001) MH
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.
10) Kieso, Donald E., Weygandt, Jerry J., Warfield, Terry D. Intermediate Accounting. Hoboken, NJ: Current Developments for Audit Committees 2002. Pricewaterhouse Coopers analysis on recognizing revenue. External
To help accounting professionals easily navigate through 50-plus years of unorganized US generally accepted accounting principles (GAAP) and standards the Trustees of the Financial Accounting Foundation approved the Financial Accounting Standards Board (FASB) Accounting Standards Codification (Codification.) By codifying authoritative US GAAP, FASB will provide users with real-time and accurate information in one location. Concurrently, FASB developed the FASB Codification Research System; a web-based system allowing registered users to electronically research accounting issues. Since 2009, the codification became the single source of nongovernmental authoritative GAAP.
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).
To illustrate these tendencies, several macro-level trends and events in Illinois’ recent history warrant brief discussion. First, Thomas Walstrum, a business economist from the Federal Reserve Bank of Chicago, published a striking analysis in 2016 concerning Illinois’ fiscal situation that succinctly illustrated how the state’s current fiscal trajectory essentially began in the late 1980s. In his article, “The Illinois Budget Crisis in Context: A History of Poor Fiscal Performance,” he posits that the state could have been categorized as a low-expenditure, low-revenue state prior to the 1990s (Walstrum). Starting in the mid-1990s, however, his analysis shows that the state began consistently spending more than it took in in revenues, significantly outpacing the national average (see figs. 1-3). From the years 1994 to 2010, Illinois’s spending averaged 115.9% of its revenues compared with 105.7% for the typical U.S. state (see fig. 4). The main source of this increased spending was pension-related and since revenues continued to remain low, the state began accruing debt to cover these liabilities (Walstrum). This imbalance between revenues and expenditures indicates that Illinois’ budget has not really been balanced since this period in the 90s. In his analysis, Walstrum also treats the yearly change in pension liabilities as an expenditure, treating future payments as if they were being made right now. In doing so, he demonstrates that Illinois was actually a much higher expenditure state than commonly believed since it was merely deferring those expenditures in the form of pension fund payments well into the future
It provides information about all the accounts in the General Fund and the totals of all other governmental funds. According to the notes on page 144, “in the fiscal year 2010-11, the City implemented GASB 54 under which governmental fund balances are reported as nonspendable, restricted, committed, assigned, and unassigned. For the fiscal year 2009-10 fund balances have been characterized to comply with GASB 54 in order to facilitate year-to year comparisons.” This made the report’s presentation look unusual. Half of the page contains the old account names and the balances from 2005 to 2009. The other half of the page presents the new way of reporting the fund balances and the information for the following years. The last report for this section is the Changes in Fund Balances of Governmental Funds. The change on the presentation of fund balances did not affect the presentation of this report. The major changes that happed the fund balances seem to be a negative ending balance from 2008 to 2011. Most likely due to the
The steady rise of healthcare costs and the ever increasing cost of health insurance premiums are making it harder and harder for employers to pay healthcare premiums for their employees. In the past, it was almost a given that employers picked up the tab for health insurance coverage. The health coverage was usually exceptional with little or no money paid out of pocket by the individual for the insurance premiums. Those appear to be the “good old days”, with fewer and fewer employers shelling out money for health insurance premiums and demanding a larger percentage to be paid by the employee. Other employers are simply unable to financially provide healthcare coverage for their employees and have stopped all together.
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...
-Hyman, David M. (1990) Public Finance: A Contemporary Application of Theory to Policy, 3rd, Dryden Press: Chicago, IL
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.
The globalization of business has resulted in the need for compatible accounting standards that can be used internationally for financial reporting. As a result, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) to unify the various financial reporting methods and create a single accounting standard which can be applied to any financial statement worldwide (Byatt). The global standardization of financial reporting will increase the readability and enhance comparability of globally traded companies’ financial statements, without the need of conversion or translation. There are a few main differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (U.S GAAP). The increasing recognition and acceptance of the International Financial Reporting Standards by accounting professionals in the United States, will affect the way in which the U.S will record financial statements in the future.
Lehan, Edward A., Simplified Governmental Budgeting. Chicago: Municipal Finance Officers Association of the US and Canada, 1981.
"Accountants." WISCareers. University Of Wisconsin System Board of Regents, 2009. Web. 20 Nov. 2009. .
The success of a company is very dependent upon its financial accounting. In accounting there are numerous Regulatory bodies that govern the accounting world. These companies are extremely important to a company because they set the standards when it comes to the language and decision making of a company. These regulatory bodies can be structured as agencies, associations, commissions, and boards. Without companies like the Security and Exchange Commission (SEC), The Financial Accounting Standards Board (FASB), the Governmental Accounting Standards Board (GASB), Internal Accounting Standards Board (IASB), Internal Revenue Service (IRS), and other regulatory bodies a company could not make well informed decisions. In this paper the author will look at only four of them.