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Future Accounting Standard Changes - Continued <br />GASB Statement No. 71- Pension Transition for Contributions Made Subsequent to the Measure Date - an Amendment of <br />GASB Statement No. 68 <br />Summary <br />The objective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68, <br />Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a <br />state or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement <br />date of the government's beginning net pension liability. <br />Statement No. 68 requires a state or local government employer (or nonemployer contributing entity in a special funding <br />situation) to recognize a net pension liability measured as of a date (the measurement date) no earlier than the end of its prior <br />fiscal year. If a state or local government employer or nonemployer contributing entity makes a contribution to a defined benefit <br />pension plan between the measurement date of the reported net pension liability and the end of the government's reporting period, <br />Statement No. 68 requires that the government recognize its contribution as a deferred outflow of resources. In addition, <br />Statement No. 68 requires recognition of deferred outflows of resources and deferred inflows of resources for changes in the net <br />pension liability of a state or local government employer or nonemployer contributing entity that arise from other types of events. <br />At transition to Statement No. 68, if it is not practical for an employer or nonemployer contributing entity to determine the <br />amounts of all deferred outflows of resources and deferred inflows of resources related to pensions, paragraph 137 of Statement <br />No. 68 required that beginning balances for deferred outflows of resources and deferred inflows of resources not be reported. <br />Consequently, if it is not practical to determine the amounts of all deferred outflows of resources and deferred inflows of <br />resources related to pensions, contributions made after the measurement date of the beginning net pension liability could not have <br />been reported as deferred outflows of resources at transition. This could have resulted in a significant understatement of an <br />employer or nonemployer contributing entity's beginning net position and expense in the initial period of implementation. <br />This Statement amends paragraph 137 of Statement No. 68 to require that, at transition, a government recognize a beginning <br />deferred outflow of resources for its pension contributions, if any, made subsequent to the measurement date of the beginning net <br />pension liability. Statement No. 68, as amended, continues to require that beginning balances for other deferred outflows of <br />resources and deferred inflows of resources related to pensions be reported at transition only if it is practical to determine all such <br />amounts. <br />The provisions of this Statement are required to be applied simultaneously with the provisions of Statement No. 68. <br />How the Changes in This Statement Will Improve Financial Reporting <br />The requirements of this Statement will eliminate the source of a potential significant understatement of restated beginning net <br />position and expense in the first year of implementation of Statement No. 68 in the accrual -basis financial statements of <br />employers and nonemployer contributing entities. This benefit will be achieved without the imposition of significant additional <br />costs. <br />' Note. From GASB Pronouncements Summaries. Copyright 2014 by the Financial Accounting Foundation, 401 Merritt 7, <br />Norwalk, CT 06856, USA, and is reproduced with permission. <br />This communication is intended solely for the information and use of Board of Directors, management and the Minnesota Office of <br />the State Auditor, and is not intended to be and should not be used by anyone other than these specified parties. <br />Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting records <br />and related data. The comments and recommendations in the report are purely constructive in nature, and should be read in this <br />context. <br />If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your convenience. <br />We wish to thank you for the opportunity to be of service and for the courtesy and cooperation extended to us by your staff. <br />abilktitiLimarolto <br />ABDO, EICK & MEYERS, LLP <br />Minneapolis, Minnesota <br />March 18, 2014 <br />-10- <br />People <br />+Process,, <br />Going <br />BeyoIldihe <br />Numbers <br />