GFOA Supports Proposals to Make OPEB Reporting Like Pension ReportingCategories: National Developments,OPEB/GASB 45/75
The Bond Buyer by Naomi Jagoda, November 7, 2014
Government Finance Officers Association officials said recently that it makes sense that draft standards on other post-employment benefit financial reporting are similar to ones in effect for pension reporting.
OPEB mainly consist of retiree health care benefits. The Governmental Accounting Standards Board published two draft OPEB statements in June: one for plans and the other for employers. The statement for employers would urge state and local governments to disclose their net or total OPEB liabilities on the face of their financial statements.
GASB chairman David Vaudt has said that the OPEB drafts mirror the standards on pension reporting released in 2012, which require state and local governments that offer defined-benefit pension plans to report a net pension liability in their financial statements. The pension standards for governments are effective for fiscal years beginning after June 15, 2014. As a result, many governments are in their first year of implementing the standards. The statement for pension plans is effective for fiscal years starting after June 15, 2013.
During GFOA’s annual accounting update on Thursday, an official with the group’s Technical Services Center, Jake Lorentz, summarized GFOA’s comments on the proposed OPEB standards that were provided to GASB earlier this year.
While GFOA likes the funding-based approach to reporting OPEB liabilities that is included in the OPEB standards currently in effect, it also supports GASB’s effort to make the OPEB standards similar to those for pensions, Lorentz said.
The GFOA is convinced “that OPEB are essentially similar to pensions and ought to be treated accordingly in the interest of consistency,” GFOA said in its comments. “Therefore, we support the GASB’s proposals to bring the current accounting and financial reporting for OPEB into line with the new accounting and financial reporting for pensions.”
When GASB released the OPEB draft statements, it also issued a draft on financial reporting for pension plans that aren’t covered under the statements released in 2012. The proposed statements would take effect for financial statements of periods that begin after Dec. 15, 2015 for OPEB plans, Dec. 15 2016 for OPEB employers, and June 15, 2016 for pension plans.
But the GFOA is urging GASB to delay the effective dates of each of the draft statements by at least one year “to allow sufficient time to accumulate and report the required information.” GFOA said it didn’t think the dates that GASB proposed would give governments enough time to implement the statements “given the other GASB implementations that will be occurring during this same period.”
During GFOA’s presentation, officials with the group also discussed the implementation of the pension standards that recently went into effect.
Governments in agent multi-employer pension plans face special audit challenges relating to implementing the standards. It was initially unclear if governments’ auditors would be able to get the information they need to give clean opinions in the first year of the standards’ implementation. However, it now appears that the challenges will be surmountable, said Steve Solomon, another official in the Technical Services Center.
There are 20 states with agent multi-employer plans, GFOA officials said.